UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

 

 

Form 8-K

 

 

CURRENT REPORT

PURSUANT TO SECTION 13 OR 15(d)

OF THE SECURITIES EXCHANGE ACT OF 1934

Date of Report (Date of earliest event reported): June 18, 2019

 

 

PEABODY ENERGY CORPORATION

(Exact name of registrant as specified in its charter)

 

 

 

Delaware   1-16463   13-4004153

(State or Other Jurisdiction

of Incorporation)

 

(Commission

File Number)

 

(I.R.S. Employer

Identification No.)

701 Market Street, St. Louis, Missouri   63101-1826
(Address of Principal Executive Offices)   (Zip Code)

Registrant’s telephone number, including area code: (314) 342-3400

 

 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

 

☐

Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

 

☐

Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

 

☐

Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

 

☐

Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Securities registered pursuant to Section 12(b) of the Act:

 

Title of each class

 

Trading

Symbol(s)

 

Name of each exchange

on which registered

Common Stock, par value $0.01 per share   BTU   New York Stock Exchange

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

Emerging growth company  ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.  ☐

 

 

 

Item 1.01.

Entry into a Material Definitive Agreement.

On June 18, 2019, Peabody Energy Corporation, a Delaware corporation (“ Peabody ”), entered into a definitive implementation agreement (the “ Implementation Agreement ”) with Arch Coal, Inc., a Delaware corporation (“ Arch ”), to establish a joint venture that will combine the respective Powder River Basin and Colorado mining operations of Peabody and Arch. Pursuant to the terms of the Implementation Agreement, Peabody will hold a 66.5% economic interest in the joint venture and Arch will hold a 33.5% economic interest. At the closing, certain of the respective subsidiaries of Peabody and Arch will enter into an Amended and Restated Limited Liability Company Agreement (the “ LLC Agreement ”) in substantially the form attached as an exhibit to the Implementation Agreement. Under the terms of the LLC Agreement, the governance of the joint venture will be overseen by the joint venture’s board of managers, which will initially be comprised of three representatives appointed by Peabody and two representatives appointed by Arch. Decisions of the board of managers will be determined by a majority vote subject to certain specified matters set forth in the LLC Agreement that will require a supermajority vote. Peabody, or one of its affiliates, will initially be appointed as the operator of the joint venture and will manage the day-to-day operations of the joint venture, subject to the supervision of the joint venture’s board of managers.

Formation of the joint venture is subject to customary closing conditions, including the termination or expiration of the waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, the receipt of certain other required regulatory approvals and the absence of injunctions or other legal restraints preventing the formation of the joint venture. The obligation of Peabody to consummate the transaction is also conditioned upon Peabody having obtained consents or refinanced all outstanding indebtedness under Peabody’s existing senior secured credit facility, the indenture governing Peabody’s 6.000% Notes due 2022 and 6.375% Notes due 2025 and Peabody’s existing receivables securitization facility. The obligation of Arch to consummate the transaction is also conditioned upon (a) Arch having obtained consents or refinanced all outstanding indebtedness under Arch’s senior secured term loan facility, Arch’s inventory based revolving credit facility and Arch’s existing accounts receivable securitization facility and (b) Arch having either obtained an exemptive order from the U.S. Securities and Exchange Commission (the “ SEC ”) or other exemptive determination under the Investment Company Act of 1940 (the “ 1940 Act ”). Formation of the joint venture does not require approval of the respective stockholders of either Peabody or Arch.

The Implementation Agreement contains customary representations, warranties and covenants, including an obligation for each of Peabody and Arch to use its best efforts to take all actions necessary to obtain required regulatory approvals, subject to the limitations set forth in the Implementation Agreement.

The Implementation Agreement may be terminated by mutual written agreement of Peabody and Arch and by either Peabody or Arch if, among other things, the closing has not occurred on or prior to December 18, 2020, except that (a) the right to terminate will not be available to a party whose failure to perform any of its obligations under the Implementation Agreement has been a principal cause of or resulted in the failure of the closing to occur on or prior to such date and (b) the right to terminate will not be available to Arch until June 18, 2021 if all closing conditions have been satisfied other than the receipt by Arch of an exemptive order (or other determination) under the 1940 Act.

Additionally, if the closing has not occurred on or prior to June 18, 2020 and all required regulatory approvals have not been obtained, the Implementation Agreement may be terminated by either Peabody or Arch no later than June 29, 2020 following written notice and the payment by the terminating party to the non-terminating party of a termination fee of $40 million; provided , however , that the non-terminating party may elect to extend the Implementation Agreement until September 18, 2020. If the non-terminating party exercises this option to extend, the termination fee payable to the non-terminating party by the terminating party if the closing does not occur on or prior to September 18, 2020 will be reduced to $25 million.

Except as set forth above, neither party will be required to pay a termination fee if the Implementation Agreement is terminated. If all closing conditions have been satisfied other than the receipt by Arch of an exemptive order (or other determination) under the 1940 Act, Arch will reimburse Peabody for regulatory transaction expenses.

The foregoing description of the Implementation Agreement and the LLC Agreement and the transactions contemplated thereby does not purport to be complete and is subject to, and qualified in its entirety by reference to, the Implementation Agreement, including the form of LLC Agreement attached as an exhibit thereto, a copy of which will be filed as an exhibit to an amendment to this Current Report on Form 8-K.

Item 7.01.

Regulation FD Disclosure.

On June 19, 2019, Peabody issued a press release that includes, among other matters, information related to the Implementation Agreement. A copy of the press release is furnished as Exhibit 99.1 hereto and is incorporated into this Item 7.01 by reference.

Additionally, on June 19, 2019, Peabody posted on the “Investor Center” section of Peabody’s website, www.peabodyenergy.com, an investor presentation by Peabody that includes, among other matters, information related to the Implementation Agreement. A copy of the investor presentation posted by Peabody is furnished as Exhibit 99.2 hereto and is incorporated into this Item 7.01 by reference.

The information set forth in and incorporated into this Item 7.01 of this Current Report on Form 8-K and Exhibit 99.1 and Exhibit 99.2 is being furnished pursuant to Item 7.01 of Form 8-K and shall not be deemed to be “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “ Exchange Act ”), or otherwise subject to the liabilities of that section, nor shall it be deemed incorporated by reference into any of Peabody’s filings under the Securities Act of 1933, as amended, or the Exchange Act, whether made before or after the date hereof and regardless of any general incorporation language in such filings, except to the extent expressly set forth by specific reference in such a filing. The filing of this Item 7.01 of this Current Report on Form 8-K shall not be deemed an admission as to the materiality of any information herein that is required to be disclosed solely by reason of Regulation FD.

 

Item 9.01.

Financial Statements and Exhibits.

(d) Exhibits.

 

Exhibit
Number

  

Description

99.1    Press Release, dated June 19, 2019.
99.2    Investor Presentation, dated June 19, 2019.

Cautionary Note Regarding Forward-Looking Statements

The press release, investor presentation and related statements by management contain forward-looking statements within the meaning of the securities laws. Forward-looking statements can be identified by the fact that they do not relate strictly to historical or current facts. They often include words or variation of words such as “expects,” “anticipates,” “intends,” “plans,” “believes,” “seeks,” “estimates,” “projects,” “forecasts,” “targets,” “would,” “will,” “should,” “goal,” “could” or “may” or other similar expressions. Forward-looking statements provide management’s current expectations or predictions of future conditions, events or results. All statements that address operating performance, events or developments that Peabody expects or anticipates will occur in the future are forward-looking statements. They may include estimates of value accretion, joint venture synergies, closing of the joint venture, revenues, income, earnings per share, cost savings, capital expenditures, dividends, share repurchases, liquidity, capital structure, market share, industry volume, or other financial items, descriptions of management’s plans or objectives for future operations or descriptions of assumptions underlying any of the above. All forward-looking statements speak only as of the date they are made and reflect Peabody’s good faith beliefs, assumptions and expectations, but they are not guarantees of future performance or events. Furthermore, Peabody disclaims any obligation to publicly update or revise any forward-looking statement, except as required by law. By their nature, forward-looking statements are subject to risks and uncertainties that could cause actual results to differ materially from those suggested by the forward-looking statements. Factors that might cause such differences include, but are not limited to, a variety of economic, competitive and regulatory factors, many of which are beyond Peabody’s control, including (i) risks that the proposed joint venture may not be completed, including as a result of a failure to obtain required regulatory approvals, (ii) risks that the anticipated synergies from the proposed joint venture may not be fully realized, including as a result of actions necessary to obtain regulatory approvals, (iii) other

factors that are described in Peabody’s Annual Report on Form 10-K for the fiscal year ended December 31, 2018 and (iv) other factors that Peabody may describe from time to time in other filings with the SEC. You may get such filings for free at Peabody’s website at www.peabodyenergy.com. You should understand that it is not possible to predict or identify all such factors and, consequently, you should not consider any such list to be a complete set of all potential risks or uncertainties.

SIGNATURES

Pursuant to the requirements of the Exchange Act, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

 

    PEABODY ENERGY CORPORATION
June 19, 2019     By:  

/s/ Amy B. Schwetz

    Name:   Amy B. Schwetz
    Title:   Executive Vice President and Chief Financial Officer

Exhibit 99.1

 

LOGO

FOR IMMEDIATE RELEASE

June 19, 2019

PEABODY AND ARCH TO COMBINE U.S. PRB AND COLORADO ASSETS IN HIGHLY SYNERGISTIC

JOINT VENTURE TO UNLOCK APPROXIMATELY $820 MILLION IN SYNERGIES

 

  •  

JV synergies projected to average approximately $120 million per year over initial 10 years, with NPV of approximately $820 million

 

  •  

Optimal combination expected to create one of lowest-cost thermal coal suppliers in U.S. to strengthen competitiveness against natural gas and renewables and create value

 

  •  

JV ownership to be 66.5% Peabody and 33.5% Arch; Peabody to serve as operator

 

  •  

Centerpiece combines two adjacent and highly productive U.S. coal mines into single, lower-cost complex

ST. LOUIS, June 19 – Peabody (NYSE: BTU) and Arch Coal (NYSE: ARCH) today announced that they have entered into a definitive agreement to combine the companies’ Powder River Basin and Colorado assets in a highly synergistic joint venture aimed at strengthening the competitiveness of coal against natural gas and renewables, while creating substantial value for customers and shareholders.

The joint venture is expected to unlock synergies with a pre-tax net present value of approximately $820 million. 1 Average joint venture synergies are projected to be approximately $120 million per year over the initial 10 years. 2 The joint venture will be 66.5 percent owned by Peabody and 33.5 percent owned by Arch.

“The Peabody/Arch joint venture is an extraordinary example of industrial logic targeted to strengthen the competitive position of our products and create significant value for multiple stakeholders in a low-cost combination with exceptional physical synergies,” said Peabody President and Chief Executive Officer Glenn Kellow. “The transaction unites two strong, culturally aligned workforces with a commitment to core values such as safety and sustainability. We believe this joint venture allows us to offer enhanced products and security of supply for customers, increased value for shareholders, greater efficiencies for railroads, long-term opportunities for employees and strength for the communities in which we operate.”

“We are excited about this transaction’s potential to enhance the value of Arch’s top-tier thermal coal assets,” said Arch Chief Executive Officer John W. Eaves. “This new joint venture should allow us to realize the full potential of our valuable assets in the Powder River Basin and Colorado and benefit our customers in the process. The significant operating synergies will enhance the competitiveness of these assets and also enable us to continue to generate long-term, sustainable returns for our shareholders. We look forward to completing this transaction in a timely manner.”

 

 

1  

Synergies of approximately $820 million represent the combined net present value of estimated pre-tax synergies projected over standalone life-of-mine plans assuming third-party price assumptions and a 10 percent discount rate.

2  

Average combined synergies of approximately $120 million per year projected over initial 10 years.

Governance of the joint venture will consist of a five-member board of managers appointed by Peabody and Arch. Each party will have voting rights in proportion to its ownership percentage, with certain items requiring supermajority approval. As the operator, Peabody will manage all activities including the marketing of coal. Peabody and Arch will share profits, capital requirements and cash distributions of the joint venture in proportion to ownership percentages.    

Among other assets, the joint venture will combine two productive and adjacent U.S. coal mines – Peabody’s North Antelope Rochelle Mine (NARM) and Arch’s Black Thunder Mine, which share a property line of more than seven miles – into a single, lower-cost complex.

Aggregated synergies are expected to enable the joint venture to significantly reduce costs well beyond what each company could achieve alone. A lower cost structure enables coal to better compete against other energy sources for electricity generation and create value. Expected substantial synergies include, among others:

 

  •  

Optimization of mine planning, sequencing and accessing otherwise isolated reserves;

 

  •  

Improved efficiencies in deployment of the combined equipment fleet;

 

  •  

More efficient procurement and warehousing;

 

  •  

Enhanced blending capabilities to more closely meet customer requirements;

 

  •  

Improved utilization of the combined rail loadout system and other rail efficiencies;

 

  •  

Reductions in long-term capital requirements; and

 

  •  

Leveraging Peabody’s shared services.

Underpinning the combination, Peabody has the lowest-cost position among major Powder River Basin producers and Arch has some of the highest-quality coal in the PRB. Arch is contributing its low-cost, higher-margin West Elk Mine that enhances Peabody’s Twentymile Mine in Colorado. Further PRB synergies are expected from the integration of the Caballo, Rawhide and Coal Creek mines, which have some of the best overburden-to-coal ratios in the world. Together with NARM and Black Thunder, these PRB assets represent five of the 10 most productive mines in the United States. The inclusion of the Colorado assets will lead to additional synergies and offer the ability to better serve domestic customers while preserving seaborne coal optionality.

The combination of assets from two recognized companies is expected to advance continued responsible mining and reclamation for decades to come, benefiting all stakeholders.

“For Peabody, the creation of the joint venture is a clear demonstration of the company’s U.S. thermal strategy to optimize our lowest-cost, highest-margin operations in a low-capital fashion to maximize cash generation,” said Kellow. “The transaction fully aligns with our stated investment filters, further enhances our financial strength and enables continued commitment to our shareholder return program, in which we are committed to returning an amount greater than our free cash flow to shareholders in 2019.”

Peabody and Arch will continue to operate the assets independently until closing of the transaction. Closing is subject to regulatory approval and satisfaction of usual closing conditions. Upon closing, Peabody and Arch will each contribute its active Powder River Basin and Colorado mines, as well as related assets and liabilities, into the joint venture. Each company expects to proportionally consolidate the joint venture within their respective financial statements.

In 2018, on a combined basis, the assets shipped 206.0 million tons of coal. The assets are operated by a workforce of approximately 3,300, with combined proven and probable reserves totaling 3.4 billion as of Dec. 31, 2018.

 

2

Conference Call

On June 19, 2019, Peabody and Arch will each host conference calls to discuss the details of the joint venture. Peabody’s call will be held at 9:00 a.m. CDT, with Arch’s call immediately following at 9:30 a.m. CDT. Participants can access Peabody’s call at PeabodyEnergy.com or using the following dial-in numbers:

 

U.S. and Canada

   888-312-3049

Australia

   1800 849 976

United Kingdom

   0808 238 9907

All other international participants, please contact Peabody Investor Relations at (314) 342-7900 prior to the call to receive your dial-in number. Participants can access Arch’s call at 800-667-5617 (U.S. or Canada) or 334-323-0509 (International).

Peabody is the leading global pure-play coal company and a member of the Fortune 500, serving power and steel customers in more than 25 countries on six continents. The company offers significant scale, high-quality assets, and diversity in geography and products. Peabody is guided by seven core values: safety, customer focus, leadership, people, excellence, integrity and sustainability. For further information, visit PeabodyEnergy.com.

U.S.-based Arch Coal, Inc. is a top coal producer for the global steel and power generation industries. Arch operates a streamlined portfolio of large-scale, low-cost mining complexes that produce high-quality metallurgical coals in Appalachia and low-emitting thermal coals in the Powder River Basin and other strategic supply regions. For more information, visit www.ArchCoal.com .

Credit Suisse and Lazard are acting as financial advisers to Peabody for the transaction. Cravath, Swaine & Moore LLP and Akin Gump Strauss Hauer & Feld LLP are acting as legal advisers to Peabody. Wachtell, Lipton, Rosen & Katz are acting as board counsel to Peabody. Goldman Sachs & Co. LLC is acting as financial adviser to Arch. Latham & Watkins LLP and Baker Botts LLP are acting as legal advisers to Arch.

Contact:

Peabody

314.342.4351

Arch Coal

314.994.2897

Peabody Forward-Looking Statements

This press release contains forward-looking statements within the meaning of the securities laws. Forward-looking statements can be identified by the fact that they do not relate strictly to historical or current facts. They often include words or variation of words such as “expects,” “anticipates,” “intends,” “plans,” “believes,” “seeks,” “estimates,” “projects,” “forecasts,” “targets,” “would,” “will,” “should,” “goal,” “could” or “may” or other similar expressions. Forward-looking statements provide management’s current expectations or predictions of future conditions, events or results. All statements that address operating performance, events or developments that Peabody or Arch expect or anticipate will occur in the future are forward-looking statements. They may include estimates of value accretion, joint venture synergies, closing of the joint venture, revenues, income, earnings per share, cost savings, capital expenditures, dividends, share repurchases, liquidity, capital structure, market share, industry volume, or other financial items, descriptions of management’s plans or objectives for future operations,

 

3

or descriptions of assumptions underlying any of the above. All forward-looking statements speak only as of the date they are made and reflect Peabody’s and Arch’s good faith beliefs, assumptions and expectations, but they are not guarantees of future performance or events. Furthermore, each Peabody and Arch disclaim any obligation to publicly update or revise any forward-looking statement, except as required by law. By their nature, forward-looking statements are subject to risks and uncertainties that could cause actual results to differ materially from those suggested by the forward-looking statements. Factors that might cause such differences include, but are not limited to, a variety of economic, competitive and regulatory factors, many of which are beyond the Peabody’s and Arch’s control, including (i) risks that the proposed joint venture may not be completed, including as a result of a failure to obtain required regulatory approvals, (ii) risks that the anticipated synergies from the proposed joint venture may not be fully realized, including as a result of actions necessary to obtain regulatory approvals, (iii) other factors that are described in Peabody’s Annual Report on Form 10-K for the fiscal year ended Dec. 31, 2018, (iv) other factors that are described in Arch’s Annual Report on Form 10-K for the fiscal year ended Dec. 31, 2018 and (v) other factors that Peabody or Arch may describe from time to time in other filings with the SEC. You may get such filings for free at Peabody’s website at www.peabodyenergy.com and Arch’s website at www.archcoal.com. You should understand that it is not possible to predict or identify all such factors and, consequently, you should not consider any such list to be a complete set of all potential risks or uncertainties.

 

4

Peabody/Arch Joint Venture

Joint Venture Mines

 

Mine

  

Company

  

Basin

   2018 Sales
Volume
*tons in millions 		   Proven and Probable Reserves
(as of Dec. 31, 2018)
*tons in millions

NARM

   Peabody    PRB    98.4    1,698

Black Thunder

   Arch    PRB    71.1    816

Caballo

   Peabody    PRB    11.3    465

Rawhide

   Peabody    PRB    9.5    258

Coal Creek

   Arch    PRB    8.0    95

West Elk

   Arch    Colorado    4.8    54

Twentymile

   Peabody    Colorado    2.9    28

 

5

Exhibit 99.2

 

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Peabody/Arch JV Combines PRB and Colorado Assets Glenn Kellow – President and Chief Executive Officer Amy Schwetz – EVP and Chief Financial Officer Vic Svec – SVP Global Investor and Corporate Relations June 19, 2019

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Statement on Forward-Looking Information This presentation contains forward-looking statements within the meaning of the securities laws. Forward-looking statements can be identified by the fact that they do not relate strictly to historical or current facts. They often include words or variation of words such as “expects,” “anticipates,” “intends,” “plans,” “believes,” “seeks,” “estimates,” “projects,” “forecasts,” “targets,” “would,” “will,” “should,” “goal,” “could” or “may” or other similar expressions. Forward-looking statements provide management’s current expectations or predictions of future conditions, events or results. All statements that address operating performance, events or developments that Peabody or Arch expect will occur in the future are forward-looking statements. They may include estimates of value accretion, joint venture synergies, closing of the joint venture, revenues, income, earnings per share, cost savings, capital expenditures, dividends, share repurchases, liquidity, capital structure, market share, industry volume, or other financial items, descriptions of management’s plans or objectives for future operations, or descriptions of assumptions underlying any of the above. All forward-looking statements speak only as of the date they are made and reflect Peabody’s and Arch’s good faith beliefs, assumptions and expectations, but they are not guarantees of future performance or events. Furthermore, each Peabody and Arch disclaim any obligation to publicly update or revise any forward-looking statement, except as required by law. By their nature, forward-looking statements are subject to risks and uncertainties that could cause actual results to differ materially from those suggested by the forward-looking statements. Factors that might cause such differences include, but are not limited to, a variety of economic, competitive and regulatory factors, many of which are beyond the Peabody’s and Arch’s control, including (i) risks that the proposed joint venture may not be completed, including as a result of a failure to obtain required regulatory approvals, (ii) risks that the anticipated synergies from the proposed joint venture may not be fully realized, including as a result of actions necessary to obtain regulatory approvals, (iii) other factors that are described in Peabody’s Annual Report on Form 10-K for the fiscal year ended Dec. 31, 2018, (iv) other factors that are described in Arch’s Annual Report on Form 10-K for the fiscal year ended Dec. 31, 2018 and (v) other factors that Peabody or Arch may describe from time to time in other filings with the SEC. You may get such filings for free at Peabody’s website at www.peabodyenergy.com and Arch’s website at www.archcoal.com. You should understand that it is not possible to predict or identify all such factors and, consequently, you should not consider any such list to be a complete set of all potential risks or uncertainties.

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Peabody/Arch PRB and Colorado Joint Venture: Key Takeaways 1 Highly synergistic joint venture aimed at strengthening competitiveness against natural gas and renewables 2 Expected to create substantial value for customers, shareholders; Benefits railroads, employees and communities 3 Expected to unlock synergies with NPV of $820 million; Average synergies of ~$120 million per year over initial 10 years 4 Unites strong, culturally aligned workforces with commitment to safety and sustainability Note: Synergies of approximately $820 million represent the combined net present value of estimated pre-tax synergies projected over standalone life-of-mine plans assuming third-party price assumptions and a 10 percent discount rate. 3 Average combined synergies of approximately $120 million per year projected over initial 10 years.

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Joint Venture: Structure • Ownership split of 66.5% Peabody and 33.5% Arch, determined by NPV of life-of-mine plans utilizing common assumptions • Governance of JV overseen by 5-member board of managers – Voting rights in proportion to ownership percentages • Peabody to serve as operator of JV and market coal – Leveraging shared services systems • Peabody and Arch to share JV profits, capital requirements and cash distributions in proportion to ownership percentage • Each company expects to proportionally consolidate JV within respective financial statements • Closing subject to regulatory approvals and usual conditions – Peabody and Arch will continue to operate independently until closing

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JV Combines Low-Cost, Highly Productive PRB Assets with High-Quality Colorado Assets • JV will operate 5 of top 10 most productive mines in United States • Centerpiece includes two of the most productive U.S. coal mines – NARM and Black Thunder • Caballo, Rawhide and Coal Creek mines have among best overburden- to-coal ratios in world • Colorado assets offer additional synergies and ability to better serve domestic customers while preserving seaborne coal optionality Note: Productivity data per MSHA for full-year 2018 based on production per total employee hours. 5

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Expected to Unlock Pre-Tax Synergies of ~$820 Million; Projected 10-Year Average Synergies of ~$120 Million Per Year • Integration projected to lead to substantial synergies, including: – Optimization of mine planning and sequencing and accessing otherwise isolated reserves – Improved efficiencies in deployment of combined equipment fleet – More efficient procurement, warehousing – Enhanced blending capabilities to more closely meet customer requirements – Improved utilization of combined rail loadout system, other rail efficiencies – Reductions in long-term capital requirements – Leveraging Peabody’s shared services • NARM and Black Thunder to operate as a single complex Note: Synergies of approximately $820 million represent the combined net present value of estimated pre-tax synergies projected over standalone life-of-mine plans assuming third-party price assumptions and a 10 percent discount rate. 6 Average combined synergies of approximately $120 million per year projected over initial 10 years.

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Synergies Expected to Reduce Costs; Lower Cost Structure Enables Coal to Better Compete Against Other Energy Sources U.S. Electricity Mix (Twh) • Natural gas and Coal Natural Gas Nuclear Hydro Renewables Other renewables continue to increase share of U.S. electricity mix ? Coal’s competitiveness largely based on price of natural gas, availability of subsidized wind, solar • JV expected to improve 2004 2006 2008 2010 2012 2014 2016 2018 competitiveness of Average Henry Hub Natural Gas Price coal against natural gas 2004 – 2008 2009 – 2013 2014 – 2018 and renewables $7.64/mmBtu $3.82/mmBtu $3.11/mmBtu Source: EIA and CME Group. 7

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For Peabody, Extraordinary Example of Industrial Logic Creating Significant Value Clear demonstration Fully aligned Continued of Peabody’s with stated commitment to U.S. strategy investment filter shareholder returns “Optimize lowest-cost, ? Strategic portfolio fit highest-margin U.S. thermal assets in ? Enhances financial strength low-capital fashion ? Returns above cost of capital to maximize cash ? Rapid payback period generation” ? Substantial tangible synergies • Significant value for our shareholders

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Appendix

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Joint Venture Mines (tons in millions) Proven & 2018 Sales Mine Company Basin Probable Volumes Reserves NARM Peabody PRB 98.4 1,698 Black Thunder Arch PRB 71.1 816 Caballo Peabody PRB 11.3 465 Rawhide Peabody PRB 9.5 258 Coal Creek Arch PRB 8.0 95 West Elk Arch Colorado 4.8 54 Twentymile Peabody Colorado 2.9 28 Source: Company filings and information. Proven and probable reserves as of Dec. 31, 2018. 10