Retired coal miner Ricky Clark, left, of Man, W.Va., protests with around 2,000 other retired and active coal miners and their
The United Mine Workers of America is promising more protests in its continuing campaign regarding the Patriot Coal bankruptcy and the future contract and benefits for thousand of miners and retirees , as everyone is gearing up for a major court hearing that starts on April 29, and in the wake of last week’s announcement by Patriot Coal of a new offer to the mine workers, described in this story by the Gazette’s Paul Nyden:
Janine Orf, Patriot’s vice president for investor relations, said Thursday that the UMW would be given “a direct 35 percent equity stake in the reorganized enterprise.”
The bankrupt company said the union could then sell all or part of the stake and put the money in the new voluntary employees beneficiary association, or VEBA, that the company has proposed setting up.
Under the company’s new proposal, retiree health-care benefits would be moved to the VEBA Trust on Jan. 1, 2014, an extension of six months, if the UMW agrees to a short-term funding proposal.
If union leaders agree, UMW retirees and their beneficiaries will continue getting their current level of benefits until the end of the year.
The extension is being offered, Orf said, to give the UMW “ample time” to figure out the “optimum level of health-care coverage the VEBA Trust can provide.”
On Friday, UMWA President Cecil Roberts had this response:
While we are working with our financial advisors to fully analyze the amended Section 1114 proposals made by Patriot Coal yesterday with respect to health care for retired miners, their dependents and widows, this appears to be a step forward by the company.
There are still considerable problems with the company’s intentions to change the existing contract for active workers under the Section 1113 process. We are nowhere near a fair and just agreement regarding that part of this equation.
We continue to believe that an agreement can be reached that provides Patriot with the short-term relief it needs to emerge from bankruptcy, keep people working and become a profitable company again without putting retirees’ lives at risk or demanding the deep sacrifices the company says it needs from hourly workers. We will continue our discussions with the company on these issues.
Meanwhile, if you haven’t read these two stories by the State Journal’s Tyler Kuykendall (here and here), they are worth checking out for more detail and background on this whole mess, and for sure check out yesterday’s story recounting the State Journal’s interview with Patriot CEO Ben Hatfield, which includes quotes like these from Hatfield:
Patriot CEO Ben Hatfield was not at Patriot Coal when the company filed Chapter 11 bankruptcy just five years after it was birthed from the assets and liabilities of Peabody Energy. Hatfield was the CEO of International Coal Group. He said at that time, coal executives were scratching their heads about the formation of Patriot Coal.
“Frankly, as a competitor, we looked at that and said ‘how could that work?’ It looks like a bad balance here – too many liabilities and not enough assets,” Hatfield said. “Now, they were some good assets. These are coal mines that have a lot of potential and good people and good management, but an inordinate amount of legacy liabilities disproportionate to the assets. As a competitor we were very suspect from the day the spin was announced as to whether this venture could survive.”
The story goes on:
In Patriot’s first annual report, it claimed accrued post-retirement benefit liabilities combined with workers’ compensation liabilities totaled about $720 million — equivalent to about 60 percent the size of its assets, which was valued at $1.2 billion. The value of Peabody’s assets outweighed liabilities ten-to-one, about half the proportion prior to the spin-off.
“Even if you go back to the public announcements at the time of the spin, Peabody proudly declared they had divested a significant, indeed the majority of their long term labor liabilities,” Hatfield said. “They saw it as an opportunity to segregate Peabody going forward from liabilities that were sure to grow in an industry that is very challenged, particularly in Appalachia. So, I think it was the plan.”
So, did the stack of legacy liabilities – a majority of them tied to workers who never worked in a mine owned by Patriot before or after the spin-off – “doom” Patriot from the start? That’s essentially what the United Mine Workers of America have been claiming since the bankruptcy was filed.
“I think it’s a fair assessment to be honest,” Hatfield said. “It’s one of the areas where I frankly agree with many of things (UMWA President) Cecil Roberts has said. Something doesn’t quite smell right here.”
Hatfield said everyone at Patriot Coal is making sacrifices and if the company is to emerge from bankruptcy, the organized labor force will have to do the same. That doesn’t mean he’s pleased with the idea of thousands of miners losing their benefits.
“It isn’t fair and I don’t like the outcome either,” Hatfield said. “Keep in mind, I’m West Virginian, born and bred. I grew up among coal miners, went to school with coal miners, worshipped with coal miners and will one day be buried among coal miners. This is where I spent most of my life and my career. It is absolutely the wrong outcome when innocent people are now in their seventies and eighties, and many of them can certainly not do anything about it, wind up in this kind of predicament. It’s the wrong outcome.”
And it’s also worth noting that, while the Daily Mail here in Charleston dismissed the UMWA’s protests as “an emotional way to sway public opinion” — and highlighted the paper’s view that “the reality is that nobody benefits if wealth creation ends” — State Journal owner Bray Cary offered strong support for the miners and pensioners:
Frankly, the United Mine Workers of America have every right to protest Patriot Coal’s benefit cuts. Benefits were negotiated in good faith and Patriot needs to live up to their end of the deal, not hide behind legal proceedings. But this is larger than this fight and if the court rules in Patriot’s favor, they are setting a dangerous precedent. When companies promise one thing, and then try to do something else, everyone loses.