Peabody terminates surety agreement, establishes new bonding facilities

Peabody (NYSE: BTU) announced it has terminated its 2020 Transaction Support Agreement with surety providers and entered standard indemnification agreements to support U.S. reclamation obligations. The coal producer also established asset-backed surety facilities for Australian reclamation obligations, replacing cash-backed bank guarantees and direct cash deposits with regulatory authorities.

The transactions are expected to reduce total reclamation collateral requirements and eliminate a minimum liquidity covenant while maintaining the company's global bonding program, according to a company statement.

"These changes, along with the successful recent refinancing of the company's 2028 convertible notes, continue to enhance Peabody's financial strength and flexibility," said Executive Vice President and Chief Financial Officer Mark Spurbeck. "The additional liquidity afforded by the new surety arrangements allows the company to continue its multi-pronged strategy of balance sheet strength, disciplined capital allocation, and shareholder returns."

The new arrangements affect how Peabody secures its mining reclamation obligations in both the U.S. and Australia, shifting from cash-intensive backing to alternative structures.

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