According to Bloomberg, 16 West Virginia miners went to New York on October 18 to meet with the company, its creditors’ committee and the US Trustee who is overseeing the Chapter 11 proceedings.
All worked for predecessor companies Peabody, which spun off Patriot in 2007, or Arch, which spun off Magnum – which Patriot acquired in 2008.
The 16 said they were representing the 10,000 retirees whose benefits were being paid by Patriot, but the potential existed that the troubled producer would not cover what it has called “unsustainable” benefits totaling $US1.3 billion.
“We want to make sure other creditors, the court and the public know that Peabody and Arch are responsible for the obligations they made to the miners,” the group’s attorney Arthur Traynor told the news service.
“They are responsible as well for Patriot’s financial condition.”
Peabody spokeswoman Meg Gallagher told ILN in an interview October 10 that one of its subsidiaries had assumed an obligation to pay more than $600 million in healthcare liabilities under the spin-off.
“While these are administered by Patriot, Peabody has paid for these healthcare benefits since the spin off and continues to do so today,” she said.
“Patriot was a viable company when it was spun off in 2007, and substantial events inside and outside Patriot’s control significantly altered its future.”
Gallagher went on to say that the company and the world had both significantly changed since the 2007 Patriot spin-off.
“These changes include Patriot’s transformational acquisition of Magnum Coal Company, significant changes in Patriot’s capital structure, decreased demand for US coal due to sharp declines in natural gas prices, the softening of global steel markets and more burdensome regulations,” she said.
“Patriot notes many of these same factors in its filings with the bankruptcy court.”
On July 9 Patriot announced that the miner and its wholly owned subsidiaries had filed for Chapter 11 bankruptcy.
Following this news, the price of Patriot shares dropped 72% from a closing of $US2.19 per share on July 6 to 61c per share on July 9.
The company was the first to seek court protection for its financial situation since coal markets tanked; it blamed cancelled contracts, rising costs and plummeting coal prices for its woes.
Patriot holds 12 active mining complexes in Appalachia and the Illinois Basin and controls about 1.9 billion tons of coal reserves.
Its clientele is electricity generators as well as steel and coke producers.
