Miner Union Gearing Up for Fight Against Patriot Coal - Beckley, Bluefield & Lewisburg News, Weather, Sports

In a meeting with members of the United Mine Workers of America today, the UMWA is launching an initiative to do "whatever it takes" to protect the benefits of active workers, retirees and families of Patriot Coal.

Patriot Coal is currently in the process of Chapter 11 bankruptcy. In a news release that will be distributed at a media event following the UMWA meeting this morning, Roberts expressed concern that employee benefits at Patriot might be at risk.

"This union has never backed away from a fight to preserve what our members and retirees have earned, and we're not going to back away now," Roberts said, according to the release. "Patriot is a company that was set up to fail so that two of the biggest coal operators, Peabody Energy and Arch Coal, could try to walk away from their contractual obligations. We will not stand idly by and watch our members pay the price for corporate greed."

Arch Coal and Peabody Energy had spun off some of their coal mines into, respectively, Magnum Coal and Patriot Coal. The spinoff included Peabody's pension and long-term health care obligations to retirees. The spinoffs merged, setting up a company the UMWA said was destined to fail.

"Patriot has indicated that they intend to use the bankruptcy process to seek significant concessions," Roberts said. "This meeting today is the kick-off of what we anticipate will be a long-term campaign to fight for fairness at Patriot."

Patriot is one of many coal companies facing hardship in a market where demand is weak and other energy sources are increasingly more competitive. According to materials distributed by UMWA, some suffering may be market-based, but "the truth is that Patriot was a company created to fail."

The UMWA says the company was formed with far too little production volume to cover long-term obligations. The company has survived for some time selling metallurgical coal at high market prices.

"But when the bottom dropped out of the coal market, this house of cards – purposefully created by Peabody and Arch in an attempt to get out of their responsibilities to their retired and active UMWA workers – collapsed," the UMWA information sheet states. "And that is just what Peabody and Arch had choreographed."

About 2,000 active UMWA workers are in Patriot mines and more 10,000 retirees receive their benefits from Patriot. A large number of those workers rallied at the Charleston Civic Center today.

"The UMWA's Fight for Fairness at Patriot has only just begun," the union warns in the letter. "The union is launching a multi-faceted worldwide strategic campaign to expose not only the moral issues underlying this struggle, but also the enormous consequences coalfield communities and other working communities will feel if the flow of hundreds of millions of dollars in benefits payments into their local economies is suddenly shut off."

Patriot recently received court approval for an $802 million debtor in possession financing package to continue operating the business.

The company said in its initial bankruptcy announcement that it intended to maintain customer shipments and mining operations through the Chapter 11 process. At the time, the company blamed its financial distress on reduced coal demand, environmental regulations and an overall weak economy with a lower demand for electricity.

"We are pleased with Patriot's initial progress in the restructuring process and are continuing to identify the necessary changes to ensure the Company's future viability," said Patriot Chairman and CEO Irl F. Engelhardt. "Management is reviewing every aspect of the business to make sure we operate as efficiently and productively as possible, while maintaining our focus on safety."

At the same time, the bankruptcy court also approved the final orders authorizing Patriot to continue paying wages and providing health care and benefits to employees.

"The coal industry is undergoing a major transformation and Patriot's existing capital structure prevents it from making the necessary adjustments to achieve long-term success," Engelhardt said in a prior news release from the company. "Our objective is to use the reorganization process to address important issues in an orderly way and make the Company stronger and more competitive."

Patriot has publicly insisted that it expects to emerge from bankruptcy "stronger and more competitive."

"All retiree medical programs are still in place and payments are being made as usual," Patriot said in a letter to retirees just after announcing bankruptcy. "As with every part of our business, our benefit programs will be reviewed.  If any changes are made that affect you or your specific benefits, you will be notified in a timely manner."

More information will be released following a media availability session later today.