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As Alabama miners continue their seven-month strike against Warrior Met Coal, a trio of U.S. senators on Tuesday sent letters of inquiry to the private equity firms the lawmakers say “made off like bandits” after taking over the company while workers “endured severe cuts to pay and benefits” in order to ensure its success.
“We have long been concerned that some private equity firms pursue strategies that extract value from portfolio companies at the expense of workers and communities.”
Sens. Elizabeth Warren (D-Mass.), Bernie Sanders (I-Vt.), and Tammy Baldwin (D-Wis.) wrote to the CEOs of Apollo Global Management and Blackstone asking for details regarding the firms’ investment in Warrior Met Coal, which operates the Brookwood, Alabama mine, whose workers have been on strike since April 1.
“We have long been concerned that some private equity firms pursue strategies that extract value from portfolio companies at the expense of workers and communities,” the senators wrote. “These strategies include loading debt onto companies to fund payouts for the private equity firm and its executives, engaging in severe cost-cutting measures that harm workers and consumers, and quickly cashing out after extracting as much value as they can.”
“Warrior Met has returned at least $1.4 billion—or more than twice the company’s market capitalization last year—in dividends to its owners since the company went public in 2017, potentially imperiling its ability to refinance its debt in the coming years,” they said.
Warrior Met miners affiliated with the United Mine Workers of America (UMWA) have been striking over pay, benefits, and working conditions. According to the union: “Workers decided to save their company, preserve their jobs and their communities by sacrificing wages, time off from work, loss of overtime pay, and an end to full healthcare coverage. Their sacrifices totaled $1.1 billion over five years in cost savings and helped the company reach revenues in excess of $4.3 billion.”
“The result of these sacrifices and an unheard-of financial comeback for the company was Warrior Met’s blatant mistreatment of its workers, forcing them to work most holidays and complete 12-hour shifts reaching up to seven days a week,” the union added.
In July, labor activists from across the U.S. joined striking Alabama UMWA workers in a protest outside the New York City headquarters of multinational asset management firm BlackRock, Warrior Met’s largest shareholder.
The three senators noted that “more than 1,100 Warrior Met workers in Brookwood, Alabama have been on strike to restore wages, benefits, and fair work practices that were stripped away following the bankruptcy of Walter Energy, Warrior Met’s predecessor company.”
“Blackstone Inc.’s GSO Capital Partners (GSO) and other private equity investors in Warrior Met dictated the terms and conditions of the 2016 takeover of the company and continue to bear responsibility for the cuts in pay and benefits that have led to the Warrior Met miners’ strike,” they said. “We write to request information in order to better understand Blackstone’s investment in Warrior Met and other businesses.”
The senators continue:
As part of the restructuring deal negotiated between the two parties, Walter Energy’s collective bargaining agreement with the United Mine Workers of America (UMWA) was terminated, along with the company’s pension and health obligations to 2,800 retired coal miners and their dependents.
Workers conceded to a $6-an-hour wage cut—a cut of more than 20%—and reduced benefits in their 2016 contract. This included a reduction in medical coverage “from 100% of medical fees covered before Warrior Met Coal took over to only 80%,” a particularly troubling change given the significant danger and health risks associated with coal mining.
Warrior Met miners report that the “company has also gotten stricter on attendance. Workers could be expected to work seven days a week, up to 16 hours a day, and termination for missing more than four days of work except in the case of a family death.”
Despite the $1.1 billion in savings from workers’ concessions, the letters state that “Warrior Met has refused to restore the contract terms that prevailed before Walter Energy’s bankruptcy, instead offering workers an hourly pay increase of just $1.50 over five years. Meanwhile, Warrior Met has reportedly delivered bonuses of up to $35,000 to the company’s upper management.”
Last month, Warren, Baldwin, and Reps. Mark Pocan (D-Wis.) and Pramila Jayapal (D-Wash.) reintroduced the Stop Wall Street Looting Act, a bill they say will “fundamentally reform” the private equity industry by holding firms more accountable for the businesses they acquire.
“Private equity firms were already gutting companies and killing jobs before Covid-19, now they’re drooling over companies to exploit during this crisis,” Warren explained while introducing the bill. “Private equity firms get rich off of stripping assets from companies, loading them up with a bunch of debt, and then leaving workers, consumers, and whole communities in the dust.”