Cash-Strapped Coal Giant Murray Energy Faces Liquidation
(Bloomberg) -- Bankrupt coal miner Murray Energy Corp. could be forced to liquidate unless a federal judge lets it cut health-care payments to retirees, according to court papers.
Murray Energy, the largest private coal miner in the U.S., is asking the judge overseeing its Chapter 11 bankruptcy to let it shed certain health-care obligations in a bid to stave off a default under its bankruptcy loan and conserve cash, the court papers show.
Stopping the health-care payments would save the company $200,000 a day -- some $6 million a month -- and wouldn’t hurt the retirees because the benefits are backstopped by the U.S. government, according to the request.
“The bottom line is that if the debtors do not cut off these obligations in the near term, they will likely exhaust liquidity during these cases,” attorneys for the company wrote in the papers, adding that Murray Energy “may be faced with no choice but to begin a value-destructive enterprise-wide liquidation.”
Murray Energy has taken other steps to curb costs, including abandoning some employee bonuses, laying off or dismissing at least 540 employees and idling mines. In addition, Chief Executive Officer Robert D. Moore is now personally approving any expenditure greater than $25,000.
The troubles come as Murray Energy presses on with a plan to hand control to its major lenders, which as of Feb. 7 included Silver Point Capital LP, Bain Capital Credit LP and Eaton Vance Management, other court papers show. The company last week canceled an auction for its assets after receiving no other bids.
Murray Energy, a creation of U.S. coal baron Robert E. Murray, entered bankruptcy in October as demand for the fossil fuel eroded. Murray, a vocal supporter of U.S. President Donald Trump, previously pressed the administration to help save America’s struggling coal miners.
A representative for Murray Energy didn’t immediately respond to a request for comment.
The case is Murray Energy Holdings Co., 19-bk-56885, U.S. Bankruptcy Court Southern District of Ohio (Columbus).
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