Patriot Coal Corp. (PCXCQ), the bankrupt mining company, reached a settlement resolving how it will reduce benefits for nonunion retirees, a lawyer said.
Patriot will pay $4 million into a plan administered by a trustee to pay benefits for nonunion workers, Brian Resnick, a lawyer for Patriot, said today in U.S. Bankruptcy Court in St. Louis. The payment would consist of $250,000 in cash plus stock in a reorganized company, he said. Life insurance will be capped at $30,000 and current benefits will stay in effect until July 31 under the settlement.
“The deal we cut with the nonunion employees is encouraging,” Marshall Huebner, another lawyer for Patriot, told U.S. Bankruptcy Judge Kathy Surratt-States. The company is “moving forward” talks with unionized employees, Huebner said.
Patriot filed for bankruptcy in July, citing falling demand for coal and obligations to pay $1.6 billion in lifetime health care for its 8,100 retirees. The St. Louis-based company is scheduled to go before Surratt-States April 29 with a motion to change agreements with the United Mine Workers of America, which represents about 42 percent of Patriot’s 4,000 employees.
The company today is asking Surratt-States for permission to probe former parent Peabody Energy Corp. (BTU) and for more time to control its bankruptcy. Patriot is also arguing against a motion to have an independent trustee oversee its case.
The company said April 3 that it needed to save money by reducing or ending benefits for nonunion retirees that may cost it about $51.3 million.
The case In re Patriot Coal Corp., 12-bk-51502, U.S. Bankruptcy Court, Eastern District of Missouri (St. Louis).