Murray Energy declares bankruptcy, shifts founder Bob Murray to board chairman role

Source: WV MetroNews

October 29, 2019

CHARLESTON, W.Va. — Murray Energy, an economic and political powerhouse in West Virginia, has declared bankruptcy.

Under a reorganization proposal, Robert Moore would become president and chief executive of the newly-formed Murray NewCo. Moore has already been executive vice president, chief operating officer and chief financial officer at the company.With the declaration, the company has also announced a change in leadership.

Founder Bob Murray would become chairman of the board.

“Although a bankruptcy filing is not an easy decision, it became necessary to access liquidity and best position Murray Energy and its affiliates for the future of our employees and customers and our long term success,” Bob Murray stated today.

The bankruptcy plan was announced today, but has been rumored for weeks.

Murray Energy announced in early October that it had struck a temporary agreement with lenders after missing debt payments. That agreement was extended until Oct. 28.

At the center of a Chapter 11 bankruptcy filing is a reorganization plan with an ad hoc lender group with more than 60 percent of about $1.7 billion in claims.

Murray intends to continue operations during Chapter 11 with cash on hand plus $350 million new money from the lending group, subject to bankruptcy court approval.

The lender group intends to form a new entity, Murray NewCo, to eventually take over the company.

Voluntary bankruptcy petitions have also been filed for all of the company’s main operating subsidiaries.

Those include American Energy Corporation, The Harrison County Coal Company, The Marion County Coal Company, The Marshall County Coal Company, The Monongalia County Coal Company, The Ohio County Coal Company, UtahAmerican Energy, Inc., Murray South America, Inc., The Muhlenberg County Coal Company and The Western Kentucky Coal Company, LLC, which operate mining complexes located in Ohio, West Virginia, Utah, Kentucky and Colombia.

Not filing voluntary petitions and not part of the company’s Chapter 11 cases were Foresight Energy LP  and Foresight Energy GP LLC, including their direct and indirect subsidiaries, as well as Murray Metallurgical Coal Holdings, LLC, Murray Eagle Mining, LLC, Murray Alabama Minerals, LLC, Murray Maple Eagle Coal, LLC, Murray Alabama Coal, LLC and Murray Oak Grove, LLC.

Moore, the incoming president, said he is confident the plan provides adequate liquidity to continue operating normally without affecting production.

“We appreciate the support of our lenders for this process, many of whom have been invested with the Company for a long time,” Moore stated.

Murray Energy produces 76 million tons of high quality bituminous coal each year, and employs nearly 7,000 people in six states, and Colombia, South America.

The company operates 15 active mines in five regions in the United States.

Murray Energy, like other coal companies, has been affected by declining prices for thermal coal brought on by decreased demand from power plants that are increasingly turning toward other energy sources such as natural gas, Lucas Pipes, a coal analyst with B Riley FBR Inc., told Bloomberg.

“You can’t make payments out of thin air if the money isn’t in the bank,” Pipes told the business publication last month.

Eight major U.S. coal producers have filed for bankruptcy since November 2017, including five this year.

Bob Murray has been an active backer of conservative politics, both in West Virginia and nationally.

Bob Murray personally hosted a fundraiser in July for President Donald Trump in Wheeling, near the company’s St. Clairsville, Ohio, headquarters.

Two of the largest donations so far to Gov. Jim Justice’s re-election campaign — $2,800 for the primary and another $2,800 targeted toward the General Election — have come from the Murray Energy Political Action Committee.

Murray has often used his political platform to push for breaks for the coal industry.

Some federal options to provide financial relief for coal companies — including a proposal frequently backed by Governor Justice to push coal purchases in case of national emergency to assure supply to the energy grid — have not moved forward.

Murray was critical of the Federal Energy Regulatory Commission for its rejection of a rule that would have subsidized coal and nuclear power plants.

In West Virginia, legislators passed a bill last year to lower the severance tax on steam coal from 5 percent to 3 percent over a period of years.

The change will amount to a $60 million reduction of state revenue in the third year.

But Governor Justice, signing the bill earlier this year at a Harrison County mine owned by Murray Energy, said the tax cut would help coal companies and the miners they employ.

Without such a tax decrease, Justice said at the signing ceremony, there would be a risk of some companies closing their doors.

“If they decide they’re not going to do anymore, then you know what happens? 55 companies declare bankruptcy,” the governor said at the time.

“We can’t do without these jobs. There’s no way around it. The multiplier effect of a coal miner’s job is astronomical. At the end of the day, we need to do everything in our power to preserve it, and that’s what I’m trying to do.”

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