Exhibit 99.1

MILBANK, TWEED, HADLEY & M^cCLOY LLP

VIA ELECTRONIC DELIVERY

Heather Lennox

Jones Day

901 Lakeside Ave

Cleveland, OH 44114

Phone: (216) 586-7111

Email: hlennox@jonesday.com

Re: Peabody Energy Corporation

Dear Heather:

We are in receipt of your letter, dated January 24, 2017, in response to our Revised Proposal dated January 21, 2017. As an initial matter, we continue to be disappointed by the Debtors’ willingness to only indicate problems with our proposal, without any suggestions on how those problems might be solved. Put simply, there is $1.77 billion of fully committed equity capital available to the Debtors on significantly better terms than the equity funding under the Current Plan.

We find it, at best, one-sided that your evaluation of our proposal seems focused on only those recoveries that you can conclude through your analysis are inferior and ignore any of the clearly superior aspects of our proposal to your other constituencies that deserve equal consideration.

The analysis of the Current Plan versus the Revised Proposal seems intentionally restricted to a narrow range of TEVs of $4.25 - $4.90 billion when all objective indications are that a wider range is warranted. Indeed, in its own August Business Plan, the Debtors forecasted 2017 EBITDAR of $479 million; in its November Business Plan, the Debtors forecasted 2017 EBITDAR of $811 million; and in the Disclosure Statement Exhibit filed in January 2017, the Debtors forecasts 2017 EBITDAR of $1.132 billion. Since August, the Debtors have changed their forecast of 2017 EBITDAR by $653 million. In light of the volatile coal environment, we believe it is appropriate to analyze the Current Plan and the Revised Proposal at much wider and more appropriate valuation ranges.

The Debtors need look no further than the market for an indication that it should at the very least consider other valuations when assessing the consideration to be provided to its creditors. In the thirty days preceding the filing of the plan of reorganization, the market value of unsecured senior notes traded at a price ranging from 54 cents to 76 cents, which at its midpoint implies a TEV in excess of the TEV utilized by the Debtors. Given those market prices, it is difficult to comprehend how the Debtors could view any TEV greater than of $5 billion as unsupportable.

As you know, we have offered to attend in-person meetings in St. Louis or wherever else might be convenient for you and the management team so that we could attempt to quickly and efficiently resolve the Debtors’ concerns surrounding our committed capital and construct a plan of reorganization that puts such capital to work in an equitable and value-maximizing way for the benefit of all creditors.    

We submit that appropriate engagement by the Debtors might allow us to fully resolve those concerns. Thus, our offer to meet in person or by phone and work through the night if necessary remains open. Principals from Solus and Och-Ziff will be in St. Louis for Thursday’s hearings and are more than happy to extend their stay to facilitate those meetings. We would be happy to contact chambers with you to request an adjournment of this Thursday’s hearing to allow those discussions to occur.    

We will follow up with revised documents as quickly as we can, but in the interest of time, we wish to convey the following:

We also respond to each of your issues raised below. As you will see, we believe that there are errors in your analysis, which is all the more reason for an in-person meeting so that we can ensure there are no misunderstandings.

We hope that the above modifications will finally cause the Debtors to engage in a more robust and appropriate manner.    

In addition, as you know, we believe that the alleged support for the Current Plan is tainted. In our pleadings, we have requested that you permit all non-Creditor Co-Proponent PSA parties to be heard regarding whether they actually support the Current Plan. If you provide a meaningful opportunity for PSA parties to come forward without penalty and for such creditors to ratify their support for the Current Plan in numbers that are sufficient to garner 2/3rds support for the Second Lien and Unsecured Note treatment, we will withdraw all objections to the approval of the PSA and BCA.

				January 24, 2017 | 10 Pages
		High Yield Research		CREDIT NOTE

Peabody Energy (BTU)

Source: Bloomberg, Company filings, Stifel Estimates

Prices are intraday 1/24/17.

Erratum: The note issued yesterday contained an error which resulted in incorrect calculated recoveries. The corrections are noted herein.

Company Description    

Peabody Energy Corporation is one of the largest private-sector coal companies. BTU owns interests in 28 active coal mining operations located in the United States and Australia. In addition to their mining operations, the company markets and brokers coal from operations and other coal producers, both as principal and agent, and trade coal and freight-related contracts through trading and business offices in China, Australia, the United Kingdom, Germany, Singapore, India, Indonesia and the U.S. The company filed for bankruptcy on April 13, 2016. The Plan of Reorganization was filed on December 22, 2016, and a Competing Plan, from Non-Consenting Bondholders was filed on January 23, 2017.

Thesis

The Competing Plan provides for better overall class recoveries since the Competing Plan eliminates the egregious economics benefitting the Initial Parties. We calculate Phase 2 Unsecured Bond recoveries of 72-89 in the Original Plan improve to 88-110 under the Competing Plan. Non-PSA should be trading higher following the disclosure of the Competing Plan due to the optionality the Original Plan is rejected by the court, or to the extent PSA support may collapse.    

The Competing Plan proposes reinstatement of the 2L Notes or receiving $750MM cash and 17.4% of Reorg BTU stock (pre-dilution from rights/warrants, we estimate ~4% of total equity post management dilution). The 2L Notes do not participate in the Rights Offering. We calculate Phase 2 2L Bond recoveries of 92-102 in the Original Plan improve to 104-108 under the Competing Plan.

Our thesis on coal remains intact. With fewer regulatory headwinds, natural gas at $3+/MMBTU, higher seaborne coal pricing, and our belief the U.S. basins are tightening, we have a constructive outlook for the coal market. We continue to expect multiple expansion, increasing cash flow outlooks, and further improvement in sector sentiment. We acknowledge spot met pricing has declined over $100/tonne since December, and believe the next catalyst for met coal will come at the end of the Chinese heating season, in March, when China will determine if mining days will be curtailed to 276 days. We are also constructive on China met demand, as the government is shutting induction furnaces, which produced 40-50MM tonnes of steel in 2016. That steel demand will be met by BF’s, equating to additional met demand of nearly 30MM tonnes.    

Using a LT met price of $145/t, and giving the benefit of 2017 FCF generation, we estimate BTU is trading at ~5.0x $145/mt met (on Original Plan economics), as compared to 2.9x for Contura and 3.8x for Arch. While optically rich on an EBITDA multiple, we estimate BTU’s after tax FCF to equity to be 14%, while ARCH and CNTE are at 13% and 14%, respectively. We believe the higher EBITDA multiple is supported by the FCF/equity metric. On an operating basis, we prefer BTU due to its lowest cost PRB operations, cleanest leverage to the seaborne met coal market, BTU having a history of trading at a premium to the sector, and positive technicals which we expect to result from BTU being the largest pure-play coal equity.

Any Important Disclosures regarding Price Target Risks, Valuation Methodology, Regulation Analyst Certification, Investment Banking, Ratings Definitions, and any potential conflicts of interest begin on Page I of the Appendix Section.

Past performance is no guarantee of future results.

Competing Plan Overview

Around January 17, 2017, the Non-Consenting Bondholders (which includes Balyasny, Och-Ziff, Pine River, Solus, Sound Point, AMCI Group, Citadel, JAZ Ventures, Scopia, TIG Advisors and York, as well as Mangrove as an equity holder) submitted a restructuring proposal to BTU. On January 23, details of the proposal were filed with the SEC. The Competing Plan has superior economics for all parties, with the exception of the Initial Parties, as defined in the December 22 Plan. The Competing Plan contemplates par+ recoveries for the 2L bonds, enhanced unsecured bonds distributions, as well as warrants for the converts and equity which have strike prices once senior classes recognize par recoveries.    

Pro forma debt balances and unrestricted cash balances are comparable in both plans, so the substantive difference are 1) the plan value ($4.275BN vs $6.75BN), 2) the economics for the proponents of the 2 plans, and 3) redistribution of value from Initial Parties and to the general 2L and unsecured bonds. We walk through the Competing Plan, in a similar manner as our January 4, 2017 BTU report and include tables showing the recoveries for the various classes within the 2 plans.    

The Competing Plan is far more equitable for the unsecured & 2L bondholders who are not fortunate enough to be an Initial Party. We also note that the Competing Plan shoots a shotgun, no, a bazooka sized hole in the Debtors argument in support of the Original Plan, “Obtaining commitments for an equity investment in a coal company of the magnitude that is contemplated by the Private Placement Agreement and the Backstop Agreement — $1.5 billion — is nothing short of extraordinary.” What we find extraordinary is a competing plan has been presented raising more capital at a TEV which is nearly $2.5BN greater. The Original Plan’s rights offering discount is at a 45% to Plan equity Value, whereas the Competing Plan is at a 45% discount to Plan TEV. All table and recoveries corrected for Competing Plan discount to Plan TEV.

Exhibit 1: Comparison of Unsecured Recoveries

		Page 2

We make adjustments to the Company’s sources & uses to arrive at estimates which can be seen in Exhibit 3. In the plan assumptions, the 1Q17 met coal assumption is $175/mt, while the quarterly benchmark settled for $285/mt. The incremental cash flow is $232MM, which is not reflected below, but which could result in a lower PF debt balance.

Exhibit 3: Sources & Uses

Source: Stifel, company reports

Exhibit 4: Peabody Liabilities Subject to Compromise & Capitalization – 9/30/16 ($MM)

Source: Stifel, company reports

		Page 3

While proposed share counts were not disclosed, we utilize our old plan analysis as a backbone, and an assumed $25/share plan value to drive share count and to derive illustrative equity economics, as presented in Exhibits 5, 6 & 7.

Exhibit 5: Competing Plan Illustrative Allocation of Equity

Source: Stifel, company reports

Based upon the share count, taking into account an estimated 10% management dilution, we arrive at the following TEV Multiple/Share price analysis. These multiples are the same as in our January 4, 2017 report.

Exhibit 6: TEV Multiple/Share Price Analysis

Source: Stifel, company reports

		Page 4

The following exhibit contains our estimated distributions of shares and rights.    

Exhibit 7: Capital Issuance Distribution & Shares to Unsecured & 2L Bonds

Source: Stifel, company reports

The unsecured bond valuation is much more straight forward than in the Original Plan, and the economics across the class is uniform, whereas the Original Plan has 1) Initial Parties, 2) Phase 2, and 3) non-Phase-2 parties. We include our calculated recoveries under the Original Plan as a point of comparison. We utilize a share count which is diluted for a 10% management incentive program. We also note the original plan share count does not take into account make-whole shares relating to the preferred shares, which further lowers Original Plan recoveries, and widens the differential between the Original Plan and the Competing Plan.

		Page 5

Exhibit 8: Competing Plan vs. Original Plan Unsecured Bondholder Recoveries ($MM)

The clear conclusion is bondholders recognize far better recoveries at identical TEV’s under the Competing Plan.

Similar to the unsecured valuation, the Competing Plan provides for a straightforward 2L recovery. We assume bondholders take $750MM cash and equity for our analysis. All 2L bonds are treated the same, whereas the Original Plan has 1) Initial Parties, 2) Phase 2, and 3) non-Phase-2 parties. We include our calculated recoveries under the Original Plan as a point of comparison. We utilize a share count which is diluted for a 10% management incentive program. We also note the Original Plan share count does not take into account make-whole shares relating to the preferred shares, which further lowers Original Plan recoveries, and widens the differential between the Original Plan and the Competing Plan.    

		Page 6

Exhibit 9: Competing Plan vs. Original Plan 2L Bondholder Recoveries ($MM)

Source: Stifel, company reports

We draw the same conclusion as with the unsecured analysis. The Competing Plan enables far better recoveries to 2L bondholders than in the Original Plan, at identical TEV’s.

Relative Value

While optically BTU is trading at 5.0x year-end 2017 (on Original Plan non-PSA economics) using $145/mt met, which is higher than both CNTE and ARCH, we believe the premium is warranted. First, BTU has a lower capex outlook than CNTE, allowing for more FCF generation. Specifically, BTU and ARCH commit 13-14% of EBITDA to capex, while CNTE has 37% of EBITDA going to capex. The after tax FCF yield to equity for BTU, ARCH and CNTE are all in the 12-14% range, which supports our belief that the high EBITDA multiple for BTU is warranted. On a relative value basis across the three, we prefer BTU due to the following considerations: 1) we expect BTU to be widely covered, 2) BTU should have more liquid shares, 3) larger equity shareholder base, 4) superior leverage to seaborne met, 5) lowest cost PRB operations, and 6) lower capex business model, allowing for more FCF.    

To the extent the Competing Plan prevails, the Unsecured recovery becomes ~75 at Plan Value (vs ~63 Original Plan Phase 2) and the 2L recover is ~109 at Plan Value (vs. ~85 Original Plan Phase 2), on management diluted share count. The multiple and the EBITDA outlook all remain unchanged. All that’s occurred is a return of enterprise value from the Initial Parties.

		Page 7

Exhibit 10: Comparable Trading Multiple Analysis ($MM)

Source: Company report, Stifel

Risk Factors

		Page 8

APPENDIX SECTION

This material is prepared by the Fixed Income Research Department of Stifel Nicolaus & Co (“Stifel”) and intended for Institutional Use Only and is not intended for use by retail clients. This material is for informational purposes only and is not an offer or solicitation to purchase or sell any security or instrument discussed herein. The information contained is taken from sources believed to be reliable, but is not guaranteed by Stifel as to accuracy or completeness. The opinions expressed are those of the Fixed Income Research Department and may differ from those published by other departments that produce similar material and are current as of the date of this publication and are subject to change without notice. Past performance is not necessarily a guide to future performance. Additional Information Available Upon Request.

The debt research analyst receives compensation based upon (among other factors), the firm’s investment banking, sales and trading or principal trading revenues.

Stifel intends to seek or expects to receive compensation for investment banking services from Peabody Energy in the next three months.

Stifel trades or may trade as principal in the debt securities of Peabody Energy.

Stifel Nicolaus & Co is a broker-dealer registered with the United States Securities and Exchange Commission and is a member FINRA, NYSE & SIPC.

I, Nicholas Jarmoszuk, certify that the views expressed in this research report accurately reflect my (our) personal views about the subject securities or issuers; and I, Nicholas Jarmoszuk, certify that no part of my (our) compensation was, is, or will be directly or indirectly related to the specific recommendation or views contained in this research report.

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		Appendix Section, Page 1

STIFEL HIGH YIELD RESEARCH COVERAGE

		Appendix Section, Page 2