Peabody Energy Corporation (BTU)

[LouisDesyjr]

There is no way the common shares survive

The problem is that once the classes are setup for the reorg, the common shares will be at the bottom of the list in priority when the assets or rights to the assets are distributed to the classes. The problem is that to even get to the point where the existing common shares would be entitled to anything, the company needs another $4.5 billion in value for that to happen.

Even if coal prices recovered today, the gap is too large to get filled; plus coal prices are not going to recover for months and the reorg will be all over by then.

At best, and I would consider it a miracle, the existing common shares might get some warrants in the reorg plan, with a strike price set so that all of the other classes would have to be made whole at 100% before they had any real value, otherwise I am expecting the common shares will be wiped out in the reorg plan.

I did make a large percentage on the first day of trading after the company filed Chap 11 on $2 and $1.50 put options positions that I closed when the stock was in the $0.70s, so I will still be way up on the position if the $0.50 puts expire worthless; but anyone buying the shares at these levels with the hope that there will be value in the reorg plan is making a big mistake since the numbers are just not there.

Louis J. Desy Jr.