Patriot Coal Union and Suitors Agree on Labor Pact
September 03 2015 - 03:10PM
Dow Jones News
Patriot Coal Corp. averted a bankruptcy showdown with its miners
on Thursday, after the union representing its workers and the
company's proposed suitor agreed on a new employment pact.
Patriot attorney Michael Slade said in bankruptcy court that
talks between the company, the United Mine Workers of America union
and proposed Patriot buyer Blackhawk Mining LLC yielded an
agreement on "material terms" of a new collective bargaining
agreement for Patriot's unionized workers at what would be the
postmerger company.
Representatives of Patriot, the UMWA and Blackhawk couldn't
immediately be reached for comment on Thursday.
Like a similar deal reached with the nonprofit organization
hoping to buy a smaller subset of Patriot's assets, this agreement
is subject to ratification by union members. The union will ask its
members to vote on the accord once the bankruptcy court has granted
Patriot's request to reject the existing collective bargaining
agreements covering miners at Patriot.
After hearing arguments over Patriot's request to scrap the
existing labor agreements, Judge Keith Phillips of the U.S.
Bankruptcy Court in Richmond, Va., on Tuesday strongly recommended
the sides sit down to try to reach a new deal.
Mr. Slade, the union and Blackhawk thanked the judge for
encouraging the meeting, which took place in New York Wednesday and
lasted approximately 8-1/2 hours. "I know I've put the parties to
task, but hopefully it was worth the effort," Judge Phillips said
on Thursday. "I'm very pleased you were able to work this out."
Blackhawk has offered to issue about $650 million in debt to
Patriot's creditors in exchange for the bulk of the company's
mines, while an affiliate of nonprofit Virginia Conservation Legacy
Fund would take on approximately $400 million in liabilities
associated with Patriot's remaining mines.
VCLF has said it hopes to continue operating the company's
Federal mining complex as well as to begin reforestation efforts
for acquired land.
Rival bids for the assets are due on Friday, and if any are
received, an auction is slated to be held next week. Winning bids
are ultimately subject to bankruptcy-court approval.
Neither buyer wanted to take on Patriot's existing collective
bargaining agreements, which Patriot officials testified was in
large part due to the agreements' requirement that Patriot
contribute to a multiemployer pension plan. The plan, which
required annual contributions from Patriot of roughly $20 million,
is severely underfunded, and Patriot could be on the hook for
anywhere from $700 million to $900 million in liabilities if it
withdraws from the plan.
The fate of the pension plan under the new deal between
Blackhawk and the union wasn't immediately clear on Thursday,
though Blackhawk has long insisted it won't be held to those
obligations.
"In my opinion, no buyer would buy that business subject to that
liability," Marc Puntus, Patriot's investment banker, testified
Tuesday.
Patriot had sought the right under bankruptcy law to reject the
collective bargaining agreements, which the union fought. Judge
Phillips presided over a trial on the dispute on Tuesday but
declined to rule before giving the union and Blackhawk one last
shot at resolving their differences.
Now, with the union's agreement, Judge Phillips on Thursday
indicated he'd approve Patriot's request to reject the existing
collective bargaining agreements, paving the way for the union to
complete the new deals with Patriot's would-be buyers.
Write to Jacqueline Palank at jacqueline.palank@wsj.com
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(END) Dow Jones Newswires
September 03, 2015 14:55 ET (18:55 GMT)
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