The top official with a national miners' union on Monday called bankrupt Patriot Coal Corp.'s bid to cut retiree health care immoral, as it seeks millions of dollars for executive bonuses and faces mounting payouts of $16 million in legal fees and expenses.
"Patriot has thousand-dollar-an-hour lawyers and two-dollar-an-hour morals," United Mine Workers of America President Cecil Roberts told reporters, four days after St. Louis-based Patriot filed a request in bankruptcy court to modify its collective bargaining agreements with the union.
"We think we're standing on righteous ground here, and we're going to fight this fight," Roberts said.
In pursuing Chapter 11 bankruptcy last July, Patriot cited exceptionally soft coal markets, rising costs and "unsustainable legacy liabilities" tied to its 2007 spinoff from St. Louis-based Peabody Energy Corp. Patriot said coal markets have only worsened since then, contributing to what the company now says are crushing labor and retirement benefit expenses requiring "critical financial relief in a timeframe that avoids severe business disruption."
Patriot, claiming its retiree health liability has ballooned to $1.6 billion, last week proposed creating a trust with a maximum of $300 million from future profit-sharing to fund some level of those benefits, with Patriot making an initial contribution of $15 million.
Patriot CEO Bennett Hatfield said the moves are "necessary for the survival of Patriot and the preservation of more than 4,000 jobs." Without such relief, he argued, Patriot no longer could provide health care to 10,000 retired miners and 13,000 dependents.
A hearing is scheduled for April 10.
While decrying $7 million in executive bonuses that Patriot wants a bankruptcy court to approve, Roberts warned Thursday that potentially sweeping health care cuts could be ruinous to tens of thousands of retirees and their survivors that he said could be forced to sell their homes or drain their savings to pay for medical care.
"How in the world can you pass on to someone else the promise you made?" Roberts said.
A message left Monday with Patriot for comment wasn't immediately returned.
When it spun off Patriot, Peabody agreed to pay health care costs for more than 3,000 UMWA retirees who were employed by Peabody entities that were transferred to Patriot.
Patriot last week sued Peabody, saying it wants to ensure that Peabody doesn't try to use Patriot's bankruptcy "to escape Peabody's own health care obligations to certain retirees."
Peabody fired back, saying in a statement that its contract with Patriot states Peabody will fund a portion of Patriot's retiree health care expenses for specified retirees — and that "we have been providing funds under this contract since the spin-off."
"Patriot is taking the untenable position that our payments should continue in full in the future even if Patriot's expenses are reduced," Peabody's statement read. "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."
The union previously filed suit against Peabody and Arch Coal in West Virginia, claiming they set up Patriot to fail so pension and health care benefits could be shed. After the 2007 spinoff, Patriot acquired mines that Arch Coal — another St. Louis-based coal producer — had spun off into Magnum Coal.
Union leaders have said the benefit cuts would affect retired miners and dependents mostly in West Virginia, Illinois, Indiana, Kentucky and Ohio.