Murray Energy Corporation Enters Restructuring Support Agreement, Commences Chapter 11 Cases and Secures Interim Approval of DIP Financing

Davis Polk is advising an ad hoc group (the “Ad Hoc Group”) of prepetition superpriority secured lenders and post-petition DIP lenders holding in excess of $1 billion of secured debt issued by Murray Energy Corporation (together with certain of its subsidiaries, “Murray”) in connection with Murray’s chapter 11 restructuring. On October 28, 2019, the Ad Hoc Group, Murray, holders of equity interests in Murray and other parties entered into a comprehensive restructuring support agreement (the “RSA”) that contemplates a holistic restructuring of Murray’s funded debt and other liabilities. The centerpiece of the RSA is a credit bid from Murray’s superpriority secured lenders to own the Murray business upon emergence from chapter 11. The RSA is supported by not only lenders holding more than 60% of the prepetition superpriority loans, but also creditors holding approximately 45% of Murray’s 1.5-lien notes and in excess of 50% of Murray’s second-lien notes. On October 29, 2019, Murray filed its voluntary chapter 11 petitions in the United States Bankruptcy Court for the Southern District of Ohio, Western Division, and on October 30, 2019, Murray obtained all of the “first day” relief it sought, including interim approval of a debtor-in-possession financing facility backstopped by the Ad Hoc Group in the aggregate principal amount of $440 million, which consists of $350 million of new money term loans.

Based in St. Clairsville, Ohio, Murray is the largest privately-owned coal company in the United States. It produced approximately 53 million tons of high quality bituminous coal in 2018, including approximately 2,400 active union members. Murray owns and operates 13 active mines across the Northern, Central and Southern Appalachia Basins (located in Ohio, West Virginia, eastern Kentucky and Alabama), the Illinois Basin (located in Illinois and western Kentucky), the Uintah Basin (located in Utah) and Colombia, South America. Murray also manages and operates five additional mines in the Illinois Basin through its partnership with non-debtor Foresight Energy LP. Excluding Foresight-related operations, Murray’s operations generated approximately $2.5 billion in revenue related to coal sales and $542.3 million of EBITDA in 2018.

The Davis Polk restructuring team includes partner Damian S. Schaible and associate Adam L. Shpeen. The finance team includes partners Jinsoo H. Kim and Monica Holland and associates Sanders Witkow and Scott G. Johnsson. The litigation team includes partner James I. McClammy. Partner William L. Taylor is providing M&A advice. Partner Jeffrey P. Crandall is providing executive compensation advice. The tax team includes partner Lucy W. Farr. All members of the Davis Polk team are located in the New York office.