Picture: 123RF/ARTUR NYK
Picture: 123RF/ARTUR NYK

Wilmington/New York — Robert E Murray, the US coal baron who pressed the Trump administration to help save America’s struggling miners, has placed his company into bankruptcy as demand for the fossil fuel continues to weaken.

Murray Energy Holdings filed for chapter 11 protection in the US bankruptcy court in Columbus, Ohio, to restructure more than $2.7bn of debt. The miner — the largest privately owned US coal company — reached a restructuring support agreement with a group of lenders that provides a new $350m loan to keep operations going during the re-organisation, according to the court filing.

The move comes more than a year after the Trump administration’s efforts to subsidise struggling nuclear and coal-fired power plants failed, shot down by US President Donald 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 on Tuesday that it named Robert Moore as president and CEO 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 chair 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 US power market. Cloud Peak Energy, Cambrian Coal, Blackjewel and Blackhawk Mining have all filed for bankruptcy in 2019. Their downfall mirrors waning demand for fuel that, as recently as 2003, accounted for more than half of all US 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 amortisation (ebitda) of $542m in 2018, down from $574m the prior year, and $643m in 2016, according to disclosures posted on the company’s website. Revenue from coal was $2.5bn in 2018, up from $2.2bn in a year earlier, the documents show.

Obama adversary

Murray listed almost 100 affiliates that are also filing for chapter 11. Foresight Energy, 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 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 $1m to a political action committee backing Trump’s agenda in the 2018 election.

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

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

Bloomberg