Biggest Private Coal Miner Goes Bust As Trump Rescue Fails




 

(Bloomberg) -- Robert E. Murray, the U.S. coal baron who pressed the Trump administration to help save America's struggling miners, placed his company into bankruptcy as demand for the fossil fuel continues to weaken.

Murray Energy Holdings Co. filed for Chapter 11 protection in the U.S. Bankruptcy Court in Columbus, Ohio, to restructure more than $2.7 billion of debt. The miner -- the largest privately owned U.S. coal company -- reached a restructuring support agreement with a group of lenders that provides a new $350 million loan to keep operations going during the reorganization, according to the court filing.

The move comes more than a year after the Trump administration's efforts to subsidize struggling nuclear and coal-fired power plants failed, shot down by Trump's own appointed energy regulators. Some of those plants were Murray Energy's customers. Robert Murray, a big donor to Trump's campaign, was instrumental in setting his energy agenda and has hosted multiple fundraisers.

The company said Tuesday that it named Robert Moore as president and chief executive officer of Murray Energy. Under the restructuring agreement, the lender group will form a new entity -- called Murray NewCo -- that would seek to acquire the company's assets, with Murray as chairman and Moore as CEO.

Waning Demand

The company's collapse underscores how deeply cheap natural gas and renewable energy resources have cut into coal's share of the U.S. power market. Cloud Peak Energy Inc., Cambrian Coal Co., Blackjewel LLC and Blackhawk Mining LLC have all filed for bankruptcy this year. Their downfall mirrors waning demand for fuel that as recently as 2003 accounted for more than half of all U.S. power generation.

Murray warned in 2017 that the shifts in the industry could push it into bankruptcy. The company initially chose to avoid that route and persuaded creditors to ease its debt load somewhat. But analysts said this left the company at a disadvantage with rivals because it remained saddled with high costs and interest expenses.

Murray Energy generated adjusted earnings before interest, taxes, depreciation and amortization (Ebitda) of $542 million in 2018, down from $574 million the prior year and $643 million in 2016, according to disclosures posted on the company's website. Revenue from coal was $2.5 billion in 2018, up from $2.2 billion in a year earlier, the documents show.

Obama Adversary

Murray listed almost 100 affiliates that were also filing for Chapter 11. Foresight Energy LP, a struggling St. Louis-based coal miner in which Murray bought a controlling stake, wasn't part of the proceedings, Murray said in a statement. Foresight skipped an interest payment this month and is evaluating its options.

Robert Murray, who began working in coal mines at 16 to support his family, founded his St. Clairsville, Ohio-based company in 1988 and has been one of the industry's biggest cheerleaders.

He led the fight against President Barack Obama's clean-air rules, filing numerous legal challenges and calling the Democrat "the greatest enemy I've ever had in my life." His company donated $1 million to a political action committee backing Trump's agenda in the 2018 election.

Kirkland & Ellis LLP is providing legal advice to Murray Energy. Evercore is Murray's investment banker, and Alvarez & Marsal is its financial adviser.

(Michael R. Bloomberg, the founder and majority stakeholder of Bloomberg LP, the parent company of Bloomberg News, has committed $500 million to launch Beyond Carbon, a campaign aimed at closing the remaining coal-powered plants in the U.S. by 2030 and slowing the construction of new gas plants.)

The case is Murray Energy Holdings Co., 19-bk-56885, U.S. Bankruptcy Court Southern District of Ohio (Columbus).

(Adds amount of debt being restructured in second paragraph and financial performance in seventh paragraph.)

To contact the reporters on this story: Steven Church in Wilmington, Delaware at schurch3@bloomberg.net;Will Wade in New York at wwade4@bloomberg.net;Jeremy Hill in New York at jhill273@bloomberg.net

To contact the editors responsible for this story: Rick Green at rgreen18@bloomberg.net, ;Lynn Doan at ldoan6@bloomberg.net, Shannon D. Harrington, Lynn Thomasson

For more articles like this, please visit us at bloomberg.com

©2019 Bloomberg L.P.

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