FWP 1 y27362fwp.htm FREE WRITING PROSPECTUS FWP
 

ISSUER FREE WRITING PROSPECTUS
SUPPLEMENTING PRELIMINARY PROSPECTUS SUPPLEMENT DATED DECEMBER 13, 2006
Filed pursuant to Rule 433
Registration Number: 333-136108
New Issue Summary, December 14, 2006
     
Issuer:
   Peabody Energy Corporation (NYSE symbol: BTU)
 
    
Securities:
   4.75% convertible junior subordinated debentures due 2066
 
    
Aggregate Principal Amount:
   $675,000,000 (plus up to an additional $75,000,000 principal
 
   amount pursuant to the option we have granted to the
 
   underwriters to cover overallotments)
 
    
Principal Amount per Debenture:
   $1,000
 
    
Coupon Rate:
   4.75%, subject to deferral
 
    
Interest Payment Dates:
   June 15 and December 15 of each year, beginning June 15, 2007
 
    
Interest Deferral Feature:
   Optional and mandatory deferral features described in the
 
   preliminary prospectus supplement
 
    
Ranking:
   Junior to all existing and future senior and subordinated
 
   debt, except for any future debt that by its terms ranks
 
   equal or junior
 
    
Legal Format:
   SEC-registered
 
    
CUSIP/ISIN:
   704549 AG 9/US704549AG98
 
    
Ratings(1):
   Moody’s: Ba2
 
   Standard & Poor’s: B
 
   Fitch: BB-
 
    
Trade Date:
   December 14, 2006
 
    
Settlement Date: (T+4):
   December 20, 2006
 
    
Final Maturity Date:
   December 15, 2066
 
    
Scheduled Maturity Date:
   The issuer will use commercially reasonable efforts to raise
 
   sufficient net proceeds from the issuance of qualifying
 
   capital securities to repay the principal amount and accrued
 
   and unpaid interest on December 15, 2041
 
    
Holders’ Conversion Rights:
   In whole or in part, at any time on or prior to December 15,
 
   2036 upon the satisfaction of one or more of the conditions
 
   described in the preliminary prospectus supplement
 
    
 
   In whole or in part, at any time after December 15, 2036 to
 
   (and including) December 15, 2041, irrespective of the
 
   conditions applicable prior to December 15, 2036
 
    
 
   None after December 15, 2041

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Conversion Consideration:
   For conversion either following a notice of redemption or
 
   upon a non-stock change of control, cash equal to the
 
   principal amount, cash equal to any deferred interest and,
 
   if the conversion value is greater than the principal
 
   amount, the net shares
 
    
 
   For conversion other than following a notice of redemption
 
   or upon a non-stock change of control, perpetual preferred
 
   stock with a liquidation preference equal to principal
 
   amount, accumulated dividends equal to any deferred interest
 
   and, if the conversion value is greater than the principal
 
   amount, the net shares
 
    
Net Shares:
   The net shares shall equal the sum of the daily share
 
   amounts for each of the 20 consecutive trading days during
 
   the conversion reference period (as described in the
 
   preliminary prospectus supplement)
 
    
Preferred Stock Dividend Rate:
   3.0875% (65% of the coupon rate), subject to reset following
 
   any remarketing
 
    
Conversion Rate:
   16.1421 shares of common stock per $1,000 principal amount
 
   of convertible debentures, or an initial conversion price of
 
   approximately $61.95 per share
 
    
Conversion Premium:
   40% (based on a reference price of $44.25 per common share)
 
    
Conversion Make-Whole:
   Upon the occurrence of a non-stock change of control on or
 
   prior to December 20, 2036, the conversion rate may be
 
   increased by a number of additional shares determined based
 
   on the price paid per share of common stock in the
 
   transaction constituting a non-stock change of control and
 
   the effective date of such transaction, according to the
 
   following table:
                                                                                         
    Stock Price  
    $44.25     $50.00     $61.95     $70.00     $80.00     $90.00     $100.00     $150.00     $200.00     $250.00     $300.00  
Effective Date
                                                                                        
December 20, 2006
     6.4567       5.3046       3.7514       3.0841       2.4995       2.0869       1.7842       1.0135       0.6903       0.5082       0.3898  
December 15, 2007
     6.4567       5.0169       3.4396       2.7747       2.2044       1.8121       1.5315       0.8524       0.5813       0.4298       0.3311  
December 15, 2008
     6.4567       4.6806       3.0657       2.4003       1.8461       1.4792       1.2272       0.6639       0.4544       0.3377       0.2613  
December 15, 2009
     6.4567       4.3532       2.6590       1.9771       1.4323       1.0938       0.8770       0.4565       0.3154       0.2358       0.1832  
December 15, 2010
     6.4567       4.1037       2.2414       1.4958       0.9368       0.6315       0.4667       0.2344       0.1649       0.1239       0.0966  
December 15, 2011
     6.4567       4.0340       1.9783       0.9928       0.0443       0.0000       0.0000       0.0000       0.0000       0.0000       0.0000  
December 15, 2012
     6.4567       4.0195       1.9700       0.9883       0.0441       0.0000       0.0000       0.0000       0.0000       0.0000       0.0000  
December 15, 2013
     6.4567       4.0074       1.9627       0.9843       0.0439       0.0000       0.0000       0.0000       0.0000       0.0000       0.0000  
December 15, 2014
     6.4567       3.9967       1.9557       0.9803       0.0437       0.0000       0.0000       0.0000       0.0000       0.0000       0.0000  
December 15, 2015
     6.4567       3.9896       1.9504       0.9772       0.0436       0.0000       0.0000       0.0000       0.0000       0.0000       0.0000  
December 15, 2016
     6.4567       3.9853       1.9448       0.9730       0.0433       0.0000       0.0000       0.0000       0.0000       0.0000       0.0000  
December 15, 2021
     6.4567       4.0519       1.9726       0.9859       0.0439       0.0000       0.0000       0.0000       0.0000       0.0000       0.0000  
December 15, 2026
     6.4567       4.1903       2.0336       1.0147       0.0451       0.0000       0.0000       0.0000       0.0000       0.0000       0.0000  
December 15, 2031
     6.4567       4.3221       2.0831       1.0360       0.0459       0.0000       0.0000       0.0000       0.0000       0.0000       0.0000  
December 20, 2036
     6.4567       4.4722       2.1236       1.0508       0.0464       0.0000       0.0000       0.0000       0.0000       0.0000       0.0000  

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   Notwithstanding the foregoing, in no event will the total
 
   number of common shares issuable upon conversion exceed
 
   22.5988 per $1,000 principal amount
 
    
Call Feature:
   None prior to December 20, 2011
 
    
 
   Between December 20, 2011 and December 19, 2036, in whole or
 
   in part, at the par redemption price, if for at least 20
 
   trading days within the 30 consecutive trading days
 
   immediately prior to the call notice date, the closing sale
 
   price of the issuer’s common stock has exceeded 130% of the
 
   then prevailing conversion price
 
    
 
   On or after December 20, 2036, in whole or in part, at the
 
   par redemption price, irrespective of the above condition
 
    
Par Redemption Price:
   100% of the principal amount, plus accrued and unpaid interest
 
    
Initial Price to Public:
   100% of the principal amount of the securities, plus accrued
 
   interest, if any, from December 20, 2006
 
    
Issuer Proceeds before Expenses:
   $658,912,500
 
    
Joint Bookrunners:
   Lehman Brothers Inc., Morgan Stanley & Co. Incorporated and
 
   Citigroup Global Markets Inc.
(1) An explanation of the significance of ratings may be obtained from the rating agencies. Generally, rating agencies base their ratings on such material and information, and such of their own investigations, studies and assumptions, as they deem appropriate. The rating of the convertible debentures should be evaluated independently from similar ratings of other securities. A credit rating of a security is not a recommendation to buy, sell or hold securities and may be subject to review, revision, suspension, reduction or withdrawal at any time by the assigning rating agency.
The issuer has filed a registration statement (including a prospectus) with the SEC for the offering to which this communication relates. Before you invest, you should read the prospectus in that registration statement and other documents the issuer has filed with the SEC for more complete information about the issuer and this offering. You may get these documents for free by visiting EDGAR on the SEC Web site at www.sec.gov. Alternatively, the issuer, any underwriter or any dealer participating in the offering will arrange to send you the prospectus if you request it by calling toll-free 1-866-718-1649 or 1-888-603-5847 (institutional investors) or 1-800-584-6837 (retail investors).
Any disclaimers or other notices that may appear below are not applicable to this communication and should be disregarded. Such disclaimers or other notices were automatically generated as a result of this communication being sent via Bloomberg or another email system.

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