St. Louis-based Peabody Energy has agreed to pay up to $75 million over the next 10 months to provide health care benefits for retirees caught up in the Patriot Coal bankruptcy of 2012-13, the United Mine Workers report.
Peabody will place $7.5 million a month beginning this month into the Patriot Retirees VEBA (Voluntary Employees Beneficial Association), which was created in 2013 to administer the benefits.
The payments will continue until October 2016, or until Congress passes legislation placing the retirees’ health care under the Mine Workers’ Health and Retirement Funds umbrella, the union said. The union is supporting that measure.
The agreement leaves Peabody still owing $70 million for health care under terms of the Patriot bankruptcy, but for now it will not have to pay that amount, leaving the company to boast in a press release that the agreement “improves Peabody’s expected 2017 cash flows by $70 million.”
About 12,000 retirees, dependents and widows are covered under the VEBA, living mainly in Illinois, Indiana, Kentucky and West Virginia.
Mine Workers International President Cecil Roberts said the agreement is at best a temporary solution.
“The second bankruptcy of Patriot Coal in 2015 and the breakup of that company into separate entities put the initial agreement providing funding for the VEBA in jeopardy,” Roberts said. “With this new agreement, we have been able to provide a measure of security for these retirees, their dependents and widows.
“These retirees did everything asked of them, and now through no fault of their own find their health care benefits under threat. This agreement will help but is by no means a permanent fix to this problem.”
SUSPICIOUS SPIN-OFF
Peabody spun off Patriot in 2007, including within it its oldest, highest-cost mines in the eastern United States. It also sought to hand off responsibility for its long-time workers’ pensions and health care.
When Patriot inevitably failed, filing for bankruptcy in 2012, it began a fight between the companies over which was responsible for the benefits. Despite completing bankruptcy in 2013, Patriot filed again in 2015, and its operations have been sold off.
Peabody has been claiming it doesn’t have to pay for its responsibilities because of Patriot’s own failure. Union supporters, long suspicious of the company’s motives for the spin-off, were confirmed in their belief that the company is trying to break its promises to workers.
Roberts said the miners have long been promised better treatment – and well deserve it.
“We need Congress to live up to the promise made by Harry Truman in the White House nearly 70 years ago to our nation’s miners – and repeatedly confirmed by Republican and Democrat presidents and Congresses since – that if miners would provide the resource to make America the most powerful nation on earth, they would receive retirement security for the rest of their lives.
“It is time to secure that promise once and for all,” Roberts said.
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