Peabody Asks Court To End Its Funding For Patriot Coal's Retirees

(RTTNews) - Peabody Energy(BTU), Friday asked the bankruptcy court to confirm the termination of its contractual obligation to fund certain of Patriot Coal's retiree healthcare benefits. Pursuant to Patriot Coal's new labor agreements with the UMWA, its obligations to pay the retiree healthcare benefits will end by January 1, 2014. Under the terms of Peabody's contract with Patriot, Peabody obligation to fund certain of Patriot's retiree healthcare liabilities will also end at the same time.

Post Patriot's obligations to provide retiree healthcare benefits terminates, a Voluntary Employee Beneficiary Association or VEBA will provide healthcare benefits to Patriot retirees.

Though the conclusion of the contract to fund Patriot's liabilities is not yet ended, Peabody has made several offers to contribute substantial funding to the newly-established VEBA. The company added: "Unfortunately, the UMWA has continued to grandstand, and will have to explain to its members why it chooses to posture while denying them significantly greater retiree healthcare benefits. The UMWA's unreasonable position has left Peabody with no plausible avenue but to protect our legal rights."