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 September 1, 2005 edition
By Steve
Arnold
The Hamilton Spectator
(Sep 1, 2005)
Two controversial Stelco Inc. directors
suddenly resigned yesterday in a move observers say clears the way to a
settlement of the company's 19-month-long battle to avoid bankruptcy.
Roland Keiper and Michael Woollcombe,
both major shareholders in Stelco, were appointed to the nine-member board in
February.
The move raised instant howls of
protest from retirees and workers who feared the men would push for a
restructuring that favoured shareholders over workers and retirees.
In a surprise move last night, the men
issued a one-paragraph press release announcing "they have tendered their
resignations, effective immediately ..."
The resignations, the release added,
"resulted from a fundamental disagreement over decision-making processes
followed by the board and a recent board decision."
They provided no information about what
that recent decision was and calls to both men were not returned. Company
president Courtney Pratt also refused to comment.
But observers said the removal of the
shareholder representatives from the board and its critical restructuring
committee clears the way for a settlement to Stelco's restructuring battle.
"This
news opens the possibility of a successful restructuring of Stelco," said
Murray Gold, lawyer for the salaried retirees organization, which mounted a
court challenge to the appointments.
That
challenge resulted in Keiper and Woollcombe being stripped of their positions
by the Superior Court and then restored by the Ontario Court of Appeal.
Paul
Wendling, a member of the salaried retirees' group, speculated the resignations
could have been sparked by a decision on the final shape of Stelco's
restructuring plan.
"It
looks to me like the other parties are prepared to compromise, except these
two," he said.
"We've
always thought that this process was bottle-necked because of these two, that
they were being difficult because they wanted value in the shares."
Wendling
added, "This is certainly an interesting development and it appears on the
surface to be a positive one."
In July, Stelco released a draft
restructuring plan that proposed leaving existing shareholders with less than 2
per cent of the company.
The proposal offered a down payment of
up to $200 million on the pension deficit of $1.3 billion with the balance to
be paid off over 10 years.
Existing stock would be wiped out and
replaced with 11 million new shares, 10 million of which would be used to
replace some of the company's existing debt. The rest would be refinanced.
That plan was rejected by worker groups
and the provincial government.
A series of negotiations has been
mounted since then under a cloak of confidentiality. Stelco's current period of
court protection ends Sept. 9.
The company is expected to table its
final restructuring plan Sept. 7.
Five of Stelco's six United
Steelworkers locals and the province supported a proposal by Tricap Management,
a restructuring unit of Brascan Corp.
It proposed a pension fund down payment
of $500 million with the balance settled over six years. While Stelco and its
debtholders initially rejected that idea outright, Pratt has admitted it has
been "on the table" in current negotiations.
When they were appointed to the board
in February, Keiper and Woollcombe controlled about 20 per of Stelco's stock
between them and had support from the holders of another 21 per cent.
In making the appointments, Stelco
chairman Richard Drouin said he feared if shareholders weren't mollified they
might use a clause of business law allowing them to force a stockholders'
meeting at which the board of directors and senior management could be
replaced.
Keiper is president of Clearwater
Capital, a Toronto-based investment firm, and was highly critical of earlier
Stelco restructuring proposals.
sarnold@thespec.com
905-526-3496