Tag: Murray Energy

Murray Energy Exits Bankruptcy, Rehires Union Miners

Coal mining giantMurray Energy Corp. has emerged from bankruptcy with a new name and a commitment to rehire all of its former union employees, according to a news release from the United Mine Workers of America. 

UMWA President Cecil Roberts said on Wednesday that a new collective bargaining agreement has been finalized between the coal miners union and American Consolidated Natural Resources Inc., which took over Murray Energy’s assets. 

“There is much to be concerned about for those of us associated with and working in the coal industry during these troubling times, but it is good that this process has finally been completed and our members can put the uncertainty of the bankruptcy behind them,” he said. 

Murray Energy was formerly the largest privately-owned underground coal mining company in the country with a substantial footprint across the Ohio Valley. The company produced low-cost bituminous coal at mines located close to its customers — largely coal-fired power plants. As coal-fired generators have closed, that has posed challenges for the company’s business model. 

Founder and CEO Bob Murray has close ties to President Donald Trump, including appearing at events in West Virginia with the president and donating $300,000 to his inauguration. Murray has helped shape the administration’s environmental agenda, including promoting policies that loosened restrictions on the U.S. coal industry. 

The Ohio-based company declared bankruptcy last fall, citing billions of dollars in debt, healthcare and pension liabilities. In court filings, company executives said tough market conditions for coal was one of the major factors that pushed the coal giant toward bankruptcy. 

The court process unearthed new information about spending by Murray executives, including multi-million dollar cash bonuses, and what some creditors described as a “disturbing pattern of self dealing and abuse of corporate resources.” UMWA officials have also been watching the bankruptcy process closely. Murray Energy was the last major company contributing to the union’s pension plan.

LISTEN: Veteran Coal Reporter Provides Update On Murray Energy Bankruptcy

Last fall, Murray Energy — the largest privately-owned coal company in America with a large presence in the Ohio Valley — joined many of its peers in declaring bankruptcy. Murray faced mounting debt and a struggling coal market. Then the COVID-19 pandemic hit, tanking the global economy including energy markets. 

S&P Global Market Intelligence senior reporter Taylor Kuykendall has been following the bankruptcy case closely. Late last week, he spoke with energy and environment reporter Brittany Patterson about the latest updates in the case.

 

***Editor’s Note: The following has been edited for clarity and length.

 

Kuykendall:  I think it’s worth noting a few things about Murray Energy for those that might not understand how they got there. They were buying a whole lot of property. They bought longwall coal mines in West Virginia to expand, they bought coal mines from Armstrong Energy to expand into the Illinois Basin, and they bought a mine in Colombia recently. I mean, that sounds like a lot, even if you were just talking about a normal period for the coal industry. But this is at a time when the coal industry was really, really suffering. And most people were thinking more about downsizing their coal assets.

Patterson: What were some of the reasons that the company gave at the time that it filed?

Kuykendall:  Murray used to criticize all these other companies that were filing for bankruptcy, because basically when you file for bankruptcy, you get rid of your debt, and you can compete a lot better afterwards. He called it dragging the industry into the bankruptcy sewer. Well, after, you know, months and months of complaining about being dragged towards the bankruptcy sewer, his company lands in the bankruptcy sewer. 

The reasons are ones that we’ve all heard before: cheap gas, the growth of wind and solar energy is increasingly a factor, and an overall decline or flattish electricity demand. By the time that they got to the bankruptcy court, you’re talking about a company that’s the largest private coal company in the country, but they made about $540 million in earnings in 2018. On the other side of the balance sheet, carrying about $8 billion in potential actual legacy liabilities and about $2.7 billion and other debt obligations. They had way more debt on their balance sheet than they can handle. And not only was the market bad, but it wasn’t really showing a lot of signs of looking better anytime soon. 

Patterson: What have we learned about Murray Energy? 

Kuykendall: There’s been a couple of interesting things come out. I mean, I think some of the latest developments that we’re finding, which is just kind of mind boggling when you think about the scope of the company. They started the bankruptcy, about $300 million in liquidity. And that was supposed to last them through about the end of June, I believe … whenever they’re supposed to come out on the other side of bankruptcy, burned through $180 million in two months. They said that they have about $6 million in cash on hand. $6 million. Sounds like a lot. And it’d be a lot if I had $6 million stacked on my desk right now, but for the country’s largest coal company, $6 million is not a lot of money. And even Murray Energy themselves warned in their bankruptcy filings, you know, that this amount is insufficient to responsibly manage the business and this or any environment as a quote, they mentioned laying off something like 500 employees, the CEO is personally approving any expense over $25,000. That’s not a lot of money when you’re talking about coal mining. They’re really desperate here to try to save as much money as they possibly can. And we’re also kind of learning that management and just about anybody that’s involved in this bankruptcy doesn’t think that that’s going to improve, you know, in the next several months.

 

Patterson: Tell us a little more about what some of the documents have shown us about what top officials at Murray Energy have been paid and have been doing.

Kuykendall: Consol Energy kind of caught my attention. At first, I mean this as far as its bankruptcy goes on some filings earlier this month, and they just kind of hinted at a stunning inability to control costs, manage the market and you know, otherwise manage the business, wasn’t a lot of details when they first kind of put this filing out there it was this, this latest filing from the Committee of unsecured creditors. That’s basically people that Murray Energy owes money that are a little bit further down on the list of likelihood to see that money could pay back in a bankruptcy court. So as you can imagine, they  do have some motivations here, and talking about the company, but what they describe is a “disturbing pattern of self dealing and abuse of corporate resources.”  That’s mostly pointed to actions from Mr. Murray and Mr. Moore. Basically, they went through and reviewed board materials, financial information, emails, flight logs, those kind of things, from the period between 2016-2019. 

And also to preface all this, Murray says the creditors did not interview him. He basically rejects all these statements. He disagrees with all of it. But, you know, some of the things that they found they say that the company was mostly insolvent during a lot of that investigation period they did an analysis of Murray and Moore’s compensation and compared that to other key executives. Well, they found between 2016-2019, these two executives earned about $100.4 million more than the average senior officer. They also mentioned cash bonuses around $24 million and $13 million respectively, for Murray and Moore. At the same time, company earnings were declining and flat. But they also point to these guys using the company aircraft for personal purposes. They say that they paid for vacations and sporting events. And you know, Murray’s pushback against these again, in his statements, he does say that he’s kept logs of that travel and is prepared to explain it. 

Another thing that the creditors point out was $10 million in donations to charities. One of the big beneficiaries of that is the Boy Scouts. There’s a church, I believe, in St. Clairsville [Ohio] he donated some amount of money to. Creditors are maybe making an argument that that wasn’t the most financially responsible thing that they could have done. 

Murray Energy’s a big priority, and the thing they’re pushing back on is, hey, we’re running out of liquidity. We don’t really have time for this argument. They’re trying to get through with reorganization and otherwise, and they’ve said this themselves, if you know that this isn’t done right, there very well might not be a company to restructure.

Patterson: And so if the company is forced to liquidate or go to Chapter 7 bankruptcy, what would that mean? This company employs thousands of workers, a lot in the Ohio Valley region, and as you mentioned, they have significant pension and healthcare obligations. 

 

Kuykendall: So, that’s a really big question and one that we haven’t seen come up as much. So, it’s not really clear what a Chapter 7 liquidation would look like because different things could happen. Someone could buy the mines. If Consol Energy, for example, were to buy some of these longwall mines, I imagine they would want to keep operating them. And for a lot of the workers, maybe even some that have been there back when Consol ran the mines, there would be  very little difference at all, it’d be like going back to that. But on the other hand, this is a really bad time to be trying to sell anything, let alone a coal mine. We’re talking about coal mines that have been just really painful to try to take to market and sell on an auction for the past 10 years. And nobody’s thinking that situation is getting any easier going down the road. And now they’re trying to do it in the middle of a global pandemic. We won’t know anything for a little while. I think that the next hearings aren’t for a couple weeks. There is kind of a tendency for courts to lean toward a Chapter 11 and restructuring and getting a company out on the other side. So even though Consol Energy is asking for liquidation, it doesn’t mean that it’s likely to happen.

 

Black Lung Trust Fund Likely Burdened By Murray Bankruptcy

The recent bankruptcy of Murray Energy is likely to significantly increase the debt of a struggling federal trust fund that supports disabled miners’ health care expenses.

According to court filings, Murray Energy could be responsible for as much as $155 million under the Black Lung Act and general workers’ compensation, but testimony from the Government Accountability Office shows that the company only offered $1.1 million in collateral to the Black Lung Disability Trust Fund. 

That means the struggling fund will likely have to take on at least some of that liability.

The federal fund was established in 1978 to provide monthly stipends and health care coverage for miners disabled by black lung, a preventable and progressive workplace disease. The fund, which is supported by a per-ton tax on coal companies, currently covers expenses for some 25,000 miners and their dependents, and is expected to be $15 billion in debt by 2050. Last year, Congress failed to extend a higher per-ton tax rate, increasing the strain on the fund.

A spokesperson for Senate Majority Leader Mitch McConnell of Kentucky said in an email to the ReSource, “While the temporary, higher tax expired last year, current benefits for our impacted miners and their families have been maintained. Senator McConnell will continue to ensure these important benefits are maintained. Additionally he will continue working on the many ways to help coal miners and the clinics that serve them across Kentucky.”

If the fund becomes insolvent, it may be bailed out by the Treasury’s general fund, effectively transferring the burden of caring for disabled miners from the industry that caused the illnesses to American taxpayers.

“History shows that miners and their families will be forced to pay the price in the form of reduced eligibility for benefits if Congress allows the Black Lung Disability Trust Fund to sink deeper into debt,” Rep. Bobby Scott, chairman of the House Ed and Labor committee, said in a hearing this summer. “Given the recent rise in the most severe form of black lung disease, Congress must take action to secure future benefits and health care for disabled miners.”

A spokesperson for Murray Energy did not respond to a request for comment for this article, but in court filings, newly appointed Chief Executive Officer of Holdings Robert 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.”

According to recent testimony from the Government Accountability Office, there were 22 self-insured active coal operators as of June 2019. Only 10 of those had provided estimates for their total unfunded liability to the trust fund — that is, the potential debt that could be transferred to the federal government if the company filed for bankruptcy.

“An estimated black lung liability of over $310 million has been transferred to the trust fund from insolvent coal operators,” said GAO Director of Education, Workforce and Income Security Cindy Brown Barnes. “In addition to those liabilities being transferred, there’s also the beneficiaries that have come along with that. There’s been over 1500 beneficiaries that have been transferred to the trust fund as a result of the companies that we looked at from 2014 to 2016.”

Brown Barnes could not confirm how much, if any, liability from Murray Energy would be transferred to the fund. 

“Just because a company is bankrupt, it doesn’t necessarily mean that the liabilities are going to be transferred to the trust fund,” Brown Barnes cautioned. “There’s one liability at the time of bankruptcy and then another liability that gets transferred to the fund. It’s not a one-to-one.”

A report further detailing that unfunded liability, and its implications for the solvency of the trust fund, is expected early next year.

A Larger Pattern

As of October 29, Murray reported approximately $2.7 billion in funded debt and over $8 billion in actual or potential legacy liability obligations under pension and benefit plans, including the black lung trust fund. As Murray’s numerous secured creditors vie to recoup as much of their debts as they can, it is likely that there won’t be money left over to pay back environmental, retiree and health care debts.

“When you have this pattern of a large company spinning off its least productive assets and loading those assets with obligations that it obviously doesn’t want to pay, it seems to look like it’s a strategy,” said Josh Macey, an assistant visiting professor at Cornell University.

Macey is a co-author of a recent article in the Stanford Law Review titled, “Bankruptcy as Bailout: Coal Company Insolvency and the Erosion of Federal Law.” In that paper, Macey and his co-author found that since 2012, four of the nation’s largest coal producers used bankruptcy to discharge roughly $3.2 billion in retiree benefits and $1.9 billion in environmental debts, as well as $5.2 billion in other regulatory obligations. Those numbers were current as of April 2019, before the high-profile bankruptcies of Blackjewel, Blackhawk, and Murray Energy.

Macey said Murray took a slightly different tack than other companies in similar positions. Rather than spinning off unprofitable assets into new companies that were designed to fail, Macey said, “Murray went about snatching [assets] up at a pretty frenzied pace, because it was able to in that way pledge more assets as collateral and give its own creditors tons and tons of collateral that ensured they, too, would be paid before miners and the environment.”

Is Murray Energy The Nation's Largest Coal Company?

Murray Energy Corp., a major player in the coal-mining industry, declared bankruptcy in late October, sending shockwaves across coal-dependent regions of West Virginia and neighboring states.

In addition to putting coal employment at risk, the company is the last major employer contributing to the United Mine Workers of America’s pension plan.

With such a big development, it was no surprise that Sen. Joe Manchin, D-W.Va., quickly weighed in on Twitter.

“Murray Energy, the largest coal company in the United States, filed for bankruptcy,” Manchin tweeted on Oct. 29, 2019. “If Murray rejects the UMWA pension plan obligations in Chapter 11 bankruptcy, the UMWA pension fund will be insolvent by 2020. Before last night it was projected to be insolvent by 2022.”

However, we noticed a problem with how Manchin described Murray Energy. Is it really the largest coal company in the United States?

Manchin’s office pointed us to a New York Times article published about the bankruptcy the same day as his tweet.

The article includes this sentence: “Murray, the nation’s largest privately held coal company, has nearly 7,000 employees and operates 17 mines in six states across Appalachia and the South as well as two mines in Colombia.”

Manchin’s office also cited a CNN article from the same day that used similar language. “The slow death of the American coal industry has forced Murray Energy, the largest private coal miner in the United States, to file for bankruptcy protection Tuesday,” CNN’s article said.

Manchin’s tweet glossed over a phrase repeated in both articles – “privately held.”

So, where does Murray rank among all coal companies?

Murray Energy pointed us to data from the Energy Information Administration, a division of the federal Department of Energy. Here’s a table drawn from the agency’s statistics.

This shows that Murray Energy ranks fourth, behind Peabody Energy Corp., Arch Coal Inc., and Cloud Peak Energy. We confirmed that each of the three companies ahead of Murray are publicly held, making Murray the largest private coal company but not the largest coal company overall.

Our Ruling

Manchin tweeted that Murray Energy is “the largest coal company in the United States.”

He flubbed the description — Murray Energy is the largest privately held coal company, but not the largest coal company overall. If you include both private and public coal companies. Murray ranks fourth in the country. That makes it one of the largest, but not the largest.

We rate the statement Mostly False.

This article was orignially published by PolitiFact.

Ohio-Based Coal Giant Murray Energy Declares Bankruptcy

 

This story was updated on Oct. 29 to include additional information and reaction.

Murray Energy Corp., the largest underground coal mining company in America with a substantial footprint across the Ohio Valley, has filed for bankruptcy protection. 

“Although a bankruptcy filing is not an easy decision, 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,” company founder Robert Murray said in a release.

In court documents filed Tuesday, the company said it faces billions of dollars in debt and liabilities, and tough market conditions for coal haven’t improved and have in fact deteriorated. 

The company noted its decision not to previously shed debt using the bankruptcy process — as many of its competitors have — has left Murray Energy saddled with the “weight of its own capital structure and legacy liability expenses.”

The company reports $2.7 billion in debt and more than $8 billion in obligations under various pension and benefit plans. Murray employs more than 5,000 workers — approximately 2,400 are active union members. Court filings show the company has $155 million in liability under the Black Lung Act, as well as for general workers’ compensation, and owes millions of dollars in environmental cleanup obligations for its operations.

“As a result, Murray generated little cash after satisfying debt service obligations, paying employee health and pension benefits, and maintaining operations,” the filings stated.

The company, founded in 1988, is among the largest coal producers in the country, with more than a dozen active mines, largely in the Ohio Valley and Illinois Basin. 

According to the company’s press release, the company expects to be able to continue day-to-day operations uninterrupted. Murray Energy says it will 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 court approval.

CEO Robert Murray, who founded the business more than 30 years ago, is stepping down. According to the release, a new entity, called Murray NewCo, will serve as a “stalking horse bidder” to acquire most of the company’s assets. If approved by the court, the company expects all of its debt to be eliminated and Murray to be named Chairman of the Board of Murray NewCo.

Murray Energy prided itself on producing low-cost bituminous coal at mines located close to its customers — largely coal-fired power plants. But as coal generators close, that has posed challenges for the company’s bottom line. 

Despite promises by President Donald Trump to revive the U.S. coal industry, demand for coal has fallen to its lowest level in 40 years, according to the U.S. Energy Information Administration.

Jamie Van Nostrand, director of the Center for Energy and Sustainable Development at West Virginia University, said low-priced natural gas and the falling cost of renewable energy have fundamentally changed the prospects for coal. 

“The long term prospects for coal operators is not very good in the United States right now,” he said. “I don’t see the numbers turning around, and I think we need to really come to grips with the fact that there are parts of the country that are hit disproportionately hard and really start talking about a just transition.”

Murray Energy is the ninth coal producer to seek bankruptcy during the Trump administration. Murray’s declaration follows the chaotic and high-profile bankruptcy of West Virginia-based Blackjewel LLC and Kentucky-based metallurgical coal mining company Blackhawk Mining.

While bankruptcies are not new for the U.S. coal industry, the recent spate of restructuring may point to a fundamental shift for the industry, according to Seth Feaster, energy data analyst for the Institute for Energy Economics and Financial Analysis, a think tank that supports energy transition. 

“The competitive environment that coal is facing is only looking to become more competitive, and so it’s not really a temporary blip for them,” Feaster said. “There are companies that are saying, ‘well, we’re going to survive this downturn and come out stronger on the other side,’ but I’m not sure where the other side is for the coal industry at this point.”

Trump Connection 

The company’s chief executive, Bob Murray, has enjoyed a close relationship with the Trump administration. Murray has often appeared with the president during his appearances in West Virginia. In July, he hosted a private fundraiser for Trump in Wheeling, West Virginia. 

In February, Trumptook to Twitter to urge the Tennessee Valley Authority to not shutter the Paradise Fossil Plant in Kentucky, which is largely supplied by Murray mines. 

A vocal Trump supporter, Murray donated $300,000 to the president’s inauguration. Weeks later, the coal executive shared adetailed “action plan” with administration officials that outlined a series of environmental rollbacks and policy changes that would benefit the U.S. coal industry. 

The majority of Murray’s wish list — which included the repeal and replacement of the Obama-era Clean Power Plan, withdrawal from the Paris climate agreement, and staff cuts at the U.S. Environmental Protection Agency — have been carried out by the Trump administration. 

However, the White House has beenunable to fulfill one of Murrary’s chief requests — to bailout struggling coal-fired power plants. 

In 2017, FERC unanimously rejected a proposal by the Energy Department to subsidize coal and nuclear plants.Additional efforts — largely driven by the Department of Energy — have stalled. 

Speaking last week at the EnVision Forum at the University of Kentucky Center, Murray told the crowd continued inaction by federal regulators, including the Federal Energy Regulatory Commission, or FERC, has resulted “in the destruction of America’s coal industry, the reliability and resilience of the electric power grid, and the cost of electricity itself.”

The country’s largest regional grid operator, PJM Interconnection, which operates across a 13-state region including the Ohio Valley, has argued there is no need for federal intervention.

Credit Alexandra Kanik / Ohio Valley ReSource
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Ohio Valley ReSource

Murray also repeated his oft-cited nickname for the independent agency calling it “feckless FERC.” 

“Nothing has been done by FERC or anyone to save the American coal industry from extinction, and we are virtually extinct,” he said. 

Major Impact

Murray Energy’s bankruptcy could have far-reaching impacts on the company’s workers. Murray Energy is the last major company contributing to the pension plan for the United Mine Workers of America, and the bankruptcy is likely to accelerate the plan’s fast decline into insolvency. 

UMWA President Cecil Roberts said in a statement he fears the bankruptcy court will allow Murray Energy to renege on its collective bargaining agreements, which spell out pension and other benefits obligations. 

“Now comes the part where workers and their families pay the price for corporate decision-making and governmental actions,” he said. “We have seen this sad act too many times before.”

Murray mining operations have also had a number of high-profile mine safety incidents over the years, including the disastrous collapse of a mine in 2007.

In August 2007, nine miners and rescuers died after the Murray-owned Crandall Canyon mine in Utah collapsed. The Labor Department fined the company $1.85 million for violating federal mine safety law.In 2012, the agency settled with Murray for a reduced amount. The settlement included acknowledgement by Murray Energy for its “responsibility for the failures that led to the tragedy.”

Murray later told NPR “this settlement is not an admission of any contribution to the August 2007 accidents.”

Murray was also sued by the Department of Laborafter miners complained the CEO personally told workers in a 2014 meeting to stop making complaints to federal regulators. Under federal law, miners have the right to speak anonymously to government inspectors about mine safety concerns.Earlier this year, Murray lost an appeal in the case. The court upheld a decision that Murray must personally apologize. 

ReSource reporters Sydney Boles and Becca Schimmel contributed to this story.

 

 

Murray Energy Loses Appeal Over Miner Intimidation Case

Coal mining executive Bob Murray has lost an appeal in a yearslong case regarding coal miner intimidation.

 

In an opinion issued Tuesday, the U.S. Court of Appeals for the District of Columbia Circuit agreed with a previous decision that Murray Energy’s president and CEO intimidated workers and interfered with miners’ rights to report unsafe working conditions. The appeals court denied Murray’s petition to revist the earlier ruling.

 

In late 2013, Murray told miners at five West Virginia mines they were making too many complaints to federal mine safety regulators. He said employees must raise safety concerns with management too.
 

Under federal mine safety law, miners have the right to anonymously report safety concerns to federal regulators.

Following complaints from miners, the Labor Department sued Murray Energy. The independent Federal Mine Safety Health and Review Commission found the company violated the law and ordered Murray to pay $20,000 per violation. The commission also ordered Murray to hold a meeting at each mine and personally read a statement about the incidents.

In its ruling, the court denied Murray’s petition to review the commission’s decision and declined to reverse its decision that Murray must personally apologize.

A spokesperson for the company did not immediately respond to a request for comment.

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