Peabody (NYSE: BTU) announced its intention to offer $225 million in convertible senior notes due 2031 through a private placement to qualified institutional buyers. The coal producer also plans to grant initial purchasers an option to buy an additional $25 million in notes within 13 days of issuance.

The notes will mature on June 1, 2031, and accrue interest payable semi-annually. Noteholders may convert their notes under certain circumstances, with Peabody settling conversions through cash, common stock shares, or a combination at its discretion. The initial conversion price will be based on the volume weighted average price of Peabody's common stock on the pricing date.

Peabody cannot redeem the notes before June 5, 2029, except for cleanup redemptions when less than 15% of the original notes remain outstanding. After June 5, 2029, the company may redeem notes if its stock price exceeds 130% of the conversion price for a specified period.

The company plans to use proceeds to fund capped call transactions and, combined with available cash, repurchase a portion of its outstanding 3.250% convertible senior notes due 2028. Any remaining proceeds will support general corporate purposes.

Peabody expects to enter into capped call transactions with initial purchasers or affiliates to reduce potential dilution from note conversions before May 30, 2030. These transactions expire over trading days beginning April 17, 2030.

The offering is subject to market conditions and will not be registered under the Securities Act of 1933. The notes will be senior, unsecured obligations of the company.