Murray Energy OK’d to transfer retiree health payments to cut costs

By Caroline Salls

Pittsburgh, April 15 – Murray Energy Holdings Co. obtained court approval of an interim modification of the National Bituminous Coal Wage Agreement of 2016 that will suspend the Murray debtors’ obligations to pay for retiree healthcare under the Murray Energy Corp. Individual Employer Plan, according to an order filed Tuesday with the U.S. Bankruptcy Court for the Southern District of Ohio.

Murray said it sought an interim suspension of the agreement “because of the unprecedented market downturn, which has necessitated an urgent need for cost savings, and the recent legislation that protects the debtors’ retirees.”

The company said the suspension would not impact retirees because the Murray debtors’ obligations are backstopped by the U.S. Treasury.

In addition, Murray said it is taking steps to facilitate the transition of the union retirees from the Murray to its 1993 plan to ensure there is no gap in benefit coverage.

The company said it is not currently seeking interim relief to withdraw from its 1974 Pension Plan before the closing of its asset sale or asking the United Mine Workers of America (UMWA) to waive the debtors’ unpaid obligations to contribute to the 1974 Pension Plan for hours that UMWA members have worked under that plan.

“The deteriorating coal markets, global economic crisis and costly Chapter 11 proceedings have wreaked havoc on the debtors’ financings,” the motion said. “Forecasts once thought conservative were re-written and, then weeks later, re-written again.”

Murray said the debtors have just $6 million of cash on hand, and, while they also have untapped liquidity under their debtor-in-possession facility, access to those funds is in jeopardy because the unused DIP funds are in escrow.

To access those funds, the company said the debtors must not be in default on financial covenants. However, Murray said the debtors are concerned that they may default on one or more of those covenants in light of recent, negative financial performance.

Even if they maintain access to the unused DIP funds, Murray said the debtors project just $30 million at emergence, “which is insufficient to responsibly manage the business in this (or any) environment.”

The company said the suspension would save it about $200,000 per day.

“The debtors desperately need interim relief to get to the finish line,” the motion said.

Murray Energy is a Saint Clairsville, Ohio, coal company. The company filed bankruptcy on Oct. 29 under Chapter 11 case number 19-56885.

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