Peabody Energy to sharply reduce its share float through reverse stock split

Peabody Energy (NYSE: BTU), which like other U.S. coal producers has seen a falling share price in an historically bad coal market, on Sept. 16 announced a 1-for-15 reverse stock split on shares of the company’s common stock.

Authorization to implement the reverse stock split was approved by Peabody shareholders at a special meeting held on Sept. 16. 

“We thank our shareholders for their continued support as we work through these challenging times,” said President and Chief Executive Officer Glenn Kellow. “Peabody is advancing further initiatives across our global platform with an intense focus on operational excellence, lean organization, portfolio management and financial strength.”

The reverse stock split is expected to become effective at the close of business on Sept. 30, which would result in Peabody’s common stock to begin trading on a split-adjusted basis at market open on Oct. 1. Upon completion of the reverse stock split, every 15 shares of common stock owned by a shareholder will be combined into one share of common stock, and the number of outstanding shares will be reduced from approximately 278 million to approximately 19 million.

This means that each remaining share will be worth a lot more than a share before the split. One advantage to this is that stock exchanges have minimum per-share pricing levels, and if a company’s shares fall below that level, the company can be de-listed from that exchange. For example, another major U.S. coal company, Arch Coal (NYSE: ACI), earlier this year announced a reverse stock split so it could preserve its New York Stock Exchange listing.

Peabody’s stock opened the day on Sept. 17 at $1.48/share, against a 52-week high of $13.85 and a 52-week low of $0.99.

St. Louis-based Peabody Energy is the world’s largest private-sector coal company and for many years the biggest coal producer in the U.S. The company serves metallurgical and thermal coal customers in more than 25 countries on six continents.

About Barry Cassell 20414 Articles
Barry Cassell is Chief Analyst for GenerationHub covering coal and emission controls issues, projects and policy. He has covered the coal and power generation industry for more than 24 years, beginning in November 2011 at GenerationHub and prior to that as editor of SNL Energy’s Coal Report. He was formerly with Coal Outlook for 15 years as the publication’s editor and contributing writer, and prior to that he was editor of Coal & Synfuels Technology and associate editor of The Energy Report. He has a bachelor’s degree from Central Michigan University.