Murray Energy Files For Chapter 11 Protection
Murray Energy, the nation’s largest independent coal producer, filed for Chapter 11 protection October 29 after missing several rounds of payments to creditors.
The company has entered into a restructuring support agreement with lenders holding some $1.7 billion in liabilities. A group of creditors has provided $350 million to allow the company to operate while in bankruptcy. The company said it intends to continue operating all its facilities during the reorganization.
As part of the reorganization, 79-year-old CEO Robert Murray will step aside and turn over control of the company he founded to its current chief operating officer and chief financial officer, Robert Moore. Murray will chair the board of Murray NewCo. In a court filing, Moore said, “Although Murray has been able to outlast many of its competitors, mounting debt and legacy liability expenses have become too heavy of a burden to sustain under current industry conditions. The company has exhausted all options and liquidity.”
Murray Energy is based in St. Clairsville, Ohio, and operates mines in Illinois, West Virginia, Kentucky and Alabama. In total, Murray operates 15 active mines with 12 underground longwall mining systems and 42 continuous mining units. Robert Murray invented longwall mining, a technique that uses specially designed machines to mine long seams of coal more safely and efficiently than prior methods.
Murray’s inland towing service subsidiary, Murray American River Towing Inc., based in Monessen, Penn., operates 12 towboats and will continue operations as usual.
In a March 2017 interview with The Waterways Journal, Murray said, “Everything we do at Murray Energy is related to water transportation.” Finding mines close to low-cost water transportation was a key part of his strategy, he said.
By aggressively betting on the future of coal at a time when companies like Consol were seeking to exit the coal space, Robert Murray accepted a self-appointed role of the coal industry’s advocate and “bulldog,” as a financial publication named him in 2013. Known for his outspoken support of President Trump, Murray donated hundreds of thousands of dollars to Trump’s campaign funds and aggressively lobbied the Trump administration to reverse Obama-era policies against coal. He filed a wave of lawsuits against the federal government to stop new regulations intended to reduce demand for coal, some of which reached the Supreme Court.
In addition to lobbying against unfriendly coal regulation, Murray sought to pivot the company more toward exports of metallurgical coal in recent years, taking on debt to finance acquisitions. In 2013, Murray Energy bought Consol Energy Inc’s. assets in 2013 for $3.5 billion. Murray also bought a controlling stake in Foresight Energy LP and acquired Armstrong Energy Inc. assets last year in the Illinois Basin, a region well-positioned for the export market.
But ultimately the company could not overcome the downturn in the coal market resulting from abundant supplies of cheap natural gas due to hydraulic fracturing, along with a growing public turn away from coal and toward cleaner forms of energy.
Murray Energy is the fifth coal producer to have sought bankruptcy protection this year, including Blackjewel LLC, based in West Virginia; Cloud Peak Energy, based in Wyoming; Cambrian Coal Company; and Blackhawk Mining LLC. It is the last coal producer that had been contributing to the United Mine Workers’ pension fund.
As recently as 10 years ago, coal still provided almost half of U.S. energy. According to the U.S. Energy Information Administration, in 2018, coal provided 27.5 percent of all U.S. power generation, with natural gas providing 35.2 percent and renewables providing 16.9 percent.