Patriot Coal mine employees object to proposed Blackhawk Mining sale

By Kali Hays

New York, June 15 – Patriot Coal Corp.’s active and inactive employees represented by the United Mine Workers of America (UMWA) objected to the company’s proposed sale of operating assets to Blackhawk Mining, LLC, according to a Monday filing with the U.S. Bankruptcy Court for the Eastern District of Virginia.

As previously reported, Patriot Coal filed a letter of intent with the court regarding the sale on June 3. Under the terms of the letter, Blackhawk would issue $643 million in new debt securities to Patriot’s secured lenders plus class B units, providing the lenders an ownership stake in Blackhawk.

Blackhawk would also assume or replace surety bonds supporting reclamation and related liabilities associated with the purchased assets.

Though the agreement with Blackhawk is subject to higher and better offers, Blackhawk would receive a $19 million break-up fee and reimbursement of up to $5 million of its expenses if it is not ultimately the high bidder, if Blackhawk terminates the purchase agreement or if the sale does not close by Sept. 25, subject to an extension of the closing date.

In its objection, UMWA said that Patriot’s bankruptcy process thus far “is unfortunately déjà vu all over again.” The company’s prior bankruptcy case resulted in $130 million in savings due to employee benefit and wage cuts and now the company is “on the apparent path of further stripping away pension benefits, retiree obligations, and other obligations owed to the UMWA employees and the debtors’ retirees under non-expired collective bargaining agreements and related documents.”

Under the proposed transaction term sheet, Blackhawk will enter into new collective bargaining agreements ratified by the UMWA, or a final order must be entered for Patriot to reject all collective bargaining agreements.

Moreover, UMWA said that the proposed procedures are “bid-chilling” and that the proposed Blackhawk transaction “is a ‘sale’ in name only” as it “provides no cash to the estates.”

“The UMWA supports a fair and open auction process to maximize value for all constituents, to protect jobs and promised employee and retiree benefits, and to preserve a going concern operation. However, simply put, this is not that process,” the objection stated.

In light of its claims, UMWA asked that the court deny the proposed Blackhawk transaction and that Patriot Coal perform one or more alternate transactions for the assets.

Patriot Coal, a Richmond, Va.-based miner, producer and seller of thermal coal, filed for bankruptcy on May 12 in the U.S. Bankruptcy Court for the Eastern District of Virginia. The Chapter 11 case number is 15-32450.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.