More than $400 million going to VEBA
Triangle, VA – The United Mine Workers of America (UMWA) has reached a global settlement with Peabody Energy and Patriot Coal that will provide funding of more than $400 million to cover future health care benefits for retirees affected by the bankruptcy of Patriot Coal. Those benefits will be paid by the Patriot Retirees Voluntary Employee Benefit Association (VEBA).
Peabody will make payments totalling $310 million over the next four years, the proceeds of which will be applied to future retiree health care benefits. Payments of $90 million will be made in 2014, followed by payments of $75 million each year at the beginning of 2015 and 2016, with a final payment of $70 million at the beginning of 2017.
Patriot has agreed to contribute $15 million to the VEBA in 2014, with up to an additional $60 million to be paid into the fund over the following three years. This is in addition to the production-based royalty payments Patriot will make to the VEBA in upcoming years that could provide more than $15 million.
For its part, the UMWA has agreed to relinquish the value of virtually all of its 35 percent stake in Patriot, which the union received as a result of a May 29 ruling by federal Bankruptcy Judge Kathy Surratt-States. The union has also agreed to halt its months-long public relations and direct action effort related to Peabody in St. Louis and elsewhere regarding the effects of the Patriot Coal bankruptcy.
The settlement will be submitted to Judge Surratt-States for her approval. She is expected to rule shortly after a Nov. 6 hearing.
"I am very pleased that we have been able to reach this agreement with Peabody and Patriot," said UMWA International President Cecil E. Roberts. "This is a significant amount of money that will help maintain health care for thousands of retirees who earned those benefits though years of labor in America's coal mines. This settlement will also help Patriot emerge from bankruptcy and continue to provide jobs for our members and thousands of others in West Virginia and Kentucky."
STILL NEGOTIATING WITH ARCH
Patriot Coal was spun off from Peabody in 2007, and entered Chapter 11 bankruptcy reorganization on July 9, 2012. Judge Surratt-States' May 29 ruling allowed Patriot to quit paying health care benefits for retirees, and authorized the establishment of the VEBA, with initial funding of $15 million from Patriot and the 35 percent equity stake, to take over that responsibility.
Several thousand of those retirees worked for subsidiaries of Arch Coal, which has not yet settled with the union.
"Arch still can step up and meet its obligation to these retirees," Roberts said. "We will continue to encourage them to do so in the coming days."
"This settlement, as significant as it is, still does not provide the level of funding needed to maintain health care for these retirees forever," Roberts said. "That is why we are continuing our efforts to pass bipartisan legislation in Congress that will put these retirees under the Coal Act, meaning their long-term health care benefits would be secured at no additional cost to taxpayers," Roberts said.
HR 2918, introduced in the House by Rep. David McKinley (R-W.Va.), currently has 24 co-sponsors from both parties. SB 468 was introduced in the Senate by Sen. Jay Rockefeller (D-W.Va.) and currently has six co-sponsors.