Peabody Energy approves new shareholder return framework

Peabody’s Board of Directors has approved a new shareholder return framework which includes a share repurchase plan, a fixed quarterly cash dividend and a variable quarterly cash dividend component. The Board also approved a new share repurchase program authorizing repurchases of up to $1.0B of BTU common stock. Additionally, Peabody amended its surety agreement to limit collateral exposure and remove other restrictions. Peabody plans to return to shareholders at least 65% of annual Available Free Cash Flow retroactive to January 1. AFCF is defined as quarterly operating cash flow minus investing cash flow; distributions to noncontrolling interests; plus/minus changes to restricted cash and collateral arrangements and other anticipated expenditures. Peabody expects to launch the shareholder return program in Q2, following the company’s announcement of Q1 earnings. The balance of AFCF is expected to be allocated to value enhancing growth projects, repurchase of potentially dilutive securities, additional shareholder returns and capital preservation. Peabody anticipates the shareholder return program will include a regular quarterly cash dividend of 7.5c per share. First half 2023 returns are expected to include the regular quarterly cash dividend with the remaining 65% of AFCF to be returned to shareholders exclusively through share repurchases. Peabody plans to transition to a more balanced shareholder return program of fixed quarterly cash dividends, variable dividends and share repurchases in the second half of 2023. All shareholder returns remain at the Board’s discretion. Peabody amended the agreement with the providers of its approximately $1.3B surety program to establish a combined collateral limit of $722M or 56% of total bonded amount, complete pre-funding of the full estimated cost of final reclamation of $753M, remove all restrictions on shareholder returns and extend the agreement through December 31, 2026. Peabody also terminated the bank letter of credit facility which was previously used primarily for surety collateral.