Warren, Sanders, Baldwin Question Private Equity Firms Apollo and Blackstone, on Warrior Met Coal Amid Ongoing Worker Strikes
Apollo, Blackstone, and Other Private Equity Investors in Warrior Met Coal 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 Miners’ Strike
Senators: “While workers endured severe cuts to pay and benefits after the Warrior Met takeover, Apollo and the rest of the private equity consortium appear to have made off like bandits”
Text of Letter to Apollo (PDF) | Text of Letter to Blackstone (PDF)
Washington, D.C. – United States Senators Elizabeth Warren (D-Mass.), Bernard Sanders (I-Vt), and Tammy Baldwin (D-Wisc.) sent a letter to two private equity firms, Apollo Global Management (Apollo) and Blackstone, which previously owned Warrior Met Coal (Warrior Met), a mining company in Alabama whose workers have been on strike for the past seven months. In the letter, the senators highlight Apollo and Blackstone’s extractive practices and describe the role these private equity firms played in creating the conditions that have led to the Warrior Met workers' strike. They also call on the firms to provide details about their previous investments in Warrior Met, including their profits from their buyout of the company.
“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. 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,” the senators said.
Since April 1, 2021, 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. Apollo and Blackstone led the consortium of private equity firms and mutual funds that dictated the terms and conditions of the 2016 takeover of the company, which included a termination of Walter Energy’s collective bargaining agreement with the United Mine Workers of America, along with the company’s pension and health obligations to retired coal miners and dependents. Amidst the bankruptcy, Warrior Met workers conceded to a 20% wage cut and reduced benefits in their 2016 contract. Warrior Met has refused to restore the contract terms in place before Walter Energy’s bankruptcy, leading the miners to strike.
While workers endured severe cuts to pay and benefits after the Warrior Met takeover, Apollo, Blackstone, and the rest of the private equity consortium profited. Warrior Met has returned at least $1.4 billion in dividends to its owners since the company went public in 2017. These dividends include nearly $800 million special cash distributions in 2017 alone – which were funded in part through debt – to Warrior Met’s private equity owners and shareholders, of whom Apollo and Blackstone were the largest. Yet by 2019, Apollo, Blackstone, and the other private equity firms that owned Warrior Met at the time of the initial public offering had sold their shares.
Senator Warren has been a leader on highlighting and ending abusive private equity practices throughout her time in the Senate. Last month, Senator Warren reintroduced the Stop Wall Street Looting Act, a comprehensive bill to fundamentally reform the private equity industry and level the playing field by forcing private investment firms to take responsibility for the outcomes of companies they take over, empowering workers, and protecting investors. That same month, Senator Warren chaired a subcommittee hearing where she highlighted the private equity business model and its consequences for workers, families, and investors.
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