Coal Tattoo

Contract vote a relief for UMWA, Murray Energy

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The news Friday evening was certainly welcome for both the United Mine Workers of America union and Murray Energy:

Rank-and-file members of the United Mine Workers of America voted Friday to approve a proposal for a new contract with the Bituminous Coal Operators Association, whose major member company is Murray Energy.

According a statement issued by the UMW, 60.3 percent voted in favor of the new collective bargaining agreement at six Murray Energy mines in West Virginia and Ohio.

As our story noted:

Murray has previously warned that finalizing a new contract with the UMW is a crucial part of his company’s plan to avoid financial default, and has hinted that without a deal he might consider bankruptcy court protection.

While the UMWA membership earlier this summer voted down an earlier contract proposal, the last thing union leaders want is to face a Murray Energy bankruptcy that would certainly not help their current battle to preserve union pensions and health-care benefits.

UMWA President Cecil Roberts said:

This was a tough vote for our members to take. The coal industry is in a depression and more than 50 companies have filed for bankruptcy in the last few years. Thousands have been laid off. The pressures on those who are still working are tremendous and growing.

But despite all that, our members took a courageous stand by voting to try to keep their company operating while maintaining the best wages, benefits and working conditions in the American coal industry.

And Murray CEO Bob Murray said:

This is a good day for Murray American’s UMWA-represented employees, as this agreement will go a long way toward ensuring that our coal mines can keep operating, and our employees working, even in the current depressed coal marketplace.

Interior drops appeal of Blair Mountain ruling

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Blair Mountain

 

Word out of the U.S. Court of Appeals for the District of Columbia is that the Interior Department has dropped its challenge of a recent lower court ruling in favor of citizens and organizations trying to keep Blair Mountain listed on the National Register of Historic Places.

Department of Justice lawyers for Interior’s National Park Service and the Keeper of the National Register filed this motion to voluntarily dismiss their appeal.

Readers may recall this ruling from April in which a district court judge vacated the Keeper’s decision to remove Blair Mountain from the register.

UPDATED:  Here’s a statement from the National Park Service:

The National Park Service decided to accept the district court’s April 11, 2016, ruling and to implement the court’s remand order by revisiting its December 2009 decision to de-list the Blair Mountain Battlefield site from the National Register of Historic Places.

UMWA reaches new deal with Murray

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Miners Public Employees Rally

UPDATED:  The UMWA rank-and-file rejected this contract proposal.

Here’s the news announced this morning by the United Mine Workers of America:

The United Mine Workers of America (UMWA) announced today that it has reached a new tentative collective bargaining agreement with the Bituminous Coal Operators Association (BCOA) that will be submitted to its membership next week for ratification.

 UMWA International President Cecil E. Roberts said, “This tentative agreement comes six months before the expiration of the current agreement, however the rapidly deteriorating status of the American coal industry means that it is important to lock in the best terms and conditions we can before things get any worse. We believe this proposal does that, but it is up to the UMWA members who will vote on this agreement to make the final determination.”

 UMWA Local Unions will explain the proposal to members over the weekend and the ratification vote will take place next Tuesday, June 28. Details of the proposed agreement will not be released until after the ratification vote is tallied.

The BCOA, once the major negotiating group for the coal industry, now is made up mostly of Murray Energy operations. Here’s a statement issued this morning by Murray:

Murray American Energy, Inc. (“Murray American”) announced today that the Bituminous Coal Operators Association, Inc. (“BCOA”) and the United Mine Workers of America (“UMWA”) have reached a tentative labor agreement which, if ratified, will run from June 30, 2016 to December 31, 2021.

Mr. Robert E. Murray, the Chief Executive Officer of Murray American and Chairman of BCOA, said “We are pleased that the BCOA and UMWA have reached this very important tentative agreement, which will go a long way in ensuring that Murray American’s UMWA-represented employees are able to continue working, even in this very depressed coal marketplace. Indeed, over the past several years, the United States coal industry has been absolutely destroyed by policies of the Obama Administration and by the increased use of natural gas to generate electricity. Coal markets and prices have generally been cut in half. This tentative agreement provides the BCOA and UMWA with a path forward, even in these extremely difficult times.” The tentative agreement is subject to ratification by the members of the UMWA.

Murray American subsidiary companies which are members of the BCOA, include: The Ohio County Coal Company, which operates the Ohio County Mine; The Marshall County Coal Company, which operates the Marshall County Mine; The Marion County Coal Company, which operates the Marion County Mine; The Harrison County Coal Company, which operates the Harrison County Mine; and The Monongalia County Coal Company, which operates the Monongalia County Mine. Murray American currently has over 1,500 UMWA-represented active employees. The Ohio Valley Coal Company and The Ohio Valley Transloading Company, which together have over 200 UMWArepresented active employees, will also be voting on the tentative agreement with the UMWA.

 

Will Congress protect retired coal miners?

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CER

Photo by DYLAN LOVAN / AP — United Mine Workers of America president Cecil Roberts speaks to about 4,000 retired members at the Lexington Center in Lexington, Ky., last Tuesday. Roberts urged members to push for legislation that would protect pensions and health care benefits for retirees that have been put in jeopardy due to a downturn in the coal industry.

There’s been a growing public push for Congress to take action on legislation to rescue the troubled health-care and pension funds that provide for tens of thousands of retired United Mine Workers and their families across our nation’s coalfields.

Last week, the UMWA held a huge rally in Lexington to try to drum up more support for the bipartisan legislation. As the Associated Press recounted:

United Mine Workers president Cecil Roberts told the gathering in Lexington of about 4,000 members from seven states that miners spent their lives working in dangerous places to provide the nation’s electricity and steel. The miners, some of whom arrived in wheelchairs, don’t deserve having their benefits put in jeopardy, Roberts said.

“What do they want these people to do, get out of their wheelchairs and go back to the mines?” Roberts remarked after the rally.

(The AP, for reasons passing understanding, felt compelled to comment in its report that, Cecil Roberts “is popular among the union membership for his fiery oratorical style.”)

That rally followed a series of Senate floor speeches last month by Democrats, calling for action on the bill, and a letter by Sen. Joe Manchin, D-W.Va., and others urging Senate Majority Leader Mitch McConnell (whose role in blocking the measure was documented by the Washington Post) to act on the legislation prior to the summer recess.

In West Virginia, Republican Rep. David McKinley has been a strong supporter of the bill, and just yesterday, Sen. Shelley Moore Capito, R-W.Va., delivered a floor speech on the issue:

Continue reading…

What Trump didn’t tell the coal miners

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Republican presidential candidate Donald Trump puts on a miners hard hat during a rally in Charleston, W.Va., Thursday, May 5, 2016. (AP Photo/Steve Helber)

Republican presidential candidate Donald Trump puts on a miners hard hat during a rally in Charleston, W.Va., Thursday, May 5, 2016. (AP Photo/Steve Helber)

Last evening at the Charleston Civic Center, Republican presidential candidate Donald Trump certainly had a lot to say about coal miners. As the Gazette-Mail’s David Gutman reported:

The backdrop behind Trump was filled with men in miner’s stripes and hard hats waving “Trump digs coal” signs, and Trump peppered his remarks with his admiration for coal miners.

“I’ll tell you what folks, you’re amazing people,” Trump said. “The courage of the miners and the way the miners love what they do, they love what they do.”

“If I win we’re going to bring those miners back,” he said.

Then there was this:

Trump said he has “always been fascinated” by mining, “the engineering that’s involved and the safety and all that’s taken place over the last number of years.”

“All of it’s getting safe and as it gets safe they’re taking it away from you in a different way,” Trump said. “These ridiculous rules and regulations that make it impossible for you to compete, so we’re going to take that all off the table folks.”

As Gutman also reported, Trump is offering no real plan for how he’s going to reverse the downward spiral of the Southern West Virginia coal industry, though he (like West Virginia Democratic front-runner Jim Justice) is making bold promises — promises — in the face of just about every credible projection or analysis of where coal is actually headed (see here, here and here).

Just as important, though, is another issue that Trump didn’t talk about at all:  The growing crisis facing the pension and health-care funds that cover thousands upon thousands of United Mine Workers of America retirees and their families.

In the most recent UMWA Journal, union Secretary Treasurer Daniel Kane called this “the most important political issue facing the union right now. UMWA President Cecil Roberts told a U.S. Senate Committee in March:

… Today, there is a looming health care tragedy unfolding in the coalfields, with potentially devastating human effects. In many cases, the loss of health care benefits will be a matter of life or death. In all cases, it will be a financial disaster that the retired miners, who live on very meager pensions, will not be able to bear.

These are real people we are talking about. They live on small pensions, averaging $530 per month, plus Social Security. They rely very heavily on the health-care benefits they earned through decades of hard work in the nation’s coal mines … They spent decades putting their lives and health on the line every single day, going into coal mines across this nation to provide the energy and raw materials needed to make America the most powerful nation on earth. And they did that even though they knew they would pay a physical price for it.

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130416 Patriot STL DHK 107

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.

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Court action continues in Patriot bankruptcy

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patriotlogoPatriot 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.

 

 

UMWA blasts ‘outrageous’ actions by Patriot

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Cecil Roberts, Steve Earle

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.

 

Patriot Coal: Here we go again …

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Patriot Coal May 2013 Rally

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.

You can read the court filing for yourself here or here.

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?”

Bipartisan bill aims to fund miner pensions

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Coal

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.

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Report: Murray planning 1,800 layoffs

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Robert Murray

Here’s the report out today from the Wall Street Journal:

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.

Cecil Roberts re-elected as UMWA president

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cecilsenatehearing2010

Here’s some news from the United Mine Workers of America:

United Mine Workers of America (UMWA) International President Cecil E. Roberts and International Secretary-Treasurer Daniel J. Kane have been reelected by acclamation to new five-year terms as the international union’s top officers, the union’s Auditor/Tellers certified last Friday … 

… Roberts has served as International President of the UMWA since 1995, and has now been reelected by acclamation for the fifth time. He has served in that office longer than anyone other than the legendary John L. Lewis, who was President of the UMWA from 1920-1960. A West Virginia native, Roberts first won International Union office in 1982, when he was elected Vice President.

President Roberts said:

I am extremely honored to be given this responsibility for another five years. To have the trust of the membership of this union and for them to continue to have such confidence in our leadership is humbling. Dan and I pledge to continue doing our best to keep our union strong and vital in what are very challenging times for the active and retired workers we represent – coal miners, manufacturing workers, health care workers, maintenance workers and civil service workers.

And here’s something else:

Also elected with Roberts and Kane were a slate of nine International At-Large and International District Vice Presidents, who together make up the union’s International Executive Board; and three International Auditor/Tellers representing Canada and the eastern and western United States (list below).

Among those is Tanya James, a coal miner from West Virginia who is the new Auditor/Teller for the eastern United States. She becomes the first woman elected to international office in the UMWA’s 124-year history. In the previous UMWA election in 2009, International At-Large Vice President James Gibbs became the first African-American to be elected to union-wide office.

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Still searching for Cecil Roberts

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cecilsenatehearing2010

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).

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What next for Murray Energy?

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Robert Murray

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?

Patriot Coal set to emerge from bankruptcy

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Patriot Bankruptcy Protest

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.

 

Alpha close to $265 million deal in safety suit

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ALPHASIGN2

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.

And:

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.

Murray confirms purchase of CONSOL mines

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murrayhorizont2We 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.

Murray  said:

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.

 

 

Big news: UMWA reaches deal with Patriot, Peabody

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Patriot Bankruptcy Protest

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.

Miners Public Employees RallyUMWA President Cecil Roberts said:

I am very pleased that we have been able to reach this agreement with Peabody and Patriot. This is a significant amount of money that will help maintain health care for thousands of retirees who earned those benefits though years of labor in America’s coal mines. This settlement will also help Patriot emerge from bankruptcy and continue to provide jobs for our members and thousands of others in West Virginia and Kentucky.

From Patriot’s perspective, here’s how they explained these developments in their press release:

The Company reached an agreement with Knighthead Capital Management, LLC (Knighthead) to financially sponsor Patriot’s emergence from bankruptcy.  In addition, after months of litigation and negotiation with Peabody Energy Corporation (Peabody) and Arch Coal, Inc. (Arch), Patriot has entered into settlements with both companies.  These agreements will provide the Company with a significant liquidity infusion and position it to obtain the exit financing necessary to emerge from Chapter 11 as a strong, well-capitalized business.  Additionally, the agreements will result in funding for the United Mine Workers of America (UMWA)-sponsored Voluntary Employee Beneficiary Association (VEBA) trust of more than $400 million to provide healthcare coverage for UMWA retirees.

bhatfield12Patriot CEO Ben Hatfield said:

Reaching these agreements represents a pivotal juncture in Patriot’s restructuring.  With Knighthead’s financial backing and the funding provided by Peabody and Arch, Patriot is now well-positioned to secure exit financing.  This sets a clear path forward for Patriot to emerge from Chapter 11 by year-end as a strong competitor in the coal industry.

In a separate press release, Peabody Energy chief legal officer Alexander C. Schoch said:

Peabody has continued to fund healthcare benefits for retirees during Patriot’s bankruptcy proceedings.  We are pleased to resolve the uncertainty among Patriot retirees by providing substantial funding for the newly established Voluntary Employee Beneficiary Association (VEBA).  Future healthcare benefits for Patriot retirees will now be determined by managers of the new VEBA.

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Remembering the Jim Walter Mine Disaster

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RickyRoseTruck

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.