Kemmerer mine sold, judge rules Westmoreland can end CBAs

Western Coal Acquisition Partners has made a successful bid to purchase the Kemmerer mine from Westmoreland Coal Company for $215 million, according to an asset purchase agreement filed in a Houston, Texas, bankruptcy court on Tuesday, Feb. 19.

The judge also officially gave permission, but not direction, to Westmoreland to end the collective bargaining agreements (CBA) with the United Mine Workers of America for the Kemmerer mine.

The company now has the option to no longer be responsible for approximately $100 million in retiree obligations to miners from the Kemmerer and Beulah (North Dakota) mines.

Although the three-day trial ended on Friday, Feb. 15, Judge David R. Jones didn’t issue the official order on the ruling until Tuesday, Feb. 19 — a move designed to encourage Westmoreland and the union to work on last-minute negotiations.

“The decision itself is not hard for me. The impact of what my decision does is what’s hard for me,” Jones told the Wall Street Journal.

The Kemmerer CBA and retiree benefits are rejected effective Feb. 28, according to court documents filed Tuesday.

Westmoreland first informed the UMWA in October 2018 that it had plans to end retiree health benefits at the Kemmerer and Beulah mines as a way to prevent liquidation and encourage the sale of the Kemmerer mine.

Termination of the collective bargaining agreements also removes successorship language, so Western Coal Acquisition Partners’  will not be responsible for the retiree benefits when they purchase.

An official hearing in bankruptcy court regarding the sale will be held on Feb. 28. Western Coal is an affiliate of Merida Natural Resources, whose CEO is Tom Clarke.

“We are grateful to be a part of the process to sell the historical Kemmerer mine and, if we are the successful bidder, look forward to working with the employees, customers, and community in building a strong and stable future for Kemmerer,” Clarke told Business Wire.

According to a disclosure statement filed by the coal company in December, 242 active union employees and 68 retirees are covered under the Kemmerer collective bargaining agreement.

This latest decision mirrors several previous coal company bankruptcy court cases, in which the court allowed the companies not to pay retiree benefits despite union objections.

The UMWA objected to Westmoreland sending out letters to union employees that stated their benefits would be modified, saying it was done without court approval, and the collective bargaining agreements should be enforced. The court denied that motion and said Westmoreland acted legally.

Several UMWA Local 1307 leaders attended the hearing in Houston, and said they were disappointed in the ruling but hoped the union could negotiate with the mine’s new buyer to restore benefits.

Westmoreland lawyers presented their case in court for terminating the agreements, citing the precarious nature of the coal economy and the specific risks at the Kemmerer mine that make termination of the agreements the only choice.

Westmoreland has said that it has negotiated “in good faith” with the UMWA in order to prevent termination of the bargaining agreements, but was unable to reach a solution that satisfied both parties.

The coal company’s lawyers argued in a January court filing that no potential buyer wanted to purchase the Kemmerer mine if it was attached to the Kemmerer collective bargaining agreement or the retiree benefits. Westmoreland said the obligations to retirees, including a pension plan and an “extremely generous medical plan” for active union employees is something no buyer wanted to take on.

Westmoreland currently has more than $1 billion in debt, according to its latest financial statements.

The Kemmerer mine produced 4.0 million tons of coal in 2018 and employs nearly 300 people.