Miners vs. Vultures

By Sarah Jones - Intelligencer, January 20, 2022

Over the last ten months, Brian Kelly has traveled, twice, from his home in Alabama to New York City. Kelly, along with roughly 900 of his co-workers, has been on strike since April 2021, a lengthy ordeal they pin on their employer Warrior Met Coal’s lackluster proposals for a new contract. In an unusual move for a labor strike, he and hundreds of workers came to protest the three hedge funds that own Warrior Met and pressure them to pressure the company’s management. It hasn’t been easy: Last November, the NYPD arrested Kelly and several others in front of the headquarters of BlackRock, the largest shareholder in Warrior Met.

A third-generation coal miner, Kelly worked for Warrior Met’s predecessor, Walter Energy, for two decades until it filed for bankruptcy protection in 2015. That’s when a judge allowed the private equity firms that took it over, including Apollo Global Management, Blackstone, and KKR, to reject prior labor contracts with Kelly’s union, the United Mine Workers of America, as the Financial Times previously reported. Miners accepted a pay cut of $6 an hour to keep their jobs. Health-insurance costs increased. “Then they forced us to work seven days a week, up to 16 hours a day,” Kelly recalled. “Overall, we made a sacrifice during that time.” The firms say they saved jobs; instead, miners say private equity prospered from their suffering. Though private equity no longer owns the company, the strike is arguably their legacy.

“All told, we estimate that this conglomerate of private equity firms realized about $1.1 billion in savings coming out of the bankruptcy court just over the past five years, that were essentially taken out of the pockets of workers,” said Phil Smith, a spokesperson for the United Mine Workers. A bigger payday was still to come. “Before its initial public offering in 2017, Warrior paid them a $190m dividend from cash on hand,” the Financial Times reported. “A few months later it paid a $600m dividend funded with cash as well as a $350m debt offering.” Austerity for some can be a windfall for others.

In statements, Apollo, Blackstone, and KKR all emphasized that they are no longer intertwined with Warrior Met. “Our former investment in Warrior Met saved the company’s mining operations from the brink of collapse, allowed the company to deleverage and invest in its business and preserved more than a thousand high-paying jobs in Alabama,” a spokesperson for Apollo said. “During the time of Apollo’s investment until our ultimate exit in 2019, the company thrived — its stock price increased, they had positive relations with its workforce and the representative union, and employees, who rank among the top earners in Alabama, received significant pay increases and bonuses.”

That likely won’t persuade Smith or the miners who make up his union. Smith calls the firms “vulture capitalists,” which he explained in detail. “What the vultures do is they see something lying down on the ground and they come and they eat it, right?” he said. Warrior Met’s predecessor, Walter Energy, “was lying dead in bankruptcy court,” he explained, when private equity swooped in. “They’re preying on distressed and dead companies and figuring out ways to extract more money for themselves and for their investors from the bones and the remains of those companies,” he added.

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Disclaimer: The views expressed here are not the official position of the IWW (or even the IWW’s EUC) and do not necessarily represent the views of anyone but the author.