Coal Acquisition works out labor deal with UMWA for Walter mines in Alabama

Walter Energy, the United Mine Workers of America union and Coal Acquisition LLC, which was formed by Walter Energy lenders to buy the company’s main coal-producing assets in Alabama, on Feb. 8 filed a joint motion with the U.S. Bankruptcy Court for the Northern District of Alabama for approval of the creation of a Voluntary Employees’ Beneficiary Association.

Coal Acquisition would be acquiring the Alabama assets, including two longwall mines in the Blue Creek coal seam, free and clear of UMWA liabilities. The Feb. 8 joint motion asked for a quick hearing on Feb. 17 so the VEBA deal can be approved in time for the Coal Acquisition buy of these assets to close in late February.

Said the Feb. 8 joint motion: “Pursuant to the Joint VEBA Motion, the Parties request entry of an order in aid of this Court’s Sale Order which approved the Sale of the Debtors’ core Alabama assets to Buyer. In particular, the Joint VEBA Motion seeks an order authorizing and approving the formation and funding of a Voluntary Employees’ Beneficiary Association for the benefit of the UMWA Retirees (the ‘Walter Retirees’ VEBA’) which will be (i) formed and administered by the UMWA and (ii) funded by the Buyer following the closing (the ‘Closing’) of the Sale.

“The UMWA and Buyer have engaged in negotiations with respect to an initial collective bargaining agreement. On February 4, 2016, the UMWA and the Buyer executed an agreement (the ‘Buyer CBA’), subject to ratification by the UMWA Employees and the Closing of the Sale. The ratification vote with respect to the Buyer CBA is scheduled for February 16, 2016. Assuming that the Buyer CBA is ratified, the UMWA will withdraw all of the appeals (the ‘Appeals’) filed by the UMWA, subject to the Closing of the Sale.

“The Buyer CBA contemplates the formation and funding of the Walter Retirees’ VEBA for the benefit of eligible UMWA Retirees. Assuming ratification of the Buyer CBA occurs, and the closing of the Sale occurs, the Walter Retirees’ VEBA will be (i) formed and administered by the UMWA, (ii) funded by the Buyer following the Closing of the Sale, and (iii) solely responsible for the payment of health-care benefits for the UMWA Retirees upon Walter’s cessation of payment following the Closing of the Sale. The Walter Retirees’ VEBA will provide a mechanism for providing critical health-care benefits for the UMWA Retirees. Given the pending Sale which is scheduled to close in late February 2016, and the pendency of the Appeals, the Parties seek approval of the Joint VEBA Motion on an expedited basis.”

“As further described in the Joint VEBA Motion, subject to ratification of the Buyer CBA and the closing of the Sale, approval of the Walter Retirees’ VEBA (i) resolves complex issues and litigation – including the Appeals – regarding the UMWA Retirees that would otherwise require the Parties to spend substantial time, money, and resources; and (ii) will help facilitate the Closing of the Sale.”

About Barry Cassell 20414 Articles
Barry Cassell is Chief Analyst for GenerationHub covering coal and emission controls issues, projects and policy. He has covered the coal and power generation industry for more than 24 years, beginning in November 2011 at GenerationHub and prior to that as editor of SNL Energy’s Coal Report. He was formerly with Coal Outlook for 15 years as the publication’s editor and contributing writer, and prior to that he was editor of Coal & Synfuels Technology and associate editor of The Energy Report. He has a bachelor’s degree from Central Michigan University.