Patriot Coal CEO: 'This is survive or not survive'May 2 - McClatchy-Tribune Regional News - Jeffrey Tomich St. Louis Post-Dispatch
Patriot Coal Corp. will run out of cash early next year and be forced to sell itself in pieces if a bankruptcy judge doesn't approve proposals to cut union wages and retiree benefits, the company's chief executive told the court on Wednesday. "This is survive or not survive," CEO Bennett Hatfield said during four hours of testimony. "If we don't get the savings we're targeting, I don't see a future for this company." Hatfield was the last of six witnesses to appear for Patriot during this week's hearing on the company's motion to implement wage and benefit cuts under the bankruptcy code. The cuts total $150 million in annual savings that Patriot said is necessary to avoid liquidation. The United Mine Workers of America is also putting up witnesses to bolster its argument that such deep cuts aren't necessary and unfairly punish the company's 1,600-plus union miners and 13,000 retirees, most of whom never worked for Creve Coeur-based Patriot. The union continues to blame St. Louis-based Peabody Energy Corp. for Patriot's failure and the potential loss of retiree benefits -- a claim that Peabody denies. In his testimony, Hatfield acknowledged that Patriot is "uniquely challenged" because it's weighed down by legacy liabilities including $1.6 billion in retiree benefit obligations assumed from two other St. Louis area coal producers, Peabody and Creve Coeur-based Arch Coal Inc. Peabody created Patriot in October 2007, when it spun off its eastern mines. Two years earlier, Arch had sold some of its Appalachian mines to create Magnum Coal Inc., and that company was subsequently purchased by Patriot in 2008. Hatfield said the company and its creditors are investigating possible claims against Peabody related to the spinoff, as well as some below-market coal contracts that it assumed as part of the transaction. The UMWA has criticized Patriot for moving too slowly to pursue such claims. During a two-hour cross-examination on Wednesday, the attorney representing the union, asked Hatfield why the company didn't act sooner. "There was no cause of action that would support litigation," Hatfield said. Hatfield joined Patriot in 2011 and took over as CEO last year after the company filed for Chapter 11 protection. A 30-year veteran of the coal industry, Hatfield described himself as a southern West Virginia native and third-generation coal miner whose grandfather belonged to the union. "I grew up with the UMWA Journal on my family coffee table," he said. But he also cited a preference for nonunion mines. "All things being equal, I prefer an environment where I can work directly with my employees," he said. Hatfield dismissed suggestions that the wage and benefit cuts sought by the company are an effort to "bust" the union. Instead, changes are necessary for the company to exit bankruptcy, he said. And he believes the union would vote to ratify the changes put forth by Patriot if given a chance. "I believe people will vote for retaining jobs because jobs are scarce," he said. But Dallas Miller, 61, a retired miner from Muhlenberg County, Ky., disagrees. Miller, who worked more than 34 years for Peabody Coal, is among two dozen union retirees who have occupied the last two rows in the courtroom all week wearing "Peabody lied" T-shirts. A retiree, he wouldn't get a vote. But if he did, he'd vote against the proposals. Asked if he believed Hatfield's testimony, the retired miner likewise said no. "He was wishy-washy," Miller said. http://www.energycentral.com/functional/news/news_detail.cfm?did=28448802 |