Smith said the new contract will promote the "creation of a mechanism through a VEBA [Voluntary Employee Benefit Association] to continue to pay all retiree health benefits. How we get that done is still in flux. For people already retired, their health-care benefits will continue."
The proposed contract also includes slight reductions in paid vacation, holiday and sick days.
The use of contract workers, typically non-union, may also increase. Contractors will not be hired to actually produce or process coal. The use of contractors, who will also not hold permanent positions, will not cause any union workers to get laid off.
Patriot will also be allowed to withdraw from making payments to existing UMW plans such as the 1993 Benefit Plan and 2012 Retiree Bonus Account Trust and Plan.
U.S. Bankruptcy Judge Kathy Surratt-States, Smith said, also "allowed Patriot to completely get out of the UMW 1974 Pension Plan. But at the end of the day, Patriot is staying in the 1974 plan. No pensioner's pension will be affected.
"The pensions of active workers who are looking to retire in the next five years, during the life of this agreement, won't be affected either," Smith said.
According to a statement Patriot filed with the bankruptcy court, the contract changes and settlements it reached with the union will save the company's 99 debtors about $130 million each year during the next four years -- a total of about $520 million.
Patriot operates eight mining complexes in West Virginia -- Heritage Coal, Colony Bay Coal, Eastern Associated Coal, Mountain View Coal, Pine Ridge Coal, Rivers Edge Mining, Apogee Coal Co. and Hobet Mining. They are all union operations sold to Patriot by either Peabody Energy or Arch Coal after Patriot was created in 2007.
Patriot originally filed for bankruptcy in New York on July 9, 2012, focusing on financial difficulties it faced in paying the health-care and pension debts it assumed when it bought mines once operated by Peabody and Arch.
In a document filed with the Bankruptcy Court in St. Louis on Tuesday, Patriot estimates it will have to pay $1 billion in "retiree benefits" to union miners under those sales.
Its bankruptcy was also precipitated, Patriot states, by a variety of causes, including "reduced demand and prices for coal, increasingly adverse regulatory compliance requirements and unsustainable wage, benefit and retiree healthcare costs."
The agreement will also "create significant operational efficiencies, which are vital to [Patriot's] restructuring and long-term viability," according to a statement the company filed with the bankruptcy court.
By settling its dispute with the UMW, Patriot's statement to the bankruptcy court adds, the company also will avoid "the uncertainty, cost, and expense of ongoing appeals and the risk of significant labor disruptions."
Last year, Patriot Coal sold 24.9 million tons of coal, according to the company's website. Domestic and foreign electricity companies and industrial consumers bought 75 percent of Patriot's coal. The remaining 25 percent was sold to domestic and foreign steel companies to make coke.
Patriot shipped 45 percent of the coal it produced to foreign countries in 2012 -- a record high in exports.
Today, the company has 1.2 billion tons of coal reserves.
Reach Paul J. Nyden at pjny...@wvgazette.colm or 304-348-5164.