UMWA receives revised proposal from Patriot Coal

Bankrupt mining company Patriot Coal has revised its proposal to the United Mine Workers Union.

According to court papers filed in the Eastern District of Missouri Thursday, Patriot submitted a new offer to the union on Wednesday.

In this new proposal, UMWA would get an equity stake of 35 percent in a reorganized company. In the latest proposal, the UMWA would have been given an unsecured claim in the bankruptcy.

Patriot filed for bankruptcy back in July of last year due to, according to company officials, a declining demand for coal and obligations to pay $1.6 billion in lifetime health care for its 8,100 retirees.

Patriot has been seeking to reduce costs by negotiating with UMWA members. The company has said it needs to shed at least $150 million more in labor expenses in order to avoid liquidation.

The St. Louis based company believes liquidation would have far worse implications on retirees, employees and creditors.

Patriot has proposed the creation of a voluntary employees’ beneficiary association, or VEBA, trust administered by the UMWA Health and Retirement Funds as a way to reduce its obligations. The trust would receive funding from Patriot in several ways.

In the new proposal, funding would also come from royalty contributions for every ton produced at all existing mining complexes.

In addition, the court papers mentioned that the new proposal would also extend the date on which retiree health care will be moved to the trust by six months. Patriot said this would give retirees and beneficiaries more time to receive their current level of benefits.

This is the company’s fifth proposal since November, which was when the company’s initial proposal to the union was made.

UMWA members have been adamantly against Patriot’s bankruptcy proceedings since the beginning and have rallied numerous times against the company, the most recent being April 1 in Charleston where more than 7,000 members and supporters came out.

UMWA officials claim that Patriot was designed to fail, and that other coal companies wanted to get out of their union-negotiated benefit obligations by putting them into a new company that would soon go bankrupt. Patriot has denied the claims.

The UMWA represents about 42 percent of Patriot’s 4,000 employees.