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Following familiar playbook, coal miner Alpha Natural moves to end UMWA pacts

Likecoal miners that have wound up in bankruptcy court before it, is askinga judge for permission to reject agreements with its union labor force to helpit survive the "historic collapse of the domestic coal industry."

In amotion filed March 28 with the U.S. Bankruptcy Court for the Eastern Districtof Virginia, Alpha said it has no choice but to end the agreements in order to keepcertain assets operating as going concerns and help avoid the "otherwisepiecemeal liquidation of their assets, all for the benefit of all stakeholders."

Alphasaid the "relentless and rapid decline" of coal markets havecontinued to drain the company's cash reserves at an "alarming rate"approaching $10 million per week. It said it has engaged in aggressive costcutting, but that labor costs need to fall further. The company said in thefiling it spends an average of about 34% more on each union employee than eachnon-union employee.

Themove was expected by the United Mine Workers of America, which had sought toensure the sanctityof Alpha's collective bargaining agreements upon sale of the company's remainingassets in a bankruptcy court auction.

In a statement to S&P Global Market Intelligence, UMWAspokesman Phil Smith said, "Alphacan file whatever they want and the judge can order whatever he wants but itwill be up to us whether or not we work under those conditions."

TheUMWA said it is "fired up" about the loss of member benefits as anincreasing number of coal producers wind up in bankruptcy court and seek tosave costs. The union plans to sendthousands of active and retired members and their families, friends andsupporters to march and rally in southwest Pennsylvania on April 1.

"Weare in the last year of a national collective bargaining agreement," saidUMWA President Cecil Roberts. "Our members want to let everyone know thatwe are fired up, we are united and we are ready to do what it takes [to] meetall these challenges and prevail."

TheUMWA has faced similar challenges with other producers that have filedbankruptcy, including PatriotCoal Corp. and WalterEnergy Inc.

Alphafiled for bankruptcy protection in August 2015 and has to divide the company into twoentities in bankruptcy court: A collection of core assets and a collection ofnon-core assets that will be focused on reclamation. Senior lenders have made a$500 million stalking horse credit bid for the core assets, but an auction hasyet to happen.

Alphasaid it has about 610 active union employees, representing about 11% of itsworkforce, and 2,600 retired union employees.