Financially struggling Patriot Coal (NYSE: PCX) has gone the unusual route of shaking up its top management team as it tries to work its way out of a financial hole.
Patriot said May 29 that the following appointments by the Patriot Board of Directors are effective immediately:
- Irl Engelhardt has been named CEO. He succeeds Richard Whiting, who is leaving Patriot after serving as President and CEO since 2007. As CEO, Engelhardt will focus on corporate strategy, financing activities, corporate development and optimization of the company’s asset portfolio. Engelhardt will also continue to serve as Chairman of Patriot’s Board of Directors. With more than 30 years of experience in the coal and energy industries, Engelhardt, 65, served as Chairman of the Board of Directors of Patriot since its spin-off from Peabody Energy (NYSE: BTU) in 2007, and previously served as Chairman and CEO of Peabody from 1990 to 2005.
- Bennett Hatfield has been named as President of Patriot and will continue to serve as the company’s COO. He will be responsible for overseeing the execution of Patriot’s operations, sales and marketing plans. To help ensure that Patriot’s operations anticipate and respond effectively to changing market conditions, the company’s marketing teams will now report directly to Hatfield. Hatfield, 55, has served as Patriot’s Executive Vice President and COO since September 2011. He previously was President, CEO and a Director of International Coal Group, from 2005 until the June 2011 sale of that company to Arch Coal (NYSE: ACI). He has held a number of top jobs during his 30-plus years in the coal industry, including: President, Eastern Operations of Arch Coal; Executive Vice President and COO of Massey Energy; and Executive Vice President and Chief Commercial Officer of Coastal Coal.
- Michael Scharf has been named Lead Independent Director of the Patriot Board. He has been a member of the board since 2007 and currently chairs Patriot’s Nominating & Governance Committee.
Engelhardt said in the May 29 statement: “Ben and I will immediately focus on improving Patriot’s competitive position as well as its financial structure to enhance value for our shareholders and all other groups who have a stake in the Company’s success. Our team has successfully navigated the inherent cycles in the energy industry in the past, and I am confident Patriot can overcome the industry challenges that we currently face. As we move forward, I could not have a better operating partner than Ben, who has demonstrated outstanding leadership and a deep knowledge of the coal industry in his 30-year career.”
Engelhardt added about the departing Whiting: “On behalf of the Board and the senior management team, we thank Rick for his contributions, commitment and service to Patriot. As President and CEO, he guided Patriot through a complex spin-off and its emergence as a standalone public company. We wish him well in his future endeavors.”
Patriot Coal is a leading producer and marketer of coal in the eastern U.S., with 13 active mining complexes in Appalachia and the Illinois Basin. Facing problems with financing, and rumors on Wall Street about a possible bankruptcy, Whiting wrote a May 22 letter to Patriot employees that reassured them the company is making progress “during these challenging times in our industry.”
Whiting noted in that letter: “Our management team has acted swiftly to ensure that we are well-positioned in the current operating environment. We have reduced thermal coal production by over four million annual tons, delayed expansions under the Met Build-Out program, and worked closely with our customers to address their changing needs. In addition, we have implemented major cost reduction initiatives, including assuming full operation of several mines and facilities that were previously managed by contractors and adjusting our workforce appropriately.”
Earlier in May, it was announced that Patriot has entered into a commitment letter for a new revolving credit facility and new term loan facility for a total of $625m. “We are continuing to work with our lenders to strengthen our finances, including the refinancing of our debt obligations that become due in March 2013,” Whiting noted in the May 22 letter. “We have engaged The Blackstone Group and continue to work with Davis Polk & Wardwell, our long-standing counsel, to achieve an optimal financing package. As we work through these matters, we continue to have access to our current credit facilities.”