Patriot Coal refutes mine workers' claim about contract negotiations

By Caroline Salls

Pittsburgh, June 13 - Patriot Coal Corp. took issue with a United Mine Workers of America (UMWA) news release that claimed the company walked out of contract negotiations.

Patriot Coal said in a news release that it has not walked out of negotiations with the UMWA, and it only learned that negotiating meetings scheduled for next week were cancelled from the union's release.

"The press release issued by the UMWA is inaccurate and distorted," Patriot president and chief executive officer Ben Hatfield said in the company release.

"If our goal was to force acceptance of the court-approved contract as is, no further discussions would have been necessary, as that option has been available to us since May 29.

"Instead, we have offered up millions of dollars in additional contract enhancements, including wage increases, health care improvements, life insurance and paid personal time off.

"The two-day recess in negotiations that the company requested for the current week was needed for financial analysis of UMWA demands that Patriot roll back the majority of cost relief approved by the bankruptcy court.

"It remains the assessment of Patriot management that agreeing to the UMWA's demands would sacrifice any chance of making the company viable."

Court-approved proposal

On May 29, the U.S. Bankruptcy Court for the Eastern District of Missouri authorized Patriot to implement proposals that would adjust employee wages and benefits to a level consistent with the regional market and transition retiree health care obligations to a VEBA trust.

The trust would be funded with hundreds of millions of dollars, consisting of a 35% ownership stake in the reorganized company, which the UMWA would monetize for a substantial cash contribution, an initial cash contribution of $15 million, royalty contributions for every ton of coal produced by Patriot and profit-sharing payments.

Despite the May 29 order, Patriot has voluntarily continued to bargain with the UMWA in an effort to reach a consensual agreement on terms more favorable than the proposals approved by the court.

"In these continuing discussions, Patriot has offered substantial improvements for our UMWA employees that result in a wage and benefit package that is clearly favorable to the regional labor market," Hatfield said in the release.

"However, we cannot support UMWA demands for changes in the court-approved contract that would increase Patriot losses by over $40 million per year in 2013, 2014 and 2015. If we did, Patriot would not emerge from bankruptcy."

Union argument

According to the Patriot Coal release, the UMWA has threatened to strike if the company implements the proposals approved by the court.

"A strike would put the company on a path to liquidation, which is the worst possible outcome for UMWA employees and retirees," Hatfield said in the release.

In its release, the UMWA said Patriot Coal walked out of talks and cancelled negotiations scheduled for the remainder of this week and next week.

"We had made significant progress toward reaching an agreement that provided a workable alternative to the severe terms Patriot asked for last spring and that were approved by the bankruptcy court," UMWA president Cecil E. Roberts said in the union release.

"The union had agreed to more than $400 million in savings for the company over the life of the current contract, which gives them the money they say they need to survive.

"When the company walked out, we were only about $30 to $35 million apart, which, given the scope of this problem, really isn't all that much.

"A big chunk of that money is in bonuses the company wants to pay management personnel into the future."

Roberts said Patriot Coal plans to implement the court-approved contract terms on July 1.

Patriot Coal, a St. Louis-based miner, producer and seller of thermal coal, filed for bankruptcy on July 9, 2012 in the U.S. Bankruptcy Court for the Southern District of New York. The case was transferred to the Eastern District of Missouri under Chapter 11 case number 12-51502.

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