Murray Energy files bankruptcy to implement agreement with lenders

By Caroline Salls

Pittsburgh, Oct. 29 – Murray Energy Holdings Co. filed Chapter 11 bankruptcy Tuesday in the U.S. Bankruptcy Court for the Southern District of Ohio to implement a restructuring support agreement reached with a group holding more than 60% of the $1.7 billion in claims under its super-priority credit and guaranty agreement, according to a news release.

Murray said Chapter 11 petitions have also been filed for all of its main operating subsidiaries, including American Energy Corp., Harrison County Coal Co., Marion County Coal Co., Marshall County Coal Co., Monongalia County Coal Co., Ohio County Coal Co., UtahAmerican Energy, Inc., Murray South America, Inc., Muhlenberg County Coal Co. and Western Kentucky Coal Co., LLC. These units operate mining complexes located in Ohio, West Virginia, Utah, Kentucky and Colombia.

Foresight Energy LP and Foresight Energy GP LLC and 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 are not part of the Chapter 11 cases.

DIP financing

Murray Energy said it intends to finance its operations throughout Chapter 11 with cash on hand and access to a $350 million new-money debtor-in-possession financing facility to be provided by lenders that are party to the restructuring support agreement.

The proceeds of the DIP facility will be used to refinance borrowings under the company’s existing ABL credit facility and to support ordinary course operations and payments to employees and suppliers throughout the restructuring process.

The DIP facility will mature on the earliest of nine months following the bankruptcy filing date, the effective date of a plan of reorganization, the closing of a sale of all or substantially all of the company’s assets and the date of acceleration or termination of the facility.

Interest will accrue at a rate of Libor plus 1,100 basis points.

Restructuring terms

Under the restructuring support agreement, the lender group will form a new entity (Murray NewCo) to act as a stalking horse bidder to acquire substantially all of the company’s assets by credit bidding its debt under a Chapter 11 plan, subject to an overbid process. The agreement calls for substantially all of Murray Energy’s pre-bankruptcy funded debt to be eliminated.

DIP term loan claims will be paid in full in cash or converted into exit financing.

DIP first-in last-out claims will be paid in cash.

If Murray NewCo is the winning bidder for the company’s assets, holders of super-priority credit agreement claims will receive equity interests in Murray NewCo. If Murray NewCo is not the winning bidder, these claims will be paid in full in cash.

Holders of term loan claims, 1.5-lien notes claims, second-lien notes claims and general unsecured claims will receive a share of a distribution t which it is legally entitled after payment in full of the DIP lender claims, super-priority claims and required plan payments.

Ongoing trade partner claims will be paid in full, to the extent not already paid in the ordinary course.

The company said founder Robert E. Murray will be named chairman of the board of Murray NewCo, and Robert D. Moore will be president and chief executive officer.

“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,” Robert E. Murray said in the release.

The company filed first-day motions with the bankruptcy court that will enable day-to-day operations to continue uninterrupted.

Debt details

According to court documents, Murray Energy has $1 billion to $10 billion in both assets and debt.

The company’s largest unsecured creditors are Joy Global of Milwaukee, with a $31.38 million trade claim; Jennmar Corp. of Pittsburgh, with a $27.71 million trade debt claim; CB Mining, Inc. of Washington, Pa., with an $11.93 million trade debt claim; Jeffrey C. Hurt of Pepper Pike, Ohio, with a $10.95 million trade debt claim; GMS Mine Repair & Maintenance of Mountain Lake Park, Md., with a $9.36 million trade debt claim; Coastal Drilling East, LLC of Mt. Morris, Pa., with a $9.21 million trade debt claim; Anderson Excavating LLC of Morgantown, W.Va., with an $8.87 million trade debt claim; Industrial Commercial Residential of Bellaire, Ohio, with a $6.11 million trade debt claim; Swanson & Morgantown of Morgantown, W.Va., with a $5.88 million trade debt claim; and R M Wilson Co. of Wheeling, W.Va., with a $5.51 million trade debt claim.

Kirkland & Ellis LLP is acting as legal counsel to Murray Energy, Evercore is acting as investment banker and Alvarez & Marsal is acting as financial adviser.

Murray Energy is a Saint Clairsville, Ohio, coal company. The Chapter 11 case number is 19-56885.

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