The Stel Salaried
Pensioners Organization wishes to thank The Hamilton Spectator for permission
to post the following article by Reporters David Paddon and Tara Perkins
published in the September 2, 2005 edition
By DAVID
PADDON AND TARA PERKINS
TORONTO (CP) - Stelco Inc. is seeking
permission to name a former Ontario judge as a special officer who will help
review complaints raised against its board by two former directors who resigned
this week over a fundamental dispute.
Documents filed Friday ahead of a court
hearing next week show that the troubled Hamilton-based steelmaker is proposing
Coulter Osborne as an outside advisor to help a special committee of directors
that will review the complaints.
Osborne served in several capacities
while a judge, including as associate chief justice of Ontario from 1999 to
2001, and more recently was the province's integrity commissioner.
The documents said Osborne would advise
a special committee comprised of Stelco directors John Caldwell, Gary Lukassen,
and Douglas Mahaffy.
Richard Drouin, chairman of Stelco's
board of directors, said in an affidavit that Roland Keiper and Michael
Woollcombe raised serious complaints when they resigned Wednesday as directors
on Stelco's board.
The board thinks it would be good to
have an independent third party with recognized expertise in matters of
integrity and corporate governance to assist the special committee in respect
of the investigation and to report the results of the investigation to the
court, Drouin said.
The board is delighted that Mr. Osborne
has agreed to assist if appointed by this court to do so.
Earlier Friday, the president and chief
executive of Stelco said the company will ask for a ninth extension of its
bankruptcy protection, to Sept. 23, rather than the previous date of Sept. 9.
We need the time to clear up or deal
with these issues that have been raised by Keiper and Woollcombe, CEO Courtney
Pratt said in an interview Friday.
Stelco also needs time to finish
discussions with its stakeholders about its plan, which will outline how much
goes to each creditor group. Pratt declined to discuss details of what aspects
of the plan still need to be hammered out.
Keiper, president of Toronto-based
hedge fund Clearwater Capital Management Inc., and Woollcombe, an advisor to
Clearwater, cited a a fundamental disagreement over decision-making processes
followed by the board and a recent board decision.
Stelco said their complaint concerned
effective board oversight of recently prepared forecasts that will be important
in shaping the final plan introduced by the company.
Pratt said the reason this is pretty
critical, that there be no questioning from the court's perspective about the
way the board has dealt with this, is that the forecast is critical to the
plan.
Keiper and Woollcombe declined comment
on Friday. Drouin said in his affidavit that the company didn't want to say
more publicly so as not to influence the special investigation.
Keiper and Woolcombe represent a group
of shareholders that owns 20 per cent of Stelco's stock. Last year, that group
fought some of Stelco's restructuring moves in court and submitted a
refinancing offer that was rejected by the company.
Stelco appointed Keiper and Woollcombe
to its board in February - after Keiper gathered letters of support from
investors representing another 20 per cent of the stock - causing employee
groups to cry foul.
The steelmaker's workers have been
locked in an extended battle with its creditors over how much of the company's
funds should go towards its $1.3-billion pension solvency deficit.
Justice James Farley, who is overseeing
Stelco's court process, briefly removed the two men from the board, but the
Court of Appeal overturned the decision.
On Friday, shares in Stelco (TSX:STE.A)
gained six cents, or 9.52 per cent, to close at 69 cents on the Toronto Stock
Exchange.