Bloomberg News

Patriot Coal Asks Court to Modify Wages, Benefits

March 14, 2013

Patriot Coal Corp., the U.S. producer that sought bankruptcy protection in July, filed a court motion seeking to modify collective bargaining agreements to trim labor and health care costs as it restructures.

The proposed modifications include establishing a Voluntary Employee Benefit Association trust for retirees represented by the United Mine Workers of America and changes to pay, benefits and work rules for unionized employees, St. Louis-based Patriot said today in a statement.

“Our labor and retiree benefit costs have risen to levels that simply cannot be sustained given the challenges facing the Company and our industry,” Patriot’s Chief Executive Officer Bennett K. Hatfield said in the statement. The requested cuts will save more than 4,000 jobs and health care for 23,000 employees, retirees and dependents, Hatfield said.

Patriot’s attempt to change its collective bargaining agreement is “totally unacceptable,” Cecil E. Roberts, president of the UMWA said in a statement. Patriot wants “to scrap the health care benefits our retirees earned through decades of blood and toil,” he said.

Patriot also said it filed a lawsuit against Peabody Energy Corp., the country’s largest coal producer, from which Patriot was spun off in 2007. That suit asked the Bankruptcy Court to declare that Peabody must continue to pay for the health care costs of certain retirees who were employed by Peabody entities that were transferred to Patriot when the company formed, Patriot said in the statement.

‘Untenable Position’

Under the terms of a contract, Peabody has been funding a portion of Patriot’s retiree healthcare expenses for specified retirees since the spinoff, the St. Louis-based company said in a statement. The contract also states that should Patriot’s benefit obligations decrease, Peabody’s funding would proportionately be reduced, it said.

“Patriot is taking the untenable position that our payments should continue in full in the future even if Patriot’s expenses are reduced,” Peabody said. “Such a claim is not only unreasonable, but counter to the fundamental basis of the language in the contract.”

To contact the reporter on this story: Sonja Elmquist in New York at selmquist1@bloomberg.net

To contact the editor responsible for this story: Simon Casey at scasey4@bloomberg.net


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