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the price of electricity still exceeds market prices by over fifty percent, even after recent <br />improvements in its operational performance. 31 <br />The existence of one or more SEC investigations related to Peabody's participation in Prairie <br />State raises questions about the transaction, as noted by some investment analysts 38 In <br />addition the communities of Batavia, Illinois and Hermann, Missouri have engaged counsel to <br />obtain relief from the take -or- pay contract provisions. Peabody is not named in either case. It <br />is, however, prominently mentioned as the driving force behind the deal in a citizen class <br />action suit filed by residents of Batavia, Illinois 39 <br />Although Peabody Energy has not declared any gains since 2012 on its S percent interest in <br />Prairie State it has stated that it achieved a modest profit with the sale of its interest in the <br />plant.40 This is hard to reconcile with Peabody's SEC filing showing the company invested $246 <br />million4l in the project and will receive $57 million back from the sale. <br />Peabody appears to be exercising its right to exit the Prairie State investment prior to its original <br />agreement to stay with the plant for at least the first five years of operation. <br />Asset Sales Provide Immediate Cash, But Have No longer Term Strategic <br />Plan and Will Undermine Market Recovery and the Company's <br />Reputation <br />The sale of distressed assets is unlikely to result in any substantial improvement in Peabody's <br />finances, Instead, it is likely to forestall difficult short term decisions and will be <br />counterproductive. <br />First, the proceeds from the sale are being used to generate a short term cash benefit. The <br />company claims to be using the cash from the sales for deleveraging of debt. However, the <br />cash comes in at a time when Peabody's mining activities are not generating sufficient cash <br />to cover expenses (including interest), declare a profit and finance sustaining capital <br />expenditure, let alone future growth. Peabody now must rely on a series of one-time revenue <br />infusions from the asset sales to maintain itself as a going concern. These actions push off more <br />difficult financial decisions. The action does not solve the company's debt problem nor is it <br />part of a strategic plan to correct the fundamental financial imbalances facing the company. <br />Second, the two mining transactions serve to exacerbate the current domestic and <br />international oversupply of coal. These distressed sales actually serve to recapitalize marginal <br />" A recent Fitch Rating on a Missouri refinancing of Prairie State debt notes that after recent operational performance <br />improvements at the plant it now produces electricity for $76 Mwh The report also discloses that if the plant reaches is 8590 <br />capacity level than the price will drop to the mid $60 s Mwh. <br />http /Iwww.businesswire.com/news/home/20160203006383/en/Fitch-Rates-Missouri-Joint-Muni-Electrio-Utditys. The original <br />bond statements projected a price of $44 Mwh and the current price of on peak power at MISO hubs ranged from $22 14 to <br />26.61 Mwh in January 2016 <br />http //seekingalpha com/article13835046- disclosure-games-peabody-energy-multiple-und sclosed-sec-probes-prairie-state- <br />woes <br />32 Michael Marconi, Richard Benson v Indiana Municipal Power Agency, Inc., Rajeshwar Rao, Sargent and Lundy LLC and <br />Skelley and Loy. Case No- 1 14 -CV -07291, Plaintiff Second Amended Complaint <br />40 Matt Bandyk, Sale of Stake in Praine State Shows problems with coal plant, group says, SNL, January 22, 2016 <br />41 http.//www.I>eabodyenergy.com/contentlI62/sec-fitings Form 10K-2012, February 25, 2013, p. F-55. <br />Peabody's Strategies for Survival Ignore Market Realities and Risk Backfiring <br />