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Peabody says settlement offer for Patriot Coal retirees rejected

(Reuters) - Peabody Energy Corp , which created now-bankrupt Patriot Coal through a spin-off, said an offer to settle claims relating to healthcare benefits for Patriot Coal retirees had been rejected by the United Mine Workers of America.

Peabody and Patriot have been fighting over the funding of benefits for about 3,100 retirees that Peabody agreed to continue covering after the October 2007 spin-off of Patriot.

Peabody said in a statement that its mid-August offer to settle all claims with the UMWA could have been used to provide the retirees with lifetime healthcare benefits comparable to those of Peabody's active corporate employees.

"The UMWA retirees who have been traveling to St. Louis to rally for healthcare benefits have a right to know that a good faith settlement offer was on the table, and that union leadership rejected it," Vic Svec, a senior vice president of global investor and corporate relations, said in the statement.

Representatives for the United Mine Workers of America and Patriot Coal could not be immediately contacted for comment outside of regular U.S. business hours.

Earlier this month, Peabody said it had no obligation to fund health and pension benefits for Patriot retirees affected by the company's insolvency, arguing that new labor deals between Patriot and the UMWA effectively relieved it of any funding obligations.

(Reporting by Varun Aggarwal in Bangalore; Editing by Edwina Gibbs)

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