Over the past year, the UMW has engaged in a broad campaign to protect pensions and health-care benefits for its members who retired from Patriot, which is undergoing financial reorganization in bankruptcy court.
Patriot Coal was founded in 2007 when Peabody Energy sold its union operations east of the Mississippi River to the newly created company. In 2008, Patriot bought Magnum Coal, a company that, in 2005, took over union mines previously operated by Arch Coal. In July 2012, Patriot declared bankruptcy, citing financial problems, especially the costs of health insurance and pensions paid for miners who had worked mostly for Peabody and Arch.
A bankruptcy judge allowed Patriot's plan to cut many employee and retiree benefits, but the UMW negotiated a new deal in which the company reinstated many of those benefits.
Since then, the union has tried to focus its campaign -- featuring street protests and numerous arrests outside company offices -- on Peabody and Arch. The matter also prompted several legal actions, with various companies suing each other and the UMW suing the companies, in complex arguments over what the industry calls "legacy liabilities."
Patriot employs about 4,100 workers, with about 1,600 of them being represented by the UMW. The company operates a large underground mine in Monongalia County and a huge surface mine along the Boone-Lincoln county border. Another Patriot surface mine, in Logan County, recently had been announced for closure, but Patriot said Thursday that certain expiring coal leases there would be extended.
As part of the settlements announced Thursday, Patriot will make $75 million in direct cash payments to the new Patriot Voluntary Employee Benefits Association, a so-called "VEBA" which will pay for retiree benefits. Also, Peabody has agreed to provide $310 million over four years, through 2017, to fund the VEBA, and settle all litigation between Patriot and the UMW against Peabody.
"I am pleased that we have been able to reach agreements that provide the UMWA with hundreds of millions of dollars in retiree health-care funding," Hatfield said. "The best result for the UMWA and its members is for Patriot to emerge from bankruptcy as a healthy company that will continue to provide jobs and benefits, and we are now on track to achieve that goal."
Under a settlement with Patriot, Arch Coal will provide Patriot with $5 million in cash and a $16 million letter of credit posted in Arch's name.
"This comprehensive settlement with Patriot relieves Arch of costly legal expenses, resolves the distraction of litigation claims, and allows Arch's management team to remain focused on steering the business through current market conditions and preparing for a recovery," said Arch CEO John Eaves.
The settlements still need approval from U.S. Bankruptcy Judge Kathy Surratt-States. The judge is expected to rule shortly after a Nov. 6 hearing.
Reach Ken Ward Jr. at kw...@wvgazette.com or 304-348-1702.