BY Fraser Tennant
With coal continuing to lose market share to natural gas and renewable fuels, US private coal miner Murray Energy has entered into a restructuring support agreement (RSA) with an ad hoc lender group in order to restructure more than $2.7bn of debt.
To implement the RSA, Murray Energy, including certain of its subsidiaries, has filed for Chapter 11 bankruptcy protection. The company intends to finance its operations throughout Chapter 11 with cash on hand and access to a $350m new money debtor-in-possession (DIP) financing facility, subject to bankruptcy court approval.
Lenders party to the RSA have committed to provide the full amount of the DIP facility. The proceeds will be used to refinance borrowings under Murray Energy’s existing credit facility and to support ordinary course operations, as well as payments to employees and suppliers throughout the restructuring process.
Furthermore, under the RSA, the ad hoc lender group has agreed to form a new entity – Murray NewCo – to serve as a ‘stalking horse bidder’ to acquire substantially all of Murray Energy’s assets by credit bidding its debt under a Chapter 11 plan, subject to an overbid process. The RSA contemplates that substantially all of Murray Energy’s prepetition funded debt will be eliminated.
The RSA further states that Mr Robert E. Murray will be named chairman of the board of Murray NewCo, as well as president and chief executive. Murray Energy founder Robert Murray, having stepped down as chief executive, will remain the company’s chairman.
“We appreciate the support of our lenders for this process, many of whom have been invested with the company for a long time,” said Mr Moore. “I am confident the DIP facility provides the company with adequate liquidity to get payments to our valued trade partners and continue operating in the normal course of business without any anticipated impact to production levels.”
Murray Energy was the fourth-largest coal producer in the US in 2018, with 46.4 million short tons of output.
Mr Moore concluded: “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.”
News: Murray Energy files for bankruptcy as U.S. coal decline continues