By Steve James and Nick Brown
NEW YORK, Oct 18 (Reuters) - Retired U.S. coal miners said
on Thursday they will target former employers, Peabody Energy
and Arch Coal, to pay their healthcare costs if bankrupt
Patriot Coal cannot.
A delegation from West Virginia and Ohio attended a
creditors' meeting to quiz Patriot Coal over miners' concerns
they will lose health coverage. Bankruptcy laws allow companies
to alter terms of employee healthcare and retirement benefits.
Patriot Coal, which was spun-off from Peabody five years ago
and later acquired an Arch Coal business, has filed for Chapter
11 bankruptcy protection and the case is being heard in the U.S.
Bankruptcy Court for the southern district of New York.
The United Mine Workers of America (UMWA) union is
represented on the Patriot creditors' committee and bused about
a dozen members into New York City to express their concerns to
Patriot executives and lawyers.
UMWA spokesman Phil Smith said Thursday's meeting, while not
a formal court hearing, was an informational session convened
by the U.S. trustee, who oversees the bankruptcy process. The
miners were not under oath.
"The ultimate goal here is not to get money out of Patriot,"
Smith told Reuters in a briefing. "We're going to go back and
talk to the people who are responsible, who made these gentlemen
the promise of health care, and that's Peabody and Arch.
"(But) Peabody and Arch, apparently, don't want to pay
that," he said.
At the meeting, several union members questioned whether
Patriot will push to hold Peabody responsible. "What will
Patriot do to make Peabody honor its commitment to my
healthcare?" said Larry Knisell, who said he was taking several
medications totaling 23 pills per day, while his wife needs
treatment twice a week for fibromyalgia.
Mark Schroeder, Patriot's chief financial officer, said
Patriot would consider whether it may have claims against "other
"We're trying to find the best way to get out of bankruptcy
and survive," he said.
The union's Smith said Patriot has declared its health-care
obligations for 10,000 retirees "unsustainable." Union lawyer
Art Traynor said the company's primary reason for the Chapter 11
bankruptcy filing was to reduce costs associated with mining and
the company had estimated total aggregate health care and
pension costs at $1.3 billion.
In its Chapter 11 filing, St Louis-based Patriot said it has
$3.57 billion in assets and $3.07 billion of liabilities. It has
arranged for $802 million of financing to help it continue
operating through reorganization.
In an email to Reuters, Peabody spokesman Vic Svec said:
"Contrary to UMWA claims, a Peabody subsidiary assumed the
obligation to pay more than $600 million in healthcare
liabilities for certain retirees of Patriot subsidiaries as part
of the spinoff.
"While these are administered by Patriot, Peabody has paid
for these healthcare benefits since the spinoff and continues to
do so today," said Svec.
In a filing with the Securities and Exchange Commission in
the summer, Arch listed potential obligations of about $64
million due to contracts acquired by its Magnum subsidiary,
which was bought by Patriot.
An Arch Coal spokeswoman, Kim Link, told Reuters that if
Patriot does not emerge from bankruptcy, "Arch Coal could be
responsible for medical benefits for a small subset of UMWA
represented individuals who had retired as of September 1994."
Union member Cliff Tennant said he relies on the health care
Patriot provides him, and that cutting it would be akin to
"Like Jack Kevorkian," Tennant said, referring to the late
doctor who was jailed for assisting in suicides.
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