Peabody Energy Said to Seek $1.2 Billion Refinancing Term Loan

Peabody Energy Corp. (BTU), the largest U.S. coal producer, is seeking a $1.2 billion loan to refinance debt, according to two people with knowledge of the transaction.

Citigroup Inc. is arranging the term B financing and will host a meeting with lenders on Sept. 6 at 10 a.m. in New York, said the people, who asked not to be identified because the information is private.

Peabody, based in St. Louis, has $862.5 million of loans due in October 2016 and about $301.8 million that matures in June 2015, according to data compiled by Bloomberg. The loans pay interest at 2 percentage points more than the London interbank offered rate and 2.25 percentage points more than the lending benchmark, respectively, Bloomberg data show.

The coal miner has about $6.3 billion in debt, according to Bloomberg data.

Moody’s Investors Service cut its rating on Peabody to Ba2 from Ba1, two levels below investment grade, on Aug. 21 because of “prolonged weak industry conditions” for metallurgical coal prices, while Standard & Poor’s lowered its mark one level on Aug. 26, to an equivalent BB, citing higher leverage.

The company’s $1.34 billion of 6.25 percent bonds due in 2021 rose 0.5 cent today to 97.5 cents on the dollar to yield 6.6 percent, according to Trace, the bond price reporting system of the Financial Industry Regulatory Authority.

Vic Svec, senior vice president of investor relations and corporate communications, didn’t immediately reply to an e-mail seeking comment.

A term loan B is sold mainly to non-bank lenders such as collateralized loan obligations, bank loan mutual funds and hedge funds.

To contact the reporter on this story: Krista Giovacco in New York at kgiovacco1@bloomberg.net.

To contact the editor responsible for this story: Faris Khan at fkhan33@bloomberg.net. BTU US <EQUITY> CN

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