Here’s the latest, just in from Patriot Coal regarding its bankruptcy and the contract/benefits dispute with the United Mine Workers of America. The company has filed proposals (see here and here) to again modify its proposed changes to its agreements with the UMWA. Patriot summarized the proposals this way in an e-mail message to the media:
— The UMWA would be granted a direct 35% equity stake in the reorganized enterprise. This equity stake could be monetized, in whole or in part, generating a substantial cash contribution to the VEBA Trust, which is expected to be worth hundreds of millions of dollars.
— The date on which retiree healthcare will be transitioned to the VEBA Trust will be extended by six months to January 1, 2014, provided the UMWA consents to a short-term bridge-funding arrangement. If the UMWA consents, UMWA retirees and their beneficiaries will continue to receive their current level of benefits until January 1, 2014. The purpose of this extension is to afford the UMWA ample time to monetize the equity stake and determine the optimum level of healthcare coverage the VEBA Trust can provide. The extension will also allow UMWA retirees and beneficiaries to continue to receive their current level of benefits until the healthcare options associated with the Patient Protection and Affordable Care Act (“PPACA”) become available on January 1, 2014.
— In addition to the Profit-Sharing Contribution that was a component of prior 1114 proposals, Patriot would also pay a royalty contribution for every ton produced at all existing mining complexes. This royalty will raise additional tens of millions for the Trust based on current production estimates.
— Patriot has accepted the UMWA’s litigation trust proposal verbatim, except that the funding obligation has been reduced to a level Patriot can afford, and the appointment of members will be evenly apportioned between the UMWA and the Committee.
— As set forth in Patriot’s revised Section 1113 Proposal, Patriot has pledged to pursue good faith negotiations with the UMWA 1974 Pension Plan toward a mutually agreeable payment arrangement that avoids creation of a large unsecured claim that would be detrimental to other Patriot creditors (including the UMWA).
Unfortunately, Patriot simply does not have the financial resources to support its current benefit levels and will not survive without substantial changes across its cost structure. While we very much regret that these changes are necessary, we hope and trust that the UMWA will work with us on a collaborative basis to achieve a successful reorganization. Failure to reorganize will almost surely lead to a devastating loss of jobs and healthcare coverage for more than 21,000 active workers, retirees and their dependents.
UMWA officials are still reviewing the Patriot filings and declined comment this afternoon.