The Stel Salaried Pensioners Organization wishes to
thank The Hamilton Spectator for permission to post the following Editorial by
Mark McNeil, published in the October 14, 2005 edition
By Mark McNeil
The Hamilton Spectator
(Oct 14, 2005)
Supporters of a union-led salvation
plan for Stelco have launched a major offensive to try to push forward their
fragile deal and fend off objections from creditors.
They have received an endorsement from
Hamilton City Council and this newspaper -- after an editorial board with the
group yesterday -- has also decided to support their efforts given current
alternatives. The community needs Stelco to be successfully restructured and
this plan should be used as a basis to achieve that.
The steelworkers representatives are
urging people in the community to stand behind their Plan of Arrangement to
oppose "bondholders in their effort to drive the company into the
ground."
While such language, used in a
full-page newspaper advertisement, is probably excessive, the fact remains that
the creditors have taken the extraordinarily unhelpful step of challenging the
tenuous deal in court even before taking a vote on it.
Clearly winning over the bondholders,
who have a combined vested interest of $275 million in the company and have a
crucial vote, will be very difficult. But it should not be seen as impossible.
The key point is the deal is still
negotiable and numerous outcomes are possible. Bondholders should consider the
plan to be a work in progress. For the sake of all concerned, and in the
absence of any other real choices -- the creditors should take another look at
what is before them.
No doubt they want a greater return on
their holdings and they are not crazy about trading their bonds for equity
shares.
It must seem strange for people who
walk in financial circles to be browsing the pages of a proposal that was
largely hatched by union leaders.
But these representatives -- from
locals 8782, 5328, 5220, 3258, and 6951 as well as the pensioner group SOAR --
have done what others could not. The bondholders, led by Deutsche Bank, tried
and failed with their plan. Numerous would-be suitors, including the Russian
giant Severstal, couldn't pull it together.
Out of this vacuum of failure, by sheer
force of determination, the union leaders spearheaded a complex plan with
capitalization by Tricap Management Ltd. and $100 million from the province
that included a financial arrangement to handle pension obligations. After
agonizing negotiations with company representatives, Stelco signed on. They put
the deal in front of Justice James Farley, and he gave it his blessing.
This is a remarkable achievement. The
union representatives should be commended for the efforts which are in the best
interest of their members and the community. Society is much better served by
unions -- as someone once noted -- that focus on preserving the tree as much as
knocking the fruit from it.
And, hopefully, we are close to a final
plan that will see Stelco prosper into the future.
STELCO
* 450 hectares - Site of Stelco
Hamilton's steelmaking and processing complex.
* 4,829 - Stelco Hamilton employees.*
* 3,597 - Stelco Hamilton employees
belonging to United Steelworkers of America (USWA).
* 1,660 hectares - Site of Stelco Lake
Erie's steelmaking facility.
* 1,382 - Stelco Lake Erie employees.
* 991 - Stelco Lake Erie employees
belonging to USWA. * Employee numbers as of Nov. 30, 2004
(court documents).