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Peabody Energy Enters Into Agreement To Sell New Mexico And Colorado Assets

ST. LOUIS, Nov. 20, 2015 /PRNewswire/ -- Peabody Energy (BTU) announced today that it has entered into a definitive agreement to sell its New Mexico and Colorado coal assets to Bowie Resource Partners, LLC for $358 million in cash, subject to customary working capital adjustments. Bowie will also assume approximately $105 million in related liabilities. The transaction was entered into following a competitive bidding process and includes the El Segundo and Lee Ranch mines in New Mexico and the Twentymile Mine in Colorado, which have combined coal reserves1 of approximately 330 million tons.

"This transaction is consistent with our stated focus area of portfolio optimization. While our New Mexico and Colorado operations and workforce have been substantial contributors to our success over the years, we are reshaping our portfolio focus around our core regions including the Powder River Basin, Illinois Basin and Australia," said President and Chief Executive Officer Glenn Kellow. "At this time, we believe it is appropriate to monetize the value of these mines in a transaction that would bring forward multiple years of cash flows."

Peabody's New Mexico and Colorado mines are projected to produce 11 million tons in 2016. Based on Peabody's current operating plans, pre-tax cash flows after capital expenditures for these mines are projected to be approximately $70 million in 2016.

Transaction closing is anticipated to occur before the end of the first quarter of 2016, subject to certain governmental and regulatory approvals, and other customary conditions. Bowie intends to fund the transaction through a debt refinancing and an equity commitment from a major private equity firm. Peabody expects to use transaction proceeds for general corporate purposes and/or deleveraging activities. In addition, the sale reduces the amount of Peabody's self-bonding in place for reclamation obligations by more than $300 million. Morgan Stanley & Co. LLC is acting as the financial advisor to Peabody.

Peabody Energy is the world's largest private-sector coal...


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