COAL

Robert Murray out as his company files for bankruptcy

Murray Energy Corp., the largest private coal firm in the country, helmed by an outspoken supporter of President Trump, has filed for federal bankruptcy protection after months of financial trouble in the fraying coal sector.

Robert Murray, who Trump has affectionately called his coal "guy," will step down as his company's CEO and president to be chairman of the board of a restructured lender-owned company, under an agreement with an ad hoc group of creditors who hold the majority of Murray's $1.7 billion in claims.

He is being replaced as CEO by the company's current chief operating officer and chief financial officer, Robert Moore.

"Bob" Murray is a firebrand CEO, known for his outspoken political activism, fervent GOP support, and run-ins with unions and regulators. His ouster marks the end of an era for the self-made coal baron and media antagonist.

The bankruptcy had been brewing: Murray's Ohio-based company sought more time on debt payments due earlier this month, a choice that similarly preceded the bankruptcy filing of the Western miner Cloud Peak Energy Inc. earlier this year and the bankruptcy of coal giant Alpha Natural Resources Inc. in 2015 (Greenwire, March 19).

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Murray Energy joins seven coal miners, including two large firms in the Western coal sector, to file for bankruptcy.

The ad hoc group of lenders will provide $350 million in debtor-in-possession financing to keep the company operating through the Chapter 11 process.

Coal was king of the U.S. power market as recently as a decade ago, but it has rapidly lost market share to cheap natural gas thanks to hydraulic fracturing and, to a lesser degree, cheap renewable power like wind and solar, experts say.

Struggling to survive

Despite promises from the Trump administration since the 2017 presidential campaign to save coal — a sector then reeling from a sudden market depression — the Murray Energy bankruptcy speaks to the relentless erosion of the market (Energywire, Sept. 6).

The company was the third-largest coal producer by volume last year. It grew where others failed, while the coal market began to shrink. It had a strategy of focusing on economic mines with easy access to plants.

Murray Energy bought up Consol Energy Inc. assets in 2013 for $3.5 billion. More recently, the company pivoted toward an export market to make up for domestic losses, taking on debt to expand its coal empire.

Murray bought a controlling stake in Foresight Energy LP and acquired Armstrong Energy Inc. assets last year in the Illinois Basin, a region favorable for the export market (Greenwire, Jan. 25, 2018).

The company also bought three mines from bankrupt Mission Coal Co. LLC to expand into metallurgical coal, the high-quality coal used to make steel (Greenwire, March 29).

'No surprise'

Murray employs more union miners than any coal company in the country and as such is the health care supporter for more than 13,000 families, according to United Mine Workers of America President Cecil Roberts.

The bankruptcy spells uncertainty for collective bargaining agreements with workers, which are often overrun by bankruptcy court in favor of cutting burdens on firms trying to emerge from Chapter 11.

Roberts said in a statement today the bankruptcy came as "no surprise," describing a power sector where government policy favors renewables and a natural gas glut has created sustained low prices.

"Now comes the part where workers and their families pay the price for corporate decision making and government actions," he said.

Murray's company is a huge contributor to the UMWA pension fund. House Majority Leader Steny Hoyer (D-Md.) said today he needs to "talk to Richard Neal and Bobby Scott and others to see what steps they think we ought to take," when asked what Congress should do to further protect miners' benefits.

Neal, a Massachusetts Democrat, is chairman of the Ways and Means Committee, and Scott, a Virginia Democrat, leads the Education and Labor Committee.

Hoyer, whose comments came during his weekly briefing with reporters, said he didn't have a specific answer on how to address the potential problem but pledged to make sure retiree benefits are protected.

The union and lawmakers have been working on the issue for years amid numerous bankruptcies. Several bills are pending (Greenwire, Oct. 23).

The Maryland Democrat also said he found the bankruptcy news puzzling given the administration's repeated promises to boost the coal industry.

"I'm not going to go to where I'm thinking about, in terms of why in heaven's name would a company that's selling coal go bankrupt under this administration?" he said.

The company currently carries $8 billion in legacy liabilities, much of that health and pension funds, according to court filings that open a window into the private firm's financials. It also enters bankruptcy with $2.7 billion in secured debts.

Murray, a well-known figure due to his bombastic personality and outspoken support for the president, has regularly doled out lawsuit threats to journalists and recently sued comedian John Oliver for defamation.

The coal tycoon was also outspoken during and after the 2007 Crandall Canyon mine collapse in Utah that trapped six Murray miners, criticizing the miners' union and dismissing the Mine Safety and Health Administration's findings of multiple violations preceding the collapse.

'Long term success'

Murray said in a statement today that the decision to file for Chapter 11 protection was not an easy one.

"It became necessary to access liquidity and best position Murray Energy and its affiliates for the future of our employees and customers and our long term success," he said.

Murray tried to stem that tide through policy and political support, lobbying directly to the White House and Energy Secretary Rick Perry (see related story).

But Murray's close association with the Trump administration could not reverse the trend: Coal has gone from providing half the nation's electricity to providing little more than a quarter.

The coal-favoring agenda of the White House included revising down regulations that threatened coal such as the emissions-cutting Clean Power Plan and the Mercury and Air Toxics Standards.

Early attempts by the Trump administration to lend coal a helping hand appeared to mirror the direction of Murray's presidential "action plan" — a list of prewritten executive orders Murray presented to the administration in early 2017 that E&E News obtained through a Freedom of Information Act request. They included a retreat from the Paris climate agreement and a number of deregulatory actions (Greenwire, June 6, 2018).

'No cards left to play'

Though coal has continued to struggle, Murray has remained an outspoken supporter of the president. He hosted a private fundraiser for the president's 2020 campaign earlier this year in Wheeling, W.Va., and donated nearly $300,000 personally to the Trump Victory Committee in the most recent reporting period (Greenwire, Oct. 16).

Murray has long lambasted the government for its failure to save the industry, attacking what he often called a "feckless FERC" — referring to the Federal Energy Regulatory Commission — for not creating policies to secure coal's role as a cornerstone of the power load (Greenwire, Oct. 22).

He has also previously threatened bankruptcy if public policy didn't intervene. In 2016, Murray blamed President Obama in a notice to 80% of his employees warning of a possible bankruptcy.

Early in the Trump days, he sent a letter to a Trump aide threatening "immediate bankruptcy" if the president did not act to save one of Murray's customers, the power company FirstEnergy Solutions Corp.

The director of Sierra Club's Beyond Coal campaign, Mary Anne Hitt, said in a statement today that the Murray Energy bankruptcy was a sign that the coal industry had "no cards left to play" as the power sector continues to move toward green energy.

"As this transition continues, it's past time for state and federal lawmakers to take action to protect the miners and communities that have long shouldered the industry's burdens by supporting pensions and investing in a more diverse and robust economy, not bailing out political donors," she said.

Click here for Murray's filing in U.S. Bankruptcy Court for the Southern District of Ohio.

Reporter Kellie Lunney contributed.

Twitter: @hroxanerEmail: hrichards@eenews.net

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