Peabody Announces New Shareholder Return Framework Including Share Repurchase Plan and Cash Dividends
Peabody, one of the world's leading coal producers, has recently announced its new shareholder return framework. The framework includes a share repurchase plan, fixed and variable quarterly cash dividends, and an amendment to the surety agreement. The company aims to return at least 65 percent of annual Available Free Cash Flow (AFCF) to its shareholders retroactive to January 1, 2023.
Peabody's Board of Directors has authorized a share repurchase program that allows the company to buy back up to $1.0 billion of BTU common stock. The program is expected to be launched in the second quarter of 2023, following the Company's announcement of first-quarter earnings.
Peabody's shareholder return program will include a regular quarterly cash dividend of $0.075 per share. The first half of 2023 returns are expected to include the regular quarterly cash dividend with the remaining 65 percent of AFCF to be returned to shareholders exclusively through share repurchases. The company plans to transition to a more balanced shareholder return program of fixed quarterly cash dividends, variable dividends, and share repurchases in the second half of 2023.
Peabody amended its surety agreement to limit collateral exposure and remove other restrictions. The agreement establishes a combined collateral limit of $722 million or 56 percent of total bonded amount, complete pre-funding of the full estimated cost of final reclamation of $753 million, and removes all restrictions on shareholder returns. The agreement also extends through December 31, 2026.
Peabody's President and CEO, Jim Grech, stated that the company's program to return value to shareholders is a result of favorable market conditions for their products and their strong execution of operating plans. The company aims to return a designated portion of its cash flow to shareholders while reinvesting in its long-term future and maintaining a strong balance sheet. All shareholder returns remain at the Board's discretion.
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