Under the terms added to the agreement initially inked in 2013, Peabody will make 10 monthly payments of $7.5 million (for a total of $75 million) to the Patriot Retirees Voluntary Employees’ Beneficiary Association (VEBA). The payments will begin this month and run through October.
The UMWA represents about 12,000 retirees as well as dependents and widows covered under the Patriot VEBA, which was established in 2013 to administer benefits following the Peabody bankruptcy filing.
The amendments and payments, which Peabody officials said will improve its expected 2017 cash flows by $70 million, are now subject to bankruptcy court approval.
Peabody officials noted that the company already has contributed $165 million to VEBA since 2013 under a prior three-party agreement that involved the union and Patriot.
“While Peabody has met its obligations under this agreement, Patriot breached the agreement, which left unclear Peabody’s ongoing funding requirements to the VEBA,” it said.
It also said that, should VEBA participants begin receiving another form of health care benefits resulting from new legislation, its payments would cease. The operator’s payments for retiree healthcare under the Coal Act will continue without changes.
“The market conditions occurring in the coal industry are unprecedented and have created hardship for stakeholders at all levels,” Peabody officials said. “The company is pleased to have reached this new agreement to resolve uncertainty for UMWA participants related to Patriot.”
UMWA President Cecil Roberts said the the union is pleased that a deal could be reached.
“The second bankruptcy of Patriot Coal in 2015 and the breakup of that company into separate entities put the initial agreement providing funding for the VEBA in jeopardy. With this new agreement, we have been able to provide a measure of security for these retirees, their dependents and widows.”
He added that, while the agreement will help, it is not a “permanent fix” to the issue.
“We need Congress to live up to the promise made by Harry Truman in the White House nearly 70 years ago to our nation’s miners – and repeatedly confirmed by Republican and Democratic Presidents and Congresses since – that if miners would provide the resource to make America the most powerful nation on earth, they would receive retirement security for the rest of their lives. It is time to secure that promise once and for all.”