Coal miner Murray's bonds plunge after Trump administration snub

NEW YORK – Bonds of Murray Energy, the biggest privately owned US coal producer, fell the most in 15 months after the White House denied the company’s request to aid one of its power-plant customers, an action it said would help both companies avoid bankruptcy.

The miner’s $1.1 billion of 11.25% bonds due in 2021 fell 7 cents on the dollar on Wednesday and were quoted at 61 cents on the dollar, according to Trace, the bond-price reporting system of the Financial Industry Regulatory Authority. It was the biggest decliner and the most actively-traded security in the US corporate bond market, the data show.

The plunge came as President Donald Trump’s administration rejected Murray’s request to keep the coal-fired power plants of FirstEnergy Solutions. operating by invoking emergency authorities under the Federal Power Act. The same bonds had surged last year in part on Trump’s election as the Republican vowed to revive America’s coal industry. The securities exceeded 83 cents on the dollar as recently as February.

White House spokesperson Kelly Love said, “President Trump has followed through on his unwavering commitment to the nation’s coal miners.” His actions include repealing the Clean Power Plan and removing the US from the Paris climate agreement, she said in an email. Invoking the Federal Power Act “in this manner at this time is not an appropriate use of this authority.”

Gary Broadbent, a spokesperson for St Clairsville, Ohio-based Murray, declined to comment.

DEBT PAYMENTS
Robert Murray, the company’s chief executive officer and an early backer of Trump, said in a letter earlier this month that he was present when the president expressed support for the company’s plea and directed Energy Secretary Rick Perry to get it done.

Murray Energy has debt payments of $44.4-million due at the end of September, another $59.4-million on October 17 and $44.3-million at the end of the year, Murray’s CFO Robert Moore wrote in an August 18 letter to Perry.

“A bankruptcy filing by FirstEnergy, or another of our major customers, would make it impossible for Murray Energy to make these debt payments,” Moore wrote, which he said would ultimately result in a bankruptcy filing by Murray Energy.

At a rally in West Virginia earlier this month, Trump claimed he had made good on his promises to put coal workers back to work. “We have ended the war on beautiful, clean coal. We have stopped the EPA intrusion. American coal exports are already up,” he said.

Murray, a closely held company, produces about 65-million tons of the fossil fuel a year, according to the company’s website. It primarily operates in the country’s Northern Appalachian and Illinois coal basins and sells its coal to power plants operated by companies including FirstEnergy.