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In a launch from Peabody (NYSE:BTU) Monday, administration disclosed the necessity to tackle further financing to put up collateral on hedges. Peabody (BTU) has entered into an association with Goldman Sachs (NYSE:GS), whereby the the lender will present a $150m unsecured credit score facility at a ten% yield.
The information comes as seaborne thermal coal costs hit report highs. Given the Firm’s technique of hedging future manufacturing by way of derivatives and swaps, larger costs have lowered values of spinoff contracts and required Peabody (BTU) to put up collateral with their clearing dealer. 12 months so far, the corporate has posted $534m to fulfill margin necessities.
Monday’s information comes shortly after administration elected to concern a convertible fairness word, and following an introduced partnership to construct out photo voltaic property. Make no mistake, enterprise has by no means been higher for Peabody (BTU) or the thermal coal trade globally. Nonetheless, missteps by administration proceed to punish shareholders. Peabody (BTU) shares are down ~10% on the information, regardless of seaborne coal costs shattering prior report highs.
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