Read more: http://blogs.wvgazette.com/coaltattoo/CHARLESTON, W.Va. -- Patriot Coal has secured new financing to help it emerge from bankruptcy and has worked out a deal with Peabody Energy and Arch Coal to assist in funding future benefits for Patriot retirees, the companies and the United Mine Workers union announced Thursday.
The move provides $400 million -- from Peabody and Patriot -- to cover health-care benefits for retired miners, giving the UMW about one-quarter of the $1.6 billion union officials estimate they need for a long-term solution for more than 20,000 retired miners and their families.
"This is a significant amount of money that will help maintain health care for thousands of retirees who earned those benefits through years of labor in America's coal mines," said union President Cecil Roberts. "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."
For St. Louis-based Patriot, the new moves provide an infusion of $250 million in capital from Knighthead Capital Management, a hedge fund that focuses, in part, on investments in distressed companies. Also, Patriot will get $140 million in liquidity from Peabody, in the form of letters of credit.
"Reaching these agreements represents a pivotal junction in Patriot's restructuring," said Patriot CEO Ben Hatfield. "This sets a clear path for Patriot to emerge from Chapter 11 by year-end as a strong competitor in the coal industry."
UMW officials, though, are still left with not nearly enough funding for Patriot retiree health-care benefits beyond perhaps 2017, depending on what those benefits end up costing.
The union remains in negotiations to somehow get Arch Coal to come up with more money to fund benefits for Patriot miners who used to work for Arch, but the union also is focused on pushing federal legislation to resolve the problem.
"This settlement, as significant as it is, still does not provide the level of funding needed to maintain health care for these retirees forever," Roberts said. "Arch can still step up and meet its obligation to these retirees."
Arch Coal, also based in St. Louis, buried its involvement in the new Patriot Coal developments in a news release that focused on its acquisition -- from Patriot -- of additional coal reserves adjacent to Arch's new Leer Mine, an underground operation in Taylor County.
Arch noted that it recently won a dismissal from U.S. District Judge Joseph R. Goodwin of a class-action lawsuit seeking payment for UMW retiree health care, but said the company continues to talk with the union.
"We have put forth a good-faith effort to the UMW for a settlement that would resolve all pending and potential legal claims brought by the UMW, and we are in discussions with them on a potential resolution," said Robert G. Johnes, Arch's senior vice president and general counsel.