Newspaper article St Louis Post-Dispatch (MO)

Business Digest

Newspaper article St Louis Post-Dispatch (MO)

Business Digest

Article excerpt

Peabody deal * Peabody Energy Corp. has reached an agreement with bondholders that will let it avoid issuing new shares or warrants to pay interest on some of its debt. While the company has ample cash to make interest payments, the bonds issued in 2006 contained a special covenant keeping it from using cash if its leverage increases beyond a certain point. Bloomberg reported last month the St. Louis coal miner was nearing those leverage thresholds on the $732.5 million in debt. The covenants also would have restricted Peabody's ability to pay dividends. In May, Peabody asked holders of the 4.75 percent notes due in 2066 to waive the requirements, offering bondholders $2.50 per $1,000 of the notes' principal to do so. On Friday, Peabody sweetened the terms, offering $15 per $1,000 of principal to the owners of the debt. If the bondholders hadn't agreed, Peabody would have been forced to potentially issue preferred shares or warrants to make interest payments, diluting existing stockholders. (Jacob Barker)

Steep GDP decline * The U.S. economy shrank at a steep annual rate of 2.9 percent in the January-March quarter as a harsh winter contributed to the biggest contraction since the recession five years ago. But the setback is widely thought to be temporary, with growth rebounding solidly since spring. The first-quarter contraction reported Wednesday by the government was even more severe than the 1 percent annual decline it had estimated a month ago. Much of the downward revision reflected an unexpectedly sharp drop in health care spending. Another factor was a bigger trade deficit than earlier estimated.

Regions settles * Regions Financial Corp. has agreed to pay $51 million in a settlement with federal and Alabama regulators over alleged faulty accounting of $168 million in loans that inflated the bank's income in financial reports. Regions, based in Birmingham, Ala., signed the settlement announced Wednesday with the Securities and Exchange Commission, the Federal Reserve and Alabama's Department of Banking. The so-called "deferred prosecution agreement" with Regions applies to its failure to maintain adequate controls over its accounting when the violations occurred in 2009. …

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