Murray Energy Corp., which just completed its first purchase of overseas assets, is struggling to convince creditors it can withstand the coal slump at home in the U.S.
A $1.3 billion bond issue sold by the miner in April dropped 10.8 cents to 47 cents on the dollar, according to Trace, the bond-price reporting system of the Financial Industry Regulatory Authority. In a presentation to bondholders on Friday, the closely held company lowered its earnings outlook for 2015 to a range of $600 million to $660 million from a projection last quarter of $648 million to $790 million, according to two people with knowledge of the matter.
The miner founded by Robert E. Murray, who has vowed to be the “last man standing” in U.S. coal, is dealing with the sector’s worst downturn in decades as it faces pressure from cheap natural gas and stricter environmental regulations. The bonds were sold to finance Murray’s acquisition of a stake in Foresight Energy LP, which was announced in March.
Murray said this week it had purchased assets in Colombia from Goldman Sachs Group Inc.
Gary Broadbent, a spokesman for Murray Energy, declined to comment on the earnings or the decline in its bonds, saying that the company’s “financial information is strictly confidential.”
Murray Energy had $181 million of cash on hand at the end of June, the people said. The company also projected earnings before interest, taxes, depreciation and amortization of $625 million to $675 million for 2016, lower than what investors expected, one of the people said.
The company’s second-lien bonds mature in 2021 and pay a coupon of 11.25 percent. They were sold at 96.9 cents on the dollar to yield 12 percent. In four months, the securities have lost more than half their market value and now yield 32 percent.