The Stel Salaried
Pensioners Organization wishes to thank The Hamilton Spectator for permission
to post the following article by Reporter Tara Perkins published in the May 9,
2005 edition
Stelco results, restructuring
plan due this week
By Tara
Perkins Stelco
Inc. is expected to release its long-awaited plan to haul itself out of
bankruptcy protection on Thursday. But it won't mark the end of the Hamilton
steelmaker's rocky 15-month restructuring as a potential bidding war and talk
of union opposition continues to swirl. A
promise from the company's union not to strike also expires on that day. In a
deal the company struck with the United Steelworkers last month, Stelco
promised not to release its restructuring plan before Tricap Management Ltd.
had a chance to finalize a $1.35-billion refinancing offer it's putting
together with the union's backing. The
union hinted there will be plenty of fiery debate about which proposal on the
steelmaker's future should prevail. "We're
all weighing up our positions," said Scott Duvall, president of the
Steelworkers' local representing employees at Stelco's Stelwire operations.
"And then we'll go for the jugular at the end of the week." With
Brascan-controlled Tricap working feverishly to complete its due diligence,
some of Stelco's rejected suitors are vying for one last chance to refinance
the now-profitable steelmaker. Both
the Steelworkers and Stelco's bondholders have said they each have a veto on
the final deal. There's still plenty of interest in Canada's largest producer
of steel, despite its insolvency claim. The
steelmaker, which warned it could run out of cash within months after filing
for bankruptcy protection in January 2004, was caught off-guard by
skyrocketing steel prices that enabled it to churn out strong profits through
most of last year. Its first-quarter results will be released tomorrow. Its
profits and position in the steel sector spurred the interest of a handful of
bidders who were vying for the company earlier in the restructuring process.
But after soliciting for proposals, Stelco rejected them all in February,
after its board decided to forge ahead as a stand-alone operation and raise
money on the capital markets. Island
Energy Partnership -- a joint venture between Sherritt International Corp.
and the Ontario Teachers' Pension Plan -- wants its previous bid re-examined
now that Tricap has emerged with an offer. On
May 19, IEP is scheduled to appear before the judge overseeing Stelco's
creditor protection to ask permission to show its rejected bid to Stelco's
employees and other stakeholders, and resubmit it to the court. Ian
Blair, a spokesman for Russian steel giant OAO Severstal, says if IEP is
granted permission, Severstal will consider a similar move. The
prospect of another bidding war does not appear to excite chief restructuring
officer Hap Stephen. "One
thing that's really being misinterpreted out there is that Stelco has
effectively brought Brascan into the game. They haven't," Stephen said.
"Stelco has only agreed that Tricap can be an adviser to the
union." The
Steelworkers used a back door tactic to bring Tricap into the fray,
appointing the fund as its financial adviser. That allowed Tricap access to
Stelco's confidential corporate information so it can put together a final
bid. The Steelworkers are backing Tricap's initial offer, which would place
$500 million into Stelco's pension deficit. Stephen
said Stelco officials "were not party to anything (Tricap) did. And we
are not party to anything they're doing. (The idea) that we are meeting,
negotiating or discussing with Brascan, we're not," he said. IEP's
chances of a successful bid don't appear much better. "If
we get an offer from anybody, we will consider it," Stephen said.
"But that's not what IEP has asked for. IEP has asked for the ability to
go talk to everyone else. And we don't necessarily agree with that." |
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