The Stel Salaried
Pensioners Organization wishes to thank The Hamilton Spectator for permission
to post the following article by Reporter Steve Arnold published in the April
20, 2005 edition
|
Apr. 20, 2005. 12:42 AM |
|
Brascan deal unfairly favours
union: Stelco |
|
By Steve Arnold |
|
A union-backed rescue package for Stelco has been dismissed as an unfair effort to enrich workers at the expense of other stakeholders in the company. In court documents filed yesterday, chief restructuring officer Hap Stephen said the $1.35-billion Brascan Corporation proposal is doomed to fail because of opposition from Stelco's powerful bondholders. Stephen's affidavit, supporting an effort to keep Brascan from getting court-ordered access to Stelco's most private financial secrets, was filed on the same day Hamilton's planning and economic development committee urged Stelco to at least study the offer. In his most detailed argument against the Brascan plan to date, Stephen said the deal's requirement for new contracts to be negotiated with all company unions means the United Steelworkers would force other stakeholders to shoulder the costs of saving Stelco. "The Tricap proposal seeks to obtain economic and other advantages for the USWA while imposing concessions and compromises on other stakeholders, and does not have the support of the bondholder group such that it has no prospect of success, since the bondholders are part of the only creditor group which may have a vote on a CCAA plan," he wrote. Rather than wasting time and effort on the Brascan plan, Stephen added, Stelco should focus its attention on crafting a restructuring plan that tries to balance the interests of all stakeholders. Stelco is hoping to raise the money it needs to restructure its balance sheet on the capital markets after rejecting a number of third party offers. Debate over the Brascan deal, Stephen added, is creating "instability" in the markets. Stephen's position against the Brascan plan echoes that of bondholder lawyers Richard Orzy and Kevin Zych who wrote last week that the Brascan plan "cannot be reasonably viewed as forming the basis of a viable plan under the CCAA or even for the commencement of meaningful negotiations" and "it is clear that any attempt to pursue this plan is doomed to fail and will result only in further delay and misdirection of effort at a critical time." Union lawyer Lily Harmer said the current jockeying for position "is what everyone does at this stage until everyone sits down and negotiates a final deal." Last week, through a restructuring company called Tricap Management Ltd., Brascan offered to refinance Stelco, providing $500 million to top-up its underfunded pension plans, with more money for badly needed plant and equipment upgrades. The plan is backed by five of Stelco's six United Steelworkers of America locals. Local 1005, representing workers at the Hilton Works complex in Hamilton, is the only local that's not involved in the plan. Stephen also said Brascan had been invited to participate in Stelco's first capital raising effort last fall, but refused. He said allowing it to make a bid now would be unfair to other players. Ed Nordholm, senior vice president of Tricap, told The Spectator the company had been interested in Stelco since it filed for bankruptcy protection but refused to participate in a restructuring that didn't solve the pension issue, adding "the magnitude of capital Stelco was looking for was inadequate to deal with the pension." The landscape changed in February, when the provincial government ordered Stelco to pay off its pension debt. The Brascan proposal is conditional on a detailed review of Stelco's financial condition -- information the union can only provide if Stelco agrees to let Brascan be appointed as a union financial adviser under a confidentiality pact. Stelco has refused that permission and tomorrow the union will ask for a court order forcing the appointment. In an effort to add weight to their effort, the union and Hamilton East MPP Andrea Horwath circulated a motion among the city's other MPPs and members of the planning and economic development committee urging them to pressure Stelco to consider the Brascan offer. City politicians endorsed that call, but the city's MPPs refused. Union leaders told city councillors the Brascan plan offers the best hope to date of a real solution to Stelco's massive $900-million pension deficit. "Stelco doesn't have those answers now and we don't know when it will have those answers," said Stelwire local president Scott Duvall. "We need something that will put the retirees at a little bit of ease." Mayor Larry Di Ianni urged committee members to back the union's request as a way of moving a complicated process one step closer to a solution. The committee motion goes to the full council for endorsement April 27. Later, Duvall told The Spectator that workers have lost faith in Stelco's ability to develop a solution that meets their needs. " We don't give them any credibility at all. We don't feel Stelco will look after the pension plan." Peter Leibovitch, vice-president of the Lake Erie local, was more direct arguing "Hap's number one concern is the bondholders and our number one concern is the pensioners." sarnold@thespec.com 905-526-3496 |