The motion filed at the St Louis Bankruptcy court requests modifications to Patriot’s existing collective bargaining agreements with the union.
These include establishing a Voluntary Employee Benefit Association trust to provide healthcare for retirees represented by UMWA and changes to pay, benefits and work rules for unionized employees, St. Louis-based Patriot said in a statement.
The company said its UMWA-related healthcare obligations would be transferred to the VEBA trust. Funding for the trust would consist of an ownership stake in the reorganised company, profit sharing of up to a maximum of $300 million and an initial cash contribution of $15 million.
UMWA president Cecil Roberts said in a statement that the proposed changes were “totally unacceptable.”
“This is the path we have been saying Patriot would take from the very beginning of this bankruptcy last July,” Roberts said.
“They’re demanding massive changes to the collective bargaining agreement and they want to scrap the health care benefits our retirees earned through decades of blood and toil.”
“These demands by the company are totally unacceptable to the UMWA, and unnecessary for the company’s survival,” Roberts said.
The union said that the funding Patriot proposed to provide for the VEBA covered a tiny fraction of current costs.
Patriot president and chief executive officer Bennett Hatfield said the proposed actions were essential for the survival of Patriot and the preservation of more than 4000 jobs.
“Without the cost relief we are seeking, all of these jobs will be lost and it will no longer be possible to provide healthcare for more than 23,000 employees, retirees and their dependents,” he said.
“Our labor and retiree benefit costs have risen to levels that simply cannot be sustained given the challenges facing the Company and our industry.”
The company also said in the statement that it sought to adjust unionized wages and benefits to match those of non-unionized employees.
“The company can no longer afford to pay above-market wages and benefits to its 1600 union employees as compared to its 1300 non-union miners doing exactly the same job.”
"All of our employees and retirees are being asked to make sacrifices to help Patriot emerge from bankruptcy. These sacrifices include reductions in compensation and benefits for salaried, union and non-union employees."
Alongside the bankruptcy court motion, Patriot filed a lawsuit against Peabody Energy. That suit asked the Bankruptcy Court to declare that Peabody must continue to pay for the healthcare costs of retirees who were employed by Peabody entities that were transferred to Patriot when the company formed, Patriot said in the statement.
Peabody responded with a statement shortly after stating it had fulfilled its contractual healthcare obligations to Patriot since the spinoff.
“Our contract with Patriot Coal states that we will fund a portion of Patriot's retiree healthcare expenses for specified retirees. We have been providing funds under this contract since the spinoff,” Peabody said in a statement Thursday.
“The contract also appropriately states that, should Patriot's benefit obligations decrease, our funding would proportionately be reduced. Patriot is taking the untenable position that our payments should continue in full in the future even if Patriot's expenses are reduced.”
“Such a claim is not only unreasonable, but counter to the fundamental basis of the language in the contract. These are Patriot's obligations and, to the extent they are reduced, we will meet our agreement with Patriot to fund the new lower levels.”
Patriot filed for Chapter 11 bankruptcy reorganization in July. Months of negotiations, strikes and slurs precede this week’s court action.
The bankruptcy court is scheduled to decide the case on April 23.
