The Stel Salaried
Pensioners Organization wishes to thank The Hamilton Spectator for permission
to post the following article by Reporters Naomi Powell and Chinta Puxley
published in the September 23, 2005 edition
The Hamilton
Spectator
(Sep 23, 2005)
Stelco was expected to present deals
with unions and investors yesterday to secure a $100 million loan from the
Ontario government. The loan is crucial to the company's restructuring plan,.
Instead, Stelco lawyer Michael Barrack
said no deals had been reached despite marathon negotiations that ended minutes
before the court session. With that, all parties were ordered out of the court
at 361 University Ave. in Toronto and into Farley's chambers down the street,
where sources say they were given a harsh lecture and told to return to the
bargaining table.
Farley reserved judgment on the
extension. Parties have until midnight tonight before the current extension on
the company's bankruptcy protection expires.
But he wasn't sympathetic.
"Quite frankly, I'm not inclined
to think there's a necessity for any further extension," Farley said.
"People better get serious. I don't think they've been serious to
date."
Even after a week of round-the-clock
negotiations, stakeholders appeared far apart yesterday, with Stelco's CEO
Courtney Pratt and union leaders unwilling even to share the same elevators on
their way to the 32nd floor of the monitor's legal office at Bay and Wellesley
streets yesterday afternoon.
The two sides spoke for approximately
five minutes before Pratt and his legal adviser, Steve Shamie, returned to
their lawyers' office in a building only metres away. Asked what Farley's
orders were, Pratt said: "To get a deal." Pratt added that talks
would go on "as long as it takes."
Bill Ferguson, president of the USWA
representing Lake Erie workers, was equally determined to stay at the table
until the union was satisfied.
"We have to get a deal our members
can accept."
Although Barrack said the province was
willing to extend the deadline it placed on the company to achieve the labour
agreements and the deal with Tricap, Farley was less accommodating. He said the
failure of collective bargaining in normal circumstances results in a strike or
lockout, but warned Stelco that consequences were much more serious in this
case.
"What happens in this situation is
a splat," the judge said.
Farley also lashed out at lawyers
yesterday for not informing him of a third condition the government placed on
its $100-million loan. In its agreement with Stelco, the province says the
steelmaker must sign a deal with the unions "relating to certain Stelco
governance issues."
Although the document offers no further
details, this could mean the union is seeking seats on Stelco's board or the
ability to determine the composition of the board.
Stelco's plan calls for the company to
have between eight and 16 directors. Its current seven-member board will be
terminated as soon as the company implements its plan, and directors will be
named to hold office for one year or until the next annual meeting.
Farley set a stern tone from the
beginning of the day by scolding the high-spirited spectators in the court, who
shouted and clapped when Jake Lombardo, vice-president of the United
Steelworkers Local 1005, presented union T-shirts to lawyers for Stelco and for
the company's bondholders before court was in session.
Farley ordered all spectators to behave
like "gentlemen and gentlewomen" and threatened to clear the court.
Since Stelco entered bankruptcy
protection in 2004, it has struggled to come up with a restructuring agreement
that is satisfactory to all its stakeholders.
Bitter disputes between the union the
company have dominated most of the company's 20 months under court-ordered
protection.
Hopes of a resolution were raised on
Tuesday when the union and the company announced they had finally reached an
agreement on how to restructure. The proposed plan would see a $400 million
downpayment on the company's $1.3 billion pension shortfall -- $300 million
from the company and the $100 million loan from Ontario. Existing shares would
be wiped out and new shares issued, to be 100 per cent owned by the company's
unsecured creditors.
Should the company survive this latest
crisis, it would still have to win the support of its unsecured creditors, who
have the power to vote down any plan.
The unsecured creditors -- including
the bondholders who have the power to quash a deal on their own -- would
receive equity in exchange for the debt they hold now.
Pratt has already acknowledged that
this group does not support the plan. The company is hoping to schedule a Nov.
1 vote on the proposed restructuring plan.
npowell@thespec.com
905-526-4620
cpuxley@thespec.com
905-526-3468