Peabody Energy is currently “reviewing all options” regarding its $3.3 billion acquisition of Anglo American’s coal assets, following a mine explosion that led to the closure of one of the key sites involved in the deal.
The explosion at Anglo’s Moranbah mine in Australia, the largest mine in the transaction, has raised doubts about the completion of the deal. The closure of this site, which is scheduled to shut down in the first half of this year, questions whether the planned deal will proceed as originally intended.
Peabody confirmed that it is “maintaining discussions with Anglo American” and is “preserving all rights and protections under its purchase agreements.”
On March 31, a “small, contained ignition” at the Moranbah mine forced the evacuation of personnel. According to Anglo American, Moranbah is the largest mine by annual production in the deal, producing around 5.6 million tons of steelmaking coal annually.
Anglo is working with safety regulators to investigate the incident and has not provided a timeline for when operations will resume.
In a statement on Wednesday, the company noted it is “working with Peabody towards completing the transaction,” including providing updates about the suspension of mining operations at Moranbah North.
Another mine involved in the deal, Grosvenor, has been closed since an underground fire occurred last year, and there is no scheduled date for its reopening.
The sale of these assets is part of Anglo American’s larger restructuring effort, which followed its successful defense against a hostile £39 billion takeover attempt by BHP last year. The strategy includes divesting coal and nickel assets, while spinning off its platinum and diamond businesses.
Peabody, which had been preparing to raise funds for the deal, has delayed this process due to the recent mine explosion and unfavorable market conditions. According to sources familiar with the situation, the company had planned to secure financing this week but is now holding off.
Although Peabody has a $2 billion bridge facility in place, it had intended to replace this temporary financing with permanent funding before finalizing the deal.
Since the deal was first announced, coal prices and Peabody’s stock have both dropped significantly. The company’s share price has fallen by more than 50 percent since November, and its market capitalization is now around $1.3 billion.
A $325 million convertible bond linked to Peabody’s stock has also declined, dropping below its face value in the past week.
Under the terms of the deal, Peabody agreed to pay $1.7 billion in cash at closing for the Anglo American assets, with deferred payments of $625 million over four years. Additional contingent payments of up to $1 billion were also included, tied to future milestones, such as the reopening of the Grosvenor mine and reaching certain coal price levels.
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