The Stel Salaried
Pensioners Organization wishes to thank The Hamilton Spectator for permission
to post the following article by Reporters Naomi Powell and Joan Walters,
published in the November 16, 2005 edition
By Naomi
Powell and Joan Walters
The Hamilton Spectator
(Nov 16, 2005)
Stelco's bondholders say it will take
another $100 million from the provincial government to save the steelmaker.
A creditor vote on Stelco's restructuring
plan was adjourned yesterday under threat of liquidation after Stelco CEO
Courtney Pratt announced the company had not won the crucial support of its
bondholders.
In a telephone call to Stelco's
court-appointed monitor, Justice James Farley granted an adjournment to Nov.
21. But he warned that if the plan is voted down, he will interrupt his
vacation to hear stakeholders' plans for "alternate relief" on Nov.
25.
Stelco's court-appointed monitor, Alex
Morrison, has cautioned that liquidation is likely if creditors don't support
the restructuring plan. Stelco's bondholders have final vote on the plan. For
the first time, they said yesterday they'll back a plan that doubles the amount
of taxpayer money going into the pension deficit. The deal now has the province
putting $100 million into the pension and Stelco $300 million.
Ted Swent's retirement was supposed to
start in three years.
Those plans have been put on hold,
however, thanks to Stelco's long and tortuous path through bankruptcy
protection. Swent was one of dozens of Stelco creditors who showed up at
Mississauga's International Centre yesterday for a day that was long on
frustration and disappointment and short on answers.
They were there to vote on Stelco's
proposed restructuring plan but the vote was adjourned until Monday after the
company announced that it was still hopeful a deal could be reached with its
major bondholders.
Swent, 62, is the owner of A. Swent and
Sons Ltd., a Selkirk metal fabrication business that is owed $250,000 by
Stelco.
"We're only 25 people in my
company, so that's a lot (of money)," said Swent. "It's been very
hard on us the last year and a half."
Swent said he's had to postpone his
retirement and dip into his retirement savings because of the hardship his
company has faced from Stelco's unpaid debt. In March, Swent said he was
approached by New York's Longacre Management LLC about buying his debt.
At first they offered him 54 cents for
every dollar of debt he held. Eventually, Longacre escalated the offer to 92
cents on the dollar, but insisted on subtracting a 20 per cent
"holdback" fee in case the debt was contested by the company.
"If they'd given me dollar for
dollar I would have taken it," Swent added.
Also present at yesterday's meeting
were some of Stelco's "other" bondholders.
These people are a world away from the
investment companies and corporate high flyers that have the ability to direct
the steelmaker's future by virtue of their power and the size of their
holdings.
There's Rodger Archer of Markham, for
example, a retired management consultant and self-described "little guy in
this process." Archer bought a $10,000 Stelco bond from the company six
years ago as part of his retirement portfolio and hung on to it ever since.
"I'm a believer in Stelco and the
industry," said Archer outside the meeting hall.
Archer was prepared to vote against the
restructuring plan because he's convinced there's still a much better offer to
come. He's even hopeful that he can recoup 100 per cent of the value of his
investment.
"I honestly think that's
achievable."
Also in the audience were a number of
Stelco's smaller creditors, such as Chris Golding of Guelph, who operates
Crosible Filtration which he says is owed "in excess of $35,000 US."
Golding was prepared to vote in favour
of Stelco's plan, although he admitted it was difficult for him to digest all
of the complexities of the company's intricate proposal to creditors.
By his reckoning, a vote in favour
would get him 66 cents on the dollar in Stelco equity versus the possibility of
17 cents on the dollar in cash if the plan was defeated and the company was
eventually liquidated.
"I'd rather have 66 cents and the
possibility that the value of my stock might eventually go up," said
Golding.
Less optimistic is Robert Plaschka of Burlington,
a trade creditor who provided electrical engineering and consulting services to
Stelco. Before seeking bankruptcy protection, the steelmaker represented half
to almost three-quarters of the work for Plaschka.
But warning bells started going off for
Plaschka when his invoices weren't getting paid on time, falling from 30 days
past due to 45 days to eventually 90 days. His final two invoices went unpaid,
leaving him owed $6,000.
"It was rough because they were a
big part of my business," he said. "Essentially, I've pretty much
written them off. Anything now would be a bonus."
Plaschka said he showed up at the
meeting as part of an ongoing, painful education process for himself.
"I've learned a few lessons,"
he said, managing a small smile. "Don't put all your eggs in one basket,
don't put all your eggs in one industry and diversify."
sbuist@thespec.com
905-526-3226
With files from Naomi Powell, The
Hamilton Spectator