Patriot Coal ousts CEO
CHARLESTON, W.Va. -- Amid growing financial problems, Patriot Coal on Tuesday announced a leadership shakeup that includes the departure of CEO Richard M. Whiting and his replacement by company board chairman Irl Englehardt.
Patriot also promoted Ben Hatfield, the company's chief operating officer, to the position of president, as part of a series of moves the company said would "improve its operating and financial structure."
Since the first of the year, St. Louis-based Patriot's stock price has dropped from more than $9 per share to an opening price Tuesday of $2.56. During the first three months of the year, Patriot reported a financial loss of more than $75 million.
Englehardt has been on Patriot's board since the company was spun off from Peabody Energy in 2007. Hatfield most recently was president of International Coal Group, and previously was a Massey Energy Co. executive.
"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," Englehardt said in a statement. "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."
Last year, Patriot produced nearly 22 million tons of coal at its Appalachian operations, less than the 29 million its mines generated in the Illinois basin. In West Virginia, Patriot's largest mines are the Hobet 21 mountaintop removal operation along the Boone-Lincoln border and the Federal No. 2 underground mine in Monongalia County, both union operations.
Coal's share of electricity generation in the United States is dropping, as mine operators are facing much tougher competition from cheap natural gas supplies. Production in West Virginia is down this year, and while employment has risen over the past three years, some companies have this year begun to announce significant layoffs.
In February, Patriot announced it was closing its Big Mountain complex in Boone County, a move that cost 215 United Mine Workers members their jobs, said union spokesman Phil Smith. Patriot also announced reduced production that cut work hours and overtime at its Rocklick and Wells complexes, both also in Boone County. Patriot cited the depressed market for coal to produce electricity and a downward trend in demand for steel-making coal.
Industry analysts are concerned about Patriot's ability to secure a $625 million loan before it must repay earlier debts that are due next March. In mid-May, Patriot also warned that a "key customer" might default on its contract to buy 1.2 million tons of steel-making coal in 2012 and 2013. Current spot market prices for that coal are $25 to $30 per ton lower than the price in that customer's contract, Patriot said.
Patriot's Federal No. 2 Mine -- once touted as a model of labor-industry cooperation on safety issues -- has been caught up in a more than two-year criminal investigation and civil lawsuits over allegations of faked methane sampling. In Southern West Virginia, lawsuits by citizen groups have forced the company to agree to settlements that could force it to spend tens of millions of dollars to clean up selenium pollution from its mountaintop removal sites.
Reach Ken Ward Jr. at email@example.com or 304-348-1702.