Moody's rates Murray Energy notes Caa1, loan B1

Moody's Investors Service said it assigned Caa1 corporate family and probability-of-default ratings to Murray Energy Corp., a Caa1 (LGD3, 46%) rating to its proposed $440 million second-priority senior secured notes due 2015 and a B1 (LGD1, 4%) rating to the proposed $25 million first-lien revolving credit facility due 2012.

The outlook is stable.

Proceeds from the notes issuance and cash on hand are intended to refinance approximately $485 million of existing first-, second- and third-lien debt.

The agency said Murray's Caa1 corporate family rating reflects significant debt levels, concentration of EBITDA at key coal mines, production risk stemming from challenging operating conditions and geologic risks and annual production of approximately 25 million tons.

The ratings are supported by the company's long-term contracts with highly rated utility customers, experience with longwall mining, freight advantages associated with water-based transportation and proximity to customers and largely union-free workforce, Moody's said.

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