On October 29, Murray Energy and some of its subsidiaries filed for Chapter 11 in the U.S. Bankruptcy Court for the Southern District of Ohio. According to its parent company, Murray Energy Holdings Co., it entered into a Restructuring Support Agreement (RSA) with an ad hoc lender group holding more than 60% of the approximately $1.7 billion in claims under the company’s super-priority credit and guaranty agreement.
Voluntary petitions have also been filed for all of the company’s 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, which operate mining complexes located in Ohio, West Virginia, Utah, Kentucky and Colombia.
Foresight Energy LP and Foresight Energy GP LLC, including 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 company’s Chapter 11 cases.
This filing comes after MEC failed to make amortization or interest payments due to its major lenders on September 30. At that time, it entered into forbearance agreements with them. The lenders gave them until October 14 to resolve it.
The company 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, subject to bankruptcy court approval. Lenders party to the RSA have committed to provide the full amount of the DIP facility, and other lenders under the company’s super-priority credit and guaranty agreement will be given the opportunity to provide funding under the DIP facility, according to the company. 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.
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 the company’s assets by credit bidding its debt under a Chapter 11 plan, subject to an overbid process. The RSA contemplates that substantially all the company’s prepetition funded debt will be eliminated. The RSA further contemplates that Robert E. Murray will be named chairman of the board of Murray NewCo and Robert D. Moore will be president and CEO of Murray NewCo.
“We appreciate the support of our lenders for this process, many of whom have been invested with the company for a long time,” Moore said. “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.”
The company has filed first day motions with the court that when granted will enable day-to-day operations to continue uninterrupted.
Kirkland & Ellis LLP is acting as legal counsel to Murray Energy; Evercore is acting as investment banker; and Alvarez & Marsal is acting as financial advisor. Davis Polk & Wardwell LLP is acting as legal counsel and Houlihan Lokey Capital Inc. is acting as investment banker to the Ad Hoc Lender Group.