Patriot Coal shareholder group seek equity committee representation

By Jim Witters

Wilmington, Del., Aug. 24 - An informal group of holders of Patriot Coal Corp. common stock are seeking the appointment of an official committee of equity security holders, according to an Aug. 24 filing with the U.S. Bankruptcy Court for the Southern District of New York.

CompassPoint Partners, LP, Frank Williams and Eric Wagoner asked the court to direct the U.S. Trustee to appoint the committee "to ensure the integrity of the bankruptcy process for shareholders and to assure their adequate representation."

Patriot Coal's financial records indicate there is "meaningful equity value" available to shareholders, with assets exceeding liabilities by more than $495 million, the group says.

"Further, Patriot Coal's latest reported financial statements put total stockholders' equity in the realm of over $188 million," the motion states.

Additionally, Patriot Coal has $867 million consolidated net operating losses for federal income tax purposes and $570 million in alternative minimum tax purposes, which can be carried forward to offset future income, the group claims.

"The interested shareholders also believe there may be sources of value that the debtors have not yet disclosed, such as considerable value in their non-debtor subsidiaries, as well as other potential tax refunds, claims against officers and directors, and other claims," according to the court filing.

The equity holders fear that, without committee representation, they will be faced "with a dramatic dissipation" of their equity.

"An official equity committee will have the capability and incentive to identify sources of value for shareholders that other parties may have little incentive to find or to maximize," the group argues.

No hearing has been scheduled on the group's request.

Patriot Coal, a St. Louis-based miner, producer and seller of thermal coal, filed for bankruptcy on July 9. The Chapter 11 case number is 12-12900.

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