The Stel Salaried
Pensioners Organization wishes to thank The Hamilton Spectator for permission
to post the following article by Reporter Naomi Powell published in the October
29, 2005 edition
By Naomi
Powell
The Hamilton Spectator
(Oct 29, 2005)
Stelco said in court documents
yesterday the restructuring process will be thrown into "chaos" if
bondholders win an appeal of two crucial refinancing deals.
Stelco and its stakeholders filed a
barrage of last-minute court documents last night, all defending a $450-million
refinancing deal by Tricap Management and a $100-million loan from the
provincial government.
The deals are the linchpins of the
company's restructuring plan, forged after marathon negotiations between the
steelmaker and its unions earlier in October. The bondholders have accused
Ontario Superior Court Justice James Farley of overstepping legal bounds in
approving the deals.
"The course of Stelco's
restructuring has not been smooth," the company noted in its documents.
Stelco's restructuring is among the
longest in Canadian history, lasting nearly 21 months.
On Wednesday, the bondholders will ask
the Court of Appeal to overturn Farley's decision and scrap the financing.
Stelco is trying to convince the court not to hear the appeal, giving the
embattled steelmaker time to win over bondholders before they put the deal to a
vote Nov. 15. If the court decides to hear the appeal and rules in favour of
the bondholders, the financing deals could dissolve leaving Stelco without a
restructuring plan.
In court documents, employee groups,
the province of Ontario and a court monitor all stated their support for the
restructuring deal as the first sign of progress in months of stalled
negotiations.
If the court chooses to hear the
matter, it "would throw the proceedings into chaos less than two weeks
before the scheduled creditor vote," Stelco said in court documents.
Alex Morrison of Ernst & Young, the
court-appointed monitor in Stelco's bankruptcy protection, said in separate
documents that Stelco's restructuring had been stalled because different groups
were exercising their power.
By signing the two deals, Stelco has
obtained "a pension-plan funding solution, committed exit financing and
labour co-operation," Morrison said. "Without these agreements,
Stelco would likely find itself back in the midst of stalled
negotiations."
For its part, the province said
Stelco's bondholders "simply wish to dictate to Stelco the manner in which
Stelco's business judgment ought to be exercised."
The bondholders say the $100- million
loan deal with the province, and $450-million financing deal with Tricap,
include conditions which force Stelco to make an "excessive" $400-
million downpayment into its $1.3-billion pension solvency pension deficit.
They argue that Stelco did not look for
competing proposals to Tricap's deal, which they say was pushed unfairly by the
government, which would be given a say over who sits on Stelco's board of
directors.
If the appeal fails, the bondholders
have nevertheless vowed to veto the plan in a Nov. 15 vote.
npowell@thespec.com
905-526-4620
With files from The Canadian Press