(Reuters) - Bankrupt Patriot Coal Corp PCXCQ.PK said it had reached a new labor deal with its miners’ union, avoiding more drastic cutbacks the company was authorized to impose earlier this year.
In a statement on Monday, Patriot said it struck a deal for new collective bargaining agreements and retiree healthcare benefits, which members of the United Mine Workers of America must ratify. Terms of the deal have yet to be filed publicly on Patriot’s electronic bankruptcy docket.
Bennett Hatfield, the company’s chief executive, lauded the conclusion of “difficult” negotiations.
“Both parties want to preserve jobs and protect healthcare benefits for retirees by keeping Patriot on track for reorganization, and not liquidation,” Hatfield said in a statement.
Union President Cecil Roberts cited “several weeks of nearly around-the-clock negotiations.”
“I believe we have reached something that can be taken to the membership for ratification,” Roberts said in a statement on Monday.
Bankruptcy Judge Kathy Surratt-States, overseeing Patriot’s restructuring in U.S. Bankruptcy Court in St. Louis, in May signed off on a request by Patriot to cease pension contributions and convert retiree healthcare to an outside fund.
The request was made under bankruptcy rules that allow debtors to abandon costly employment contracts, a key point of leverage for bankrupt companies looking to save money by changing their labor cost structures.
It is unclear how the deal announced on Monday will compare to Patriot’s proposal, though it will almost certainly still require significant concessions from the union.
Patriot declared bankruptcy in 2012, saying it needed $150 million in annual labor cost savings to regain profitability. The United Mine Workers, which represent 1,700 current Patriot workers and 13,000 retirees and their relatives, have fought tooth-and-nail to salvage benefits, staging several rallies.
The union has also sued Peabody Energy Co (BTU.N), which created Patriot through a 2007 spinoff, saying that company should fund benefits Patriot cannot afford. The union believes Peabody designed Patriot to fail, knowingly loading it up with costly liabilities and few valuable assets.
The union said it is planning a rally on Tuesday at Peabody’s St. Louis headquarters.
The bankruptcy case is In Re Patriot Coal Corp, U.S. Bankruptcy Court, Eastern District of Missouri, No. 12-51502.
Editing by Eric Walsh