January 11, 2017

Judge Barry S. Schermer

United States Courthouse
Thomas Eagleton Federal Building
5th Floor, North Courtroom
111 S. 10th Street
St Louis Missouri 63102
Dear Honorable Judge Schermer:
I am writing in support of the motion by Mangrove
Partners Master Fund, Ltd. for an order appointing an
official committee of equity security holders (Docket
Number 1731). I am a private investor. I am not an
attorney, have not received legal advice, have not
received any help preparing this letter, and am not
represented by a lawyer or any bankruptcy experts. I am
just a simple Peabody shareholder trying to preserve my
lawful rights and protect as best I can the hard-earned
money that I have invested in Peabody.
Earlier in 2016, I owned approximately: a) $________in
face value of the 2026 Peabody notes (CUSIP 704549AF1)
(2026 Notes), b) call options expiring in January, 2018
giving me the right to buy approximately _______shares
of BTU at various strike prices, and c) a position in
Peabody common stock. I sold most of the Peabody notes
in ________. I also sold the call options rights in
_____________. I prematurely sold the 2026 Notes and
the options I held because Peabodys management
prematurely filed for bankruptcy in the 1st half of 2016.
My common stock position in Peabody is now about
_______shares.
I purchased these interests because I viewed Peabody
Energy as the largest and best coal company in the world.
I knew Peabody had financial difficulties, but in quarterly
earnings calls in late 2015 and early 2016, Peabodys
management continued to assure shareholders that they
had plenty of runway to meet cash flow requirements
with Peabodys cash balances, lines of credit, etc.
Furthermore, I had run my own economic models for
Peabody and was convinced that when energy prices
rebounded to normal levels, Peabody would generate

sufficient cash flow from operations to meet all its debt

obligations with enough left over to provide a good return
to its shareholders. Many of Peabodys financial difficulties
were short-term in nature due to unusually, temporarily
low energy prices following the collapse of oil prices in late
2015 and early 2016 after Saudi Arabias decision not to
support oil prices and to allow OPEC oil production to
increase at a time when the world oil market was already
slightly over-supplied. During 2016, world oil prices
collapsed from a 2015 high of ~$107/BBL to as low as
~$25/BBL. The decline in oil prices at this time carried
over to other energy products such as natural gas and
coal. Henry Hub U.S. natural gas prices dropped from an
annual average price of about ~$4.40/MMbtu in 2014 to
about $1.60/MMbtu in early 2016. This $1.60 price was
the lowest Henry Hub price for natural gas in almost 20
years. Oil and gas prices in early 2016 were extraordinarily low relative to historical prices and were
unsustainable because they were well below the
incremental cost of finding, drilling, and producing oil and
gas from new wells which are needed to 1) replace the
natural decline in oil and gas reservoirs, and 2) increase
production to meet ever-increasing world-wide demand
for oil and gas. Coal price crashed to unsustainable levels
in conjunction with the collapse of oil and gas prices in
late 2015/early 2016. Oil and natural gas prices have
doubled since their early-2016 lows. International
metallurgical coal prices have similarly doubled or tripled
from their early-2016 lows. Thermal coal prices have also
rebounded sharply from their early-to-mid 2016 lows.
Many oil, gas, and coal companies stock prices have
doubled, tripled and even quadrupled from the early-2016
lows. Furthermore, Peabody had in-place painfully
unfavorable hedges on the Australian dollar and diesel fuel
that contributed to their temporary stressed financial
position in early 2016. It is my understanding that by
2017, almost all of these unfavorable hedges have expired
so this should not be a problem for Peabody on a goforward basis.
Presented below are several of the reasons why I think

the court should establish an equity committee to

represent Peabodys common shareholders (ticker
BTUUQ):
1) The bankruptcy case is large and complex. In 2011,
when coal prices were not too dissimilar to where they are
now, Peabody had a market capitalization of ~$19 billion
(1). Wikipedia says this about Peabody, Peabody Energy
Corporation..is the largest private-sector coal company
in the world. The coal produced by Peabody Energy
fuels approximately 10% of the electricity generated in
the United States and 2% of electricity generated
throughout the world. In 2014, Peabody Energy recorded
sales of 249.8 million tons of coal. Peabody markets coal
to electricity generating and industrial customers in more
than 25 nations on six continents. As of December 31,
2014, the company had approximately 7.5 billion tons of
proven and probable coal reserves. Peabody currently has
about 18.5 million shares outstanding and secured and
unsecured debt in the neighborhood of $7 to $9 billion.
These statistics are large by almost any measure. As to
complexity, Peabodys term sheet summarizing its
restructuring
plan
dated
December
22,
2016
(Restructuring Proposal) is at least 84 pages long
including 1st lien secured creditors, 2nd lien creditors,
unsecured creditors, trade creditors, convertible note
holders, common stockholders, and several thousand
employees in several different countries and continents
among the stakeholders. The plan is overly complex and
involves discounted future stock rights, penny warrants,
and other financial vehicles, some of which appear to
require investment of substantial new capital by a select
group of Peabodys stakeholders (to the apparent
detriment of other equally ranked Peabody stakeholders)
which does not appear to be required for Peabody to meet
its financial or operational needs but adds to the
complexity of determining the real economic split of
values among varying classes of stakeholders.
2) There is an active market for the stock. Peabody is
actively traded on the OTC market. Yahoo Finance shows
that an average volume of 1,070,000 shares traded per

day over the last 3 months.

3) The stock is widely held: Yahoo Finance reports that
~300 institutions hold shares of Peabody and that 83.1%
of Peabody shares (and 83.57% of the share float) are
held by institutional and mutual fund owners, while 0.6%
are held by: a) insiders, and b) 5%+ owners. That would
mean that about 16% of the shares, or about 3 million
shares, are held by people or entities that are not
institutions, mutual funds, insiders, or 5%+ owners.
4) The case is timely: It is my understanding that a large
percentage of the debt holders and management are
trying to rush this case through the bankruptcy court in
an effort to leave the jurisdiction of the bankruptcy court
on an overly-expedited timetable which does not give all
the parties time to obtain, and possibly refute, all the
information, facts and assumptions required to determine
the reasonableness of the Restructuring Proposal. Since
the case is large and complex with many players and
moving parts and it does not appear that management is
backing the current shareholders interests, the case is
very timely as to current Peabody shareholders.
5) Peabody is not hopelessly insolvent It is my belief
that Peabody could generate at least an average of $2.0
billion of EBITDA per year in 2017 and 2018, and
therefore could have an enterprise value of $10 billion or
more based on a 5x multiple of EBITDA. This amount of
EBITDA could meet all of BTUs cash flow needs in 2017
and provide a reasonable basis for refinancing BTU with all
debtors receiving 100% on the dollar as to their claims
with enough cash and EBITDA to meet all 2018 cash flow
requirements. The court and shareholders need full
disclosure by management of actual cash flow in
December 2016 and January 2017 and an independently
created and/or reviewed realistic projection of Q1 2017
cash flow before determining the companys enterprise
value. It is my understanding that a $10 billion enterprise
value would be over twice the enterprise value that is
contained in the Restructuring Proposal. A much larger
enterprise value would radically change the Restructuring
Proposal and would leave remaining value to the

shareholders, which have been excluded from recovery in

the Restructuring Proposal. It is my understanding that
the coal prices used in the Restructuring Proposal are
close to the abysmally and unsustainably low prices that
prevailed at the start of 2016 and not reflective of current
coal prices or those traditionally received in the past or
that should reasonably be expected to be received in the
future. For example, it is my understanding that the
enterprise value established in the Restructuring Proposal
was based on Australian metallurgical coal prices which
are approximately to 1/3 of Peabodys Australian
metallurgical coal price today and of the price that
Peabody has traditionally received and could reasonably
be expected to receive in the future. A completely
independent review of the coal prices used to establish
the Peabody enterprise value needs to be performed, and
all affected parties, including Peabody shareholders, need
to have a voice in that process. Otherwise, certain parties
(such as shareholders) might be left completely devoid of
their rights to share in the value of Peabody which should
be much higher today than it was at the time Peabody
filed for bankruptcy due to higher prices and the
stabilization of energy and financial markets that has
occurred since Peabody filed for bankruptcy protection.
6. There is a reasonable chance for meaningful recovery
by shareholders. If after a more thorough and unbiased
analysis using past, current and reasonably projected
futures prices, Peabodys enterprise value is determined to
be closer to $10 billion than the $4+ billion contained in
the Restructuring Proposal, all debts could be retired at
face value and one to two billion dollars could be left for
shareholders. With 18.5 million common shares
outstanding, that could result in a share value of $50 to
$100 per share vs. the current share price trading range
of $2 to $15 per share. Even if the enterprise value were
to be set at a level less than $10 billion, but more than
that in the Restructuring proposal, there could be some
value left over for shareholders depending on the ability to
refinance some of Peabodys existing debt or sell some of
Peabodys assets now that energy prices are higher and

financial markets have stabilized.

7. Shareholders needs outweigh the costs: If Peabodys
enterprise value were to be set at $10 billion, the $1
billion to $2 billion left over for the shareholders after
paying off debt, would greatly outweigh the cost of a)
establishing an equity committee, and b) making the
process of establishing the enterprise value an open and
fair process for all current and prospective stakeholders in
the Peabody bankruptcy process. As mentioned in item 6
above, even if the enterprise value were to be set at a
level less than $10 billion there could be some material
value left over for shareholders that would greatly
outweigh the costs of establishing an equity committee.
8. Shareholders cannot be adequately represented without
an official equity committee: It is my understanding,
under the Restructuring Proposal, Peabodys management
is set to receive up to 10% of the new shares of Peabody
(versus managements current 0.60% ownership) while
current Peabody shareholders get nothing. It is clear that
Peabodys management has abandoned its shareholders,
discarded its fiduciary duty to its equity holders, and in
coordination with certain debt holders, is grossly pursuing
its own self-enrichment all at the expense of common
stock holders, convertible note holders, and small,
unsecured debt holders.
The only way Peabodys current shareholders can have
any meaningful voice in the process and receive the
necessary information along with the necessary time to
act to secure their rights, is for the court to establish an
equity committee. I strongly encourage the court to act
fairly in accordance with the law and set up an equity
committee.
Sincerely,