THE SITUATION: PLUNGING DEMAND TRIGGERS A CASH CRUNCH
In 2019, Murray Energy Holdings, the largest private coal producer in the United States, operated 13 mines in Appalachia, the Illinois Basin, and the Uintah Basin, producing approximately 53 million tons of thermal coal in 2018 and employing nearly 5,500 people. Murray Energy also managed five additional mines in the Illinois Basin through its controlling interest in Foresight Energy, which it acquired in 2015.
A downturn in the coal market left Murray Energy scrambling for liquidity in 2019. The cash crunch, coupled with the company’s high debt service costs, obligations under its union contract, and contributions to a multi-employer pension fund, drove the company to file for Chapter 11 that October. Coal demand declined further while the company was under bankruptcy court protection, as the COVID-19 lockdown and mild winter temperatures curtailed energy demand.
AlixPartners was retained as financial advisor to the Official Committee of Unsecured Creditors (the “UCC”), assisting the committee in meeting its obligations and making decisions on its behalf.
THE APPROACH: DETAILED ASSESSMENTS DRIVE THE SHAPING OF A RESCUE PLAN
As advisor to the UCC, AlixPartners participated in key moves during Murray’s time under court protection, including:
- Analyzing and challenging multiple iterations of Murray Energy’s business plan for reasonableness and feasibility, in view of dramatic swings in thermal coal demand during the period in question.
- Evaluating and analyzing Murray Energy’s cash-flow projections and proposed DIP facility, undertaking an assessment of first-day motions to determine the benefit of each motion to the estate and unsecured creditors, and assessing the feasibility of the proposed post-emergence capital structure and exit financing needs.
- Supporting UCC counsel’s investigation of certain pre-petition transactions.
- Participating in negotiations of the reorganization plan and associated global settlement.
THE SOLUTION: RIGOROUS ANALYSIS PROPELS THE EMERGENCE OF A STRONGER BUSINESS
The AlixPartners team provided support when it really mattered, helping negotiate a successful reorganization plan and global settlement that enabled Murray Energy to emerge from Chapter 11 in September 2020.
AlixPartners’ input was instrumental in preserving the company as a going concern, saving thousands of jobs, ensuring payment of approximately $150 million in pre-petition vendor claims, and positioning the company for success with a far stronger balance sheet.
The case was the winner of a 2021 TMA Turnaround and Transaction Award in the category of “2021 Mega Turnaround / Transaction of the Year.”
