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Here’s the latest word on the Patriot Coal bankruptcy hearing, via The Wall Street Journal’s Jacqueline Palank:
A bankruptcy judge on Tuesday “strongly” recommended that Patriot Coal Corp.’s would-be buyer and the union representing its miners head back to the bargaining table one last time to try to reach a deal on the miners’ future employment.
After presiding over a four-hour trial, Judge Keith Phillips of the U.S. Bankruptcy Court in Richmond, Va., declined to rule on Patriot’s request to reject the collective bargaining agreements with the United Mine Workers of America union.
Patriot has warned that its pending sale to Blackhawk Mining LLC—and the ultimate survival of its business—depends on its ability to shed the agreements, though the union says Patriot hasn’t made a good-faith effort to negotiate new deals.
“Based on what I’ve heard today, I think there [are] arguments to be made from both sides,” the judge said.
Patriot Coal is back in U.S. Bankruptcy Court in Richmond, Virginia, today — this time on its motion to be released from its labor contracts with the United Mine Workers union.
As The Wall Street Journal reported, the judge yesterday indicated approval of a plan that could allow a Virginia environmental group to buy some of Patriot’s properties with the intent to reclaim them:
Judge Keith Phillips of the U.S. Bankruptcy Court in Richmond, Va., on Monday said he would sign off on the Sept. 9 auction. An affiliate of the Virginia Conservation Legacy Fund will lead off the bidding with its offer to take responsibility for $400 million in liabilities—workers’ compensation, black lung and environmental—tied to the assets.
The auction proposal had received objections from Patriot’s unsecured creditors’ committee and lender agent Barclays Bank PLC regarding the $5 million breakup fee Patriot sought to offer VCLF should it lose the bidding. However, those were resolved during the hearing with an agreement to require any winning bidder’s offer to provide enough cash to cover the fee.
The VCLF bid, which doesn’t include cash, does feature a pledge to issue new equity to Patriot’s creditors.
This month, VCLF attorney Andrew Troop told the bankruptcy court that through the deal, the nonprofit hopes to balance its quest to reclaim land through reforestation efforts while honoring the region’s tradition of coal production.
“Its desire here is to…reclaim land, operate responsibly, provide some return to creditors who otherwise it looks like would receive nothing or very little in connection with this plan, preserve jobs and enter into a new workable resolution with the United Mine Workers” of America union, he said at an Aug. 18 hearing.
Here’s the latest from the United Mine Workers of America, in response to the recent move by Patriot Coal to try to break its union contract:
The language of the court documents filed by Patriot Coal asking for the elimination of the company’s collective bargaining agreement and its pension obligations would seem to indicate that the UMWA and its members are responsible for the company’s present predicament and that we are holding up a resolution to this bankruptcy.
Nothing could be further from the truth. No group of people have made more sacrifices to get Patriot Coal through the last couple of years than active and retired UMWA members. They have given up millions in wages and benefits, including retiree health care benefits that are a matter of life and death for thousands of them.
It is outrageous for Patriot and Blackhawk to hold up these miners and retirees as the reason this company will or won’t fail. What we are seeing here is an attempt to hand over yet more millions to a handful of Wall Street financiers at the expense of working and retired coal miners in Marion, Boone and Logan counties in West Virginia.
We have never said this process is at an end or that we have reached some sort of impasse. We have remained ready up to now to meet Patriot and their masters at Blackhawk halfway. But if that’s not possible, we are prepared to meet them head-on.
Here’s the news from The Associated Press:
Patriot Coal wants a bankruptcy judge’s permission to reject the company’s collective bargaining agreement with union miners and change retirees’ health care benefits … Patriot wrote that it would otherwise run out of cash and have to liquidate in a matter of weeks.
Patriot said the move would be necessary to close on a proposed partial sale to Lexington, Kentucky-based Blackhawk Mining LLC.
Otherwise, the United Mine Workers of America would need to reach collective bargaining terms with Blackhawk, which doesn’t want to contribute to the pension plan. Patriot wrote that discussions with the UMWA and Blackhawk are at an impasse.
Of course, we’ve seen this movie before. But it’s far from clear how it will end this time. Certainly, though, this Patriot move provides quite a contrast to what the bankrupt company sought from the court in this regard (as reported by West Virginia Public Broadcasting:
Last Friday, the United Mine Workers of America filed an objection to Patriot Coal’s proposed bankruptcy plan, which includes $6.4 million in bonuses paid to management employees.
The UMWA says Patriot’s proposed “key employee” bonus plan would benefit only the top executives. The union is concerned that the plan will ultimately lead to union miners having to take pay cuts, reduce their benefits, or even losing their jobs.
“At a time when Patriot is attempting to rid itself of obligations to workers, retirees, widows and families, it is simply outrageous that the five people who already make the most money in the company are getting hundreds of thousands more,” UMWA International President Cecil E. Roberts said. “For what? On what planet does it make sense to reward people who preside over bankrupt companies?”
Here’s the news out of Washington this morning:
U.S. Senators Joe Manchin (D-WV), Shelley Moore Capito (R-WV), Bob Casey (D-PA) and Sherrod Brown (D-OH) today introduced the Miners Protection Act. This legislation would ensure that the federal government and coal operators honor their obligation of lifetime pensions and health benefits to retired miners and their families who are facing uncertainty as a result of the financial crisis and corporate bankruptcies
According to the press release:
Retired miners are facing uncertainty because the United Mine Workers of America (UMWA) 1974 Pension Plan is severely underfunded. Unlike other public and private pension plans, the 1974 Pension Plan was well-managed and funded prior to the 2008 financial crisis, which hit at a time when this Plan had its highest payment obligations. This – coupled with the fact that 60% of the beneficiaries are “orphan” retirees whose employers are no longer in the coal business, and the fact that there are only 10,000 active workers for 120,000 retirees – has placed the Plan on the road to insolvency. If the Plan becomes insolvent, these beneficiaries face benefit cuts and the Pension Benefit Guaranty Corporation will assume billions of dollars in liabilities.
To address these issues, the Miners Protection Act would:
Amend the Surface Mining Control and Reclamation Act to transfer funds in excess of the amounts needed to meet existing obligations under the Abandoned Mine Land (AML) fund to the UMWA 1974 Pension Plan to prevent its insolvency.
Make certain retirees who lose health care benefits following the bankruptcy or insolvency of his or her employer eligible for the 1993 Benefit Plan. The assets of Voluntary Employee Benefit Association (VEBA) created following the Patriot Coal bankruptcy would be transferred to the 1993 Benefit Plan to reduce transfers from the AML fund.
Coal miner Murray Energy Corp. is set to announce layoffs of around 1,800 workers at nine locations on Friday, according to a person familiar with the matter, dealing another blow to the coal-mining industry in Appalachia.
The planned layoffs, which represent about 21% of Murray’s workforce, will come largely at mines in West Virginia and Ohio, a region already reeling from the impact of abundant natural gas and a global coal glut.
The story continues:
Robert Murray, the 75-year-old founder and chief executive of the company, made the decision Wednesday after a 12-hour meeting with operations managers, according to the person familiar with the matter.
The company decided to make much bigger cuts than it had previously been considering because of growing concerns about the slumping market for thermal coal, the person said.
The company plans to send formal notice on Friday to workers at the Monongalia County Coal Co. in West Virginia, the mine that will see the largest layoffs. The mine had been idled earlier this spring, putting several hundred miners out of work.
Asked to confirm the Journal’s report, a Murray Energy spokesman said the company would have a statement this afternoon …
UPDATED: Word of these layoffs came first in reports from the Pittsburgh Business Times and the Tribune-Review, both of which had stories yesterday, based on comments Bob Murray made at an industry conference.
We’ve written many times in this space about the huge problems, tricky politics, and uncertain future that challenge United Mine Workers of America President Cecil Roberts. See here, here, here and here.
So I’ve been remiss in not mentioning the op-ed commentary that President Roberts had in the Gazette a few weeks ago, in which he opined, among other things:
Downturns are common in the coal industry. But this one may never end because of a host of regulations coming from the Environmental Protection Agency that are slowly but surely putting a stranglehold on the lives and livelihoods of tens of thousands of coal miners, utility workers, electrical workers, boilermakers, railroad workers and their families.
Power plants that have already spent millions coming into compliance with current emissions standards are closing prematurely. Their owners cannot economically justify spending the millions more it will cost to comply with this new onslaught of regulations. That means jobs are lost, tax revenues are squeezed, public services are threatened, school budgets are slashed.
Some see this as a cause for celebration. I do not. I see the faces of those who will suffer the indignities of unemployment. I hear the voices of those who have provided a good life for their families yet now wonder how long they can hold on to their house. I see the fear in the eyes of retirees who are suddenly threatened with the loss of hard-earned pensions and health care.
The piece went on to conclude:
We must recognize that other nations are not going to stop burning coal to build their economies just because we wag our finger at them and say they should, and that includes a growing list of developed nations like Germany and Poland. The answer to building a future our electronically wired descendants can live happily in is to develop and implement technology that allows the world to continue to use coal to generate electricity in a more environmentally friendly way.
We are on that path to doing that through carbon capture and storage technology, but significant hurdles remain that will require significant government resources to be invested. It’s going to require the kind of technological and engineering innovations – and corresponding resources – it took to put a man on the moon. As important as that effort was, in this challenge, the stakes are much higher.
The op-ed prompted a quick — and not especially thoughtful — response from the Ohio Valley Environmental Coalition. Organizer Dan Taylor wrote to ask why the UMWA isn’t focusing on improving worker safety (as if that isn’t something the union does) or taking on “bad actors” like Patriot Coal (as if the UMWA hadn’t just fought a major battle with Patriot and come out with a pretty good deal).
The first report I saw about the latest news regarding Murray Energy came from the Observer-Reporter in southwestern Pennsylvania:
Murray Energy Corp. confirmed Wednesday it will terminate medical coverage of nearly 1,200 Consol Energy retirees who worked in coal mines that Murray purchased 16 months ago.
It said benefits for those salaried retirees – medical, prescription drug and life insurance – will be halted Dec. 31. The cutoff will not apply to union members, and will affect 161 households in Pennsylvania.
Murray Energy confirmed the move in this prepared statement:
Murray Energy Corporation (“Murray Energy”) has confirmed that, as of December 31, 2014, and in keeping with Murray Energy’s historic practice, it will not be able to provide retiree medical coverage to salaried retirees of Murray American Energy, Inc., formerly Consolidation Coal Company (“Consolidation Coal”).
Murray Energy’s inability to provide these benefits is, in part, due to the destruction of the coal industry, including our markets, by the Obama
Administration and its appointees and supporters, who have eliminated the livelihoods of thousands of coal miners, and their families, by the forced closing of 392 coal-fired electric power plants in America, now and in the immediate future. Due to these actions and devastated coal markets, Murray Energy is unable to support these benefits.
Murray Energy is making this announcement at this time to allow affected salaried retirees of Consolidation Coal the opportunity to make other arrangements. Over eighty percent (80%) of the lost benefits can be made up with Medicare. Also, these former Consolidation Coal retirees have good pension benefits. The Company has provided these salaried retirees with information on and access to alternate coverage.
What’s interesting about the release is that, while Murray blames its action on President Obama’s policies, the statement notes that dropping these retiree health-care benefits is “in keeping with Murray Energy’s historic practice.” I asked Murray Energy media director Gary Broadbent about this, but he declined to comment about this internal contradiction, saying in an e-mail message:
You have our statement. That is all we have to say.
Another very interesting development was this statement issued by CONSOL Energy:
As part of the transaction, which closed in the fourth quarter of 2013 where Murray Energy acquired CONSOL Energy’s five West Virginia coal mines, we insisted that Murray Energy continue to provide retiree health insurance to our former salaried employees for at least one year. CONSOL Energy’s hope and expectation was that Murray Energy would honor these obligations beyond the one year period that was negotiated as part of our agreement. While we respect the fact that Murray Energy is a different company with different priorities, this is an unfortunate and disappointing decision.
Have I missed all of the commentary from West Virginia political leaders about this particular turn of events impacting coal industry retirees?
The Associated Press had the story yesterday out of St. Louis:
A federal bankruptcy court has approved Patriot Coal’s reorganization plan, clearing the way for it to emerge from 17 months of bankruptcy, the St. Louis-based company said Tuesday as it finished wrapping up its exit financing.
The story continued:
As part of its push to regain its financial footing since filing for Chapter 11 bankruptcy in July of last year, Patriot Coal Corp. lined up $586 million in financing from Barclays and Deutsche Bank, having already obtained a $250 million infusion through a rights offering backstopped by Knighthead Capital Management LLC.
Key to Patriot’s strive to exit bankruptcy was its October settlement with former corporate parent Peabody Energy Corp. of months of legal tangling over retiree health benefits. Under that deal, Peabody, which spun off Patriot in 2007, will spend $310 million over four years to fund the benefits and provide about $140 million in letters of credit to Patriot.
In a press release, Patriot CEO Ben Hatfield said:
This marks the final step in Patriot’s financial restructuring. We look forward to a new beginning as a well-capitalized company providing a competitive product to the electric utility and steel industries.
Early this morning, Alpha Natural Resources issued its latest quarterly financial statement, and it certainly has some interesting news:
Alpha has made significant progress toward reaching a tentative understanding to settle for $265 million the securities class action brought by Massey stockholders in early 2010 alleging deficiencies in Massey’s disclosures of safety information.
The statement continues:
Additional material terms must still be negotiated. If a definitive settlement agreement is achieved and approved by the court, the settlement would result in the dismissal of the action. Alpha expects insurance recoveries of approximately $70 million to help cover the cost of the settlement.
In connection with these developments, Alpha recorded an increase in its loss contingency accruals of approximately $115 million in the third quarter. Alpha plans to continue settlement discussions in an effort to resolve all outstanding issues, including the form of consideration. Whether Alpha can resolve those issues, and when, remains uncertain, but if the case can be resolved, it would staunch the uncertainty, distraction, risks and potential costs that pursuing this litigation would involve, and would close the book on the most significant Massey-related litigation issues passed to Alpha in the acquisition.
We wrote about two weeks ago regarding the widespread speculation that Murray Energy was going to buy CONSOL Energy’s major coal operations in Northern West Virginia, and this morning that deal was made official.
The first thing I saw was Pittsburgh-based CONSOL’s statement saying:
CONSOL Energy Inc. (NYSE: CNX) has taken a transformative step to advance its E&P growth strategy. The company has entered into an agreement to sell its Consolidation Coal Company (CCC) subsidiary, which contains all five of its longwall coal mines in West Virginia, to a subsidiary of Murray Energy Corporation (Murray Energy) for $3.5 billion in value.
“While this transaction furthers CONSOL’s E&P growth strategy,” commented J. Brett Harvey, CONSOL’s chairman and CEO, “the sale of these five mines – assets that have long contributed to America’s economic strength and our company’s legacy – was a very difficult decision for our team. The employees at these mines are among the safest and most productive miners anywhere in the world. In the end, we concluded that the time had come to sell these mature assets to ownership whose strategic direction is more aligned with those mines.”
The CONSOL statement explained:
The CCC mines being sold are McElroy Mine, Shoemaker Mine, Robinson Run Mine, Loveridge Mine, and Blacksville No. 2 Mine. Collectively, these mines produced 28.5 million tons of thermal coal in 2012. Murray Energy is acquiring approximately 1.1 billion tons of Pittsburgh No. 8 seam reserves.
CONSOL’s River and Dock Operations are included in the transaction. In 2012, the fleet of 21 towboats and 600 barges transported 19.3 million tons of coal and other commodities along the upper Ohio River system.
Murray Energy issued its own statement, quoting company president Bob Murray saying:
No Company has developed a better legacy with its employees, with its customers, with the financial markets, with the regulatory agencies, or with the public in general, over many decades, than has CONSOL and Consolidation Coal. Murray Energy intends to preserve this well-earned legacy.
The Murray statement has some figures that explain the size of this deal:
Murray Energy direct employees: 3,300 before the transaction, and 7,100 after the transaction; annual coal production, 30.1 million tons before, and 58.6 million tons after; coal reserves of 859 million tons before the transaction, and 2,396 million tons after the transaction.
This is truly a momentous time for the combined employees of Murray Energy Corporation and for our company.
The United Mine Workers of America, which represents 2,800 miners at the operations Murray is buying from CONSOL, issued its own statement:
This changes nothing for our members with respect to the terms and conditions of their employment. Our collective bargaining agreement does not go away with this transaction, and our members remain covered by its provisions. There will be no changes in pay, benefits, insurance, schedules, working conditions, safety provisions, grievance procedures or any other language in the contract.
The press releases came very late last night — just before midnight — and best I can tell Taylor Kuykendall was the first out with a story early this morning:
Patriot Coal Corp. announced it has secured a financial sponsor and reached key settlements to pave the way for its emergence from Chapter 11 bankruptcy reorganization by the end of the year.
In a news release issued just before midnight on Oct. 9, Patriot said it had reached an agreement with Knighthead Management LLC to financially sponsor its exit from bankruptcy. Patriot also settled with both Peabody Energy Corp. and Arch Coal Inc. in exchange for an infusion of $250 million in new capital.
But what many folks in the coalfields will want to know is this, from the press release also issued late last night by the United Mine Workers of America:
The United Mine Workers of America (UMWA) has reached a global settlement with Peabody Energy and Patriot Coal that will provide funding of more than $400 million to cover future health care benefits for retirees affected by the bankruptcy of Patriot Coal. Those benefits will be paid by the Patriot Retirees Voluntary Employee Benefit Association (VEBA).
As described by the UMWA, here some brief details:
Peabody will make payments totalling $310 million over the next four years, the proceeds of which will be applied to future retiree health care benefits. Payments of $90 million will be made in 2014, followed by payments of $75 million each year at the beginning of 2015 and 2016, with a final payment of $70 million at the beginning of 2017.
Patriot has agreed to contribute $15 million to the VEBA in 2014, with up to an additional $60 million to be paid into the fund over the following three years. This is in addition to the production-based royalty payments Patriot will make to the VEBA in upcoming years that could provide more than $15 million.
For its part, the UMWA has agreed to relinquish the value of virtually all of its 35 percent stake in Patriot, which the union received as a result of a May 29 ruling by federal Bankruptcy Judge Kathy Surratt-States. The union has also agreed to halt its months-long public relations and direct action effort related to Peabody in St. Louis and elsewhere regarding the effects of the Patriot Coal bankruptcy.
The settlement will be submitted to Judge Surratt-States for her approval. She is expected to rule shortly after a Nov. 6 hearing on this matter.
UMWA miner Ricky Rose, who survived the 2001 disaster, showed me his truck — decorated to honor his fellow miners who were killed — during a visit to Brookwood, Ala., a few years ago.
Twelve years ago today, a series of explosions rocked the Jim Walter Resources No. 5 Mine near Brookwood, Ala., killing 13 coal miners. At the time, it was the worst coal-mining disaster in the U.S. in 17 years.
Unfortunately, since then we’ve had Sago, Aracoma, Kentucky Darby, Crandall Canyon and Upper Big Branch. During a visit to Brookwood in 2006, I attended a memorial service for those who died at No. 5, and I certainly recall what Darryl Dewberry, vice president of Alabama’s UMWA District 20, told the crowd:
The legacy of Brookwood remains unfinished. It can happen again without constant vigilance.
Here’s the announcement made yesterday by Patriot Coal:
Patriot Coal Corporation today announced plans to idle its Logan County complex located near Man, West Virginia, reducing thermal coal production by approximately two million annual tons. Pursuant to the WARN Act, the Company gave 60-day notice today to affected employees. The operations expected to be idled include the Guyan surface mine and the Fanco preparation plant and rail loadout – with a total of approximately 250 employees being impacted. Efforts are being made to place employees into open positions at other Patriot subsidiary operations, and the Company currently anticipates that about 50 employees will be offered jobs at those locations.
This is an unfortunate but necessary step to align Patriot’s production with expected sales,” said Patriot President and Chief Executive Officer Bennett K. Hatfield. “Despite the substantial progress being made in the Patriot reorganization, we still have to contend with the industry-wide challenge of coal prices that have fallen well below production costs at many Central Appalachian mines. Thermal coal markets are extremely weak due to low natural gas prices and costly regulatory changes that have reduced coal-fueled electricity generation capacity.”
And here’s a statement issued by UMWA President Cecil Roberts:
Today’s announcement by Patriot is very disappointing, though not unexpected. The company had already announced its intention to close this complex in the near term, however the continued depression in the coal market led to this action being taken sooner.
There will be jobs available for some of our members at the Hobet mine in Boone County, others are eligible for retirement and will choose that route.
This makes it even more important that we continue our fight to secure the long-term retirement health care benefits our members have earned. This is a former Arch Coal mine, and Arch made the promise of retiree health care to these miners and their spouses. We will continue to work in Congress, argue in court, and march in the streets until our struggle for fairness and justice is won, and we have a long-term funding solution for their benefits.
Here’s the news in today from the United Mine Workers of America:
The United States Bankruptcy Appellate Panel for the Eighth Circuit today reversed a decision by federal Bankruptcy Judge Kathy Surratt-States that would have allowed Peabody Energy to stop paying health care benefits for some 3,100 retirees that it had assumed in the spinoff of Patriot Coal.
The strongly-worded decision by the three-Judge panel means that Peabody continues to hold responsibility for paying the health care benefits for this group of retirees, who are mostly in the Midwest.
“This is a bright ray of good news in what has been a long, dreary period for the retirees, their dependents and widows who have been desperately worried about what’s going to happen to their health care,” UMWA International President Cecil E. Roberts said.
“Peabody has spent years trying to get rid of its obligations to the thousands of retirees who made it the richest coal company in the world,” Roberts said. “This decision foils part of that plan. And it makes us even more determined to keep fighting to make sure the company lives up to its entire obligation to these miners.”
In preparation for the spinoff of Patriot, Peabody signed a 2007 agreement with Heritage Coal Co., which was at the time a Peabody subsidiary that Peabody included in the Patriot spinoff. That agreement allowed Peabody to reduce its contribution levels for retiree health care benefits to the same level as Heritage (Patriot) would pay if such levels were modified in the future.
Peabody argued that since Heritage (Patriot) was relieved of all its obligation to pay for retiree health care by Judge Surratt-States, that Peabody should be relieved of its obligation as well. Judge Surratt-States agreed, and issued a ruling in Peabody’s favor on May 29. Patriot and Heritage appealed, and their appeal was supported by the UMWA.
The ruling is posted here.
Here’s the news just in tonight:
Members of the United Mine Workers of America (UMWA) who work at Patriot Coal operations in West Virginia and Kentucky today ratified a settlement the union reached with the company late last week that makes significant improvements in terms and conditions of employment over a federal Bankruptcy Judge’s order from last May.
The final tally was 85% in favor to 15% opposed. Members from 13 local unions participated in the vote, which was overseen by UMWA local union tellers and conducted at worksites. The UMWA International Auditor/Tellers have certified the vote.
“The membership has made it clear that they are willing to do their part to keep Patriot operating, keep their jobs and ensure that thousands of retirees continue getting the health care they depend on and deserve,” UMWA International President Cecil E. Roberts said. “This has been a difficult and uncertain year for our members. But I believe that in the end, they understood that we had done a lot to improve what the judge had ordered. They also understood all that was at stake and resolved to move forward in a positive way.
“But as we work to keep Patriot a viable company into the future, we have not forgotten how we got here and who is responsible,” Roberts said. “With this agreement, we have foiled the schemes of Peabody Energy and Arch Coal by continuing to both provide health care for retirees and maintain union jobs at these mines.”
It’s a bit day today for miners at Patriot Coal, and for the bankrupt coal company. As Jessica Lilly reports over at West Virginia Public Broadcasting:
The United Mine Workers of America is expected to vote today on an agreement between Patriot Coal and the union. The nation’s largest miners’ union says a proposed settlement with Patriot Coal would restore most wage cuts the company had sought as part of its bankruptcy reorganization.The nation’s largest miners’ union says a proposed settlement with Patriot Coal would restore most wage cuts the company had sought as part of its bankruptcy reorganization.
The ratification vote is expected to happen at the various Patriot subsidiary workplaces in West Virginia and Kentucky where the UMWA represents the workers.
Some 1,800 current or laid-off Patriot workers in the two states are eligible to cast a ballot.
If you missed it before, here’s the video of UMWA President Cecil Roberts explaining the deal to union members (though you have to sit through a fairly long history of Patriot’s creation to get to the actual contract details):
There are several key documents you can read to understand this more fully: A proposed new Collective Bargaining Agreement between the UMWA and Patriot Coal operations, a Memorandum of Understanding between the company and the union, and a list of existing Collective Bargaining Agreements between various parties to the bankruptcy proceeding.
Last evening, Patriot Coal lawyer made this filing to the U.S. Bankruptcy Court out in St. Louis, asking for court approval of the company’s proposed deal with the United Mine Workers of America.
Michael Niven over at SNL Financial is reporting on some of the details of the proposed deal:
The proposed equity arrangement is in line with what Patriot originally proposed in April when it offered the union a 35% stake in the reorganized company. The UMWA later submitted a counter proposal calling for a 57% stake in a reorganized Patriot.
The trust would also be funded by other income sources, including additional payments from Patriot, the amounts of which would be determined by the company’s financial performance. Patriot would also fund the retirement trust through royalty payments on coal production. The agreed upon royalty rates are 20 cents/ton on targeted production levels established in Patriot’s five-year business plan and $1/ton on any production that exceeds targeted levels.
The complex settlement deal also includes a wide range of other terms including wage concessions from the union and obligations that Patriot facilitate union representation at some non-union mines.
Additional documents that are available about this today include three exhibits to that court filing: A proposed new Collective Bargaining Agreement between the UMWA and Patriot Coal operations, a Memorandum of Understanding between the company and the union, and a list of existing Collective Bargaining Agreements between various parties to the bankruptcy proceeding.