Court set to hear Patriot Coal, mine workers disputeApr 26 - McClatchy-Tribune Regional News - Jeffrey Tomich St. Louis Post-Dispatch
In what has become a familiar sight this spring, thousands of current and retired coal miners will rally in the streets of downtown Monday morning to protest wage and benefits cuts proposed by Patriot Coal Corp. as part of the company's bankruptcy. As usual, there will be signs, speeches by United Mine Workers of America President Cecil Roberts, and maybe even more arrests. The key difference between this demonstration and previous ones is that at the same time union members assemble outside the courthouse, a judge will convene a hearing, the outcome of which could affect their lives for years to come. Efforts to reduce costs from union labor contracts and retiree benefits is just one of many issues in a large, complex bankruptcy, but one that's pivotal for the company and thousands of its employees and retirees. Patriot, which filed for Chapter 11 bankruptcy protection in July, says it has cut costs "to the bone." It closed unprofitable mines, altered contracts and leases and slashed its workforce as well as pay and benefits for nonunion employees, managers and executives. But the company said it still needed another $150 million in savings that can only come from union obligations. Otherwise, it will run out of cash early next year and probably face liquidation, Bennett Hatfield, Patriot's chief executive said in an interview. "This company is going to go one of two directions," said Hatfield, a longtime coal industry executive who joined Patriot in 2011. He took over as CEO last fall a few months after the company filed for Chapter 11 protection. "We've already made a huge amount of progress. But we simply have more burdens than we can service with the assets we have," he said. "It's a matter of survival." Hatfield said Patriot and the union would continue talks throughout the weekend in an effort to reach an agreement before Monday's hearing. Patriot has made two proposals to the union since filing its March 14 motion to cut wages and benefits, including one that would give the UMWA a 35-percent stake in the reorganized company as a means to help fund a health-care trust fund. But the union disagrees. It called the equity offer "a step forward" but said the company's proposal sought to strip thousands of retirees of benefits they labored for decades to earn and wage cuts that would put active union miners on the same terms as non-union miners. The union asserts that Patriot's liquidity crisis is a self-imposed one and the company's financial projections are overly pessimistic. "This is a company that has a short-term cash flow problem and we believe there are ways to meet that problem without going through such Draconian cuts," said Phil Smith, a UMWA spokesman. Meanwhile, some creditors think the company's latest offer to the union is too generous. While pushing back against proposed cuts, the union continues to keep the pressure on Patriot's former parent, Peabody Energy Corp., insisting that the 2007 spin-off that created the company was a scheme to unload hundreds of millions of dollars in liabilities that could be wiped away in bankruptcy. Hatfield, who was CEO of rival coal producer International Coal Group Inc. at the time of the spin-off, said he had doubts about Patriot. "As a competitor looking at what I could see without any insider knowledge, there were a tremendous load of liabilities attached to those assets, even though they were admittedly good assets," he said. "I think there are good questions that can and should be asked. And I've been surprised by Peabody's reluctance to answer those questions." Patriot will pursue any "viable claim" against Peabody as the result of an ongoing investigation, Hatfield said. "But we can't wait for the answer," he said. "That kind of litigation would take years to resolve. We're not going to be able to pay the bills beyond the next few quarters." Peabody has insisted that Patriot was a viable company at its creation. "Patriot was sound when launched more than five years ago and was extremely successful in the period after its spin-off," Peabody said in a statement to the Post-Dispatch. "It apparently was so attractive to (Hatfield) even nine months prior to its bankruptcy that he joined the company with great fanfare. ... No one was predicting the company's bankruptcy at that time." http://www.energycentral.com/functional/news/news_detail.cfm?did=28396838 |