Peabody: Patriot CEO ‘countered both by history and his own acti - WOWK 13 Charleston, Huntington WV News, Weather, Sports

Peabody: Patriot CEO ‘countered both by history and his own actions’

Posted: Updated:
  • Local NewsLocal NewsMore>>

  • UPDATE: Route 2 now open following tractor trailer accident

    UPDATE: Route 2 now open following tractor trailer accident

    Monday, August 25 2014 4:00 PM EDT2014-08-25 20:00:48 GMT
    A tractor trailer is blocking part of Route 2. The road is closed until further notice. Drivers heading in both direction are being asked to use the Big Ben Bowen Highway connector by Target to get around.
    A tractor trailer is blocking part of Route 2. The road is closed until further notice. Drivers heading in both direction are being asked to use the Big Ben Bowen Highway connector by Target to get around.

Peabody Energy continues to insist Patriot Coal was not destined for bankruptcy when it spun off the company, even in light Patriot's CEO sharing his doubts about the company from the formation.

Sunday, the State Journal reported Patriot CEO Ben Hatfield's stated suspicion of the viability of Patriot when it was first spun-off from Peabody. Hatfield, CEO of International Coal Group at the time, was watching as a competitor.

"Frankly, as a competitor, we looked at that and said, ‘How could that work? It looks like a bad balance here – too many liabilities and not enough assets,'" Hatfield said. "... As a competitor we were very suspect from the day the spin was announced as to whether this venture could survive."

Peabody Energy responded via e-mail on Wednesday with a comment from Vic Svec, senior vice president of investor relations and corporate communications.

"With all due respect, Mr. Hatfield is in no position to make an assessment on the launch of Patriot Coal," Svec said.

Svec added that Hatfield's comments were "countered both by history and (Hatfield's) own actions."

"Patriot was sound when launched more than five years ago and was extremely successful in the period after its spin-off," Svec said. "And it apparently was so attractive to him even nine months prior to its bankruptcy that he joined the company with great fanfare.  As he himself admits, no one was predicting the company's bankruptcy at that time."

Hatfield joined Patriot as chief operating officer in September of 2011 as part of a broader "realigning" of Patriot management. The company filed for bankruptcy in July 2012. Hatfield was later named CEO of the company to aid in the restructuring process after then-CEO Irl Engelhardt stepped down in October.

Patriot was formed in 2007 from assets and liabilities belonging to Peabody Energy. Critics of Peabody have asserted that the company didn't provide the company enough assets to overcome costly liabilities, essentially dooming the company to fail. Hatfield said a sudden surge in the coal industry is the only reason Patriot lasted as long as it did.

"Something doesn't quite smell right here," Hatfield said last week regarding Peabody's formation of Patriot.

As the company goes through bankruptcy union leaders are bringing hundreds and sometimes thousands of union protestors who fear the bankruptcy will destroy benefits won through collective bargaining. Some of the miners who might lose their benefits have never worked for Patriot Coal or at a mine that Patriot Coal does or has ever operated.

Patriot has offered a number of proposals, continually modified through negotiation with the UMWA. So far, an agreement has not been reached and Patriot has asked the bankruptcy court to step in and rule on a recent proposal.

The company's latest amendment to the proposal would offer the union a 35 percent equity stake in the company, making it the largest entity with ownership in the company. Benefits would still be significantly reduced but could prevent liquidation of the company, a result that would provide "next to nothing" for most of the parties involved.

The UMWA continued its protesting with another event in St. Louis Tuesday where members planted 1,000 white crosses to represent "miners killed at Peabody, Arch and Patriot mines and those currently at risk due to threatened cut-off of health care benefits."

"The corporate executives trying to get away with this outrageous scam tell us we should make decisions based on ‘fact,' not ‘emotion,'" said UMWA President Cecil Roberts. "Here's a fact: If you take away the benefits retired miners and their spouses need for medicine, doctor visits and hospital care, they will become sicker and poorer. And they will die younger."

Peabody issued a statement regarding the protest, saying the union protest was grandstanding and that the "matter will be decided in the courts."

"Peabody has lived up to its obligations and continues to do so," Peabody wrote in its statement. "This is a matter between the union and Patriot Coal, and will be decided in the bankruptcy court."