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MURRAY ENERGY: MGCI Selling Interests in Javelin for $20M Cash

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Murray Energy Holding Co. and its debtor affiliates ask the United States Bankruptcy Court for the Southern District of Ohio (Columbus) to authorize the private sale of Murray Global Commodities, Inc. (“MGCI”)’s ownership interests in Javelin Global Commodities Holdings LLP to an affiliate of Javelin Management Services LLP (“KM NewCo”), pursuant to a purchase agreement, for the aggregate purchase price of $20 million in cash.

The Debtors entered these chapter 11 cases with the goal of marketing all of their assets, including the Interests, as part of a comprehensive operational and balance sheet restructuring process. They have been upfront with all stakeholders regarding the sale process since the commencement of these cases. Pursuant to the Court-approved bidding procedures and subsequent marketing and sale process, the Debtors openly and thoroughly marketed all of their assets for sale, including the Interests.

Since the completion of the marketing process, the Debtors’ finances and operations have been significantly and negatively impacted by the unprecedented global COVID-19 pandemic that continues today. Recently, in consultation with the Ad Hoc Group of Superpriority Lenders (as defined in the Plan), who hold more than 50% of the DIP term loans and superpriority term loans, and who have directed the Stalking Horse Bidder as part of the Debtors’ sale process, the Debtors began to review their asset base to determine if certain non-core assets could be monetized to provide the Debtors with much needed liquidity. One such asset that was identified was the Interests.

Javelin Management Services LLP, MGCI, and Uniper Global Commodities UK Limited are the three members of Javelin. The Debtors approached the other two members of Javelin to determine whether there was any interest in purchasing the Interests. The members of Javelin Management Services LLP indicated their interest in purchasing the Interests, and the Debtors and those members commenced negotiations around the purchase of the Interests. After reaching an agreement in principle on price and in accordance with Javelin’s limited liability partnership deed, the third member of the partnership — Uniper — was offered the right to purchase its pro rata portion of the Interests at the same price per Interest and otherwise on the same material terms as KM NewCo and declined.

The purchase price is $20 million in cash. The Debtors believe that the purchase price is the best available price for the Interests and do not believe that the cost and expense of running an additional auction process would materially increase the sale proceeds, especially in light of the already completed marketing process for their assets, including the Interests. Further, neither KM NewCo nor the members of Javelin Management Services LLP have colluded with the Debtors on the purchase. Rather, KM NewCo and the members of Javelin Management Services LLP have negotiated the sale transaction, including the terms and conditions of the Purchase Agreement, with the Debtors at arm’s-length and in good faith.

The material terms of the Purchase Agreement are:

a. Seller: MGCI

b. Purchaser: KM NewCo, an affiliate of KM LLP, which will be a newly formed special purpose vehicle that is majority-owned and controlled by Peter Bradley and Spencer Sloan

c. Proposed Date, Time, and Location of Transfer: One business day after entry of the proposed order

d. Number of Interests Proposed to be Transferred: All of MGCI’s Interests in Javelin, and all rights and obligations pertaining
thereto, comprising an ownership percentage of 34%

e. Proposed Purchase Price: $20 million in cash

f. Other Material Terms:

i. that certain Specified Superpriority Lien Debt Security Assignment and Charge of Rights and Interests Relating to a Limited Liability Partnership Deed, dated June 29, 2018 (as amended, supplemented, varied, novated, modified, replaced or restated in accordance with the terms thereof), between MGCI, as Chargor, and U.S. Bank National Association, as Specified Superpriority Lien Collateral Trustee;

ii. that certain Specified Superparity Lien Debt Security Assignment and Charge of Rights and Interests Relating to a limited Liability Partnership Deed, dated June 29, 2018 (as amended, supplemented, varied, novated, modified, replaced or restated in accordance with the terms thereof), between MGCI, as Chargor, and U.S. Bank National Association, as Specified Superparity Lien Collateral Trustee; and

iii. that certain Superpriority Senior Debtor-in-Possession Lien Debt Security Assignment and Charge of Rights and Interests Relating to a Limited Liability Partnership Deed, dated Dec. 6, 2019 (as amended, supplemented, varied, novated, modified, replaced or restated in accordance with the terms thereof), between MGCI, as Chargor, and GLAS Americas LLC, as Collateral Agent.

The Ad Hoc Group of Superpriority Lenders, who have a fully-perfected first and second priority security interests in and liens upon the Interests through their DIP and superpriority loans, do not object to the proposed sale (and indeed support the proposed sale). To the extent any other prepetition secured lenders have a prepetition security interest in and liens upon the Interests, these creditors can be compelled to accept a monetary satisfaction of their interests.

About Murray Energy

Headquartered in St. Clairsville, Ohio, Murray Energy is the largest privately owned coal company in the United States, producing approximately 76 million tons of high quality bituminous coal each year, and employing nearly 7,000 people in the United States, Colombia and South America.

Murray Energy now operates 15 active mines in five regions in the United States, plus two mines in Colombia, South America. It operates 12 underground longwall mining systems, 42 continuous mining units, 10 transloading facilities, and five mining equipment factory and fabrication facilities.

Murray Energy and its affiliates sought protection under Chapter 11
of the Bankruptcy Code (Bankr. S.D. Ohio Lead Case No. 19-56885) on
Oct. 29, 2019. At the time of the filing, the Debtors disclosed assets of between $1 billion and $10 billion and liabilities of the same range.

The cases have been assigned to Judge John E. Hoffman Jr.

The Debtors tapped Kirkland & Ellis LLP and Kirkland & Ellis International LLP as general bankruptcy counsel; Dinsmore & Shohl LLP as local counsel; Evercore Group L.L.C. as investment banker; Alvarez and Marsal L.L.C. as financial advisor; and Prime Clerk LLC as notice and claims agent.

The U.S. Trustee for Region 9 appointed creditors to serve on the official committee of unsecured creditors on Nov. 7, 2019. The committee tapped Morrison & Foerster LLP as legal counsel; AlixPartners, LLP as financial advisor; and Vorys, Sater, Seymour and Pease LLP as local counsel.

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