The Stel Salaried Pensioners Organization wishes to
thank The Hamilton Spectator for permission to post the following article by
Reporter Steve Arnold published in the November 17, 2005 edition
By Steve
Arnold
The Hamilton Spectator
(Nov 17, 2005)
Stelco is trembling on the brink of
liquidation, and that's just where it has to be in order to get the government
bailout its creditors are demanding.
Bankruptcy expert Richard McLaren, of
the University of Western Ontario law school, warned yesterday the chance of
losing the once-proud steelmaker is increasing.
"I think Justice (James) Farley is
taking a deep breath and the final whistle could be blowing very soon,"
McLaren said in an interview. "I think the players have to see that
liquidation is a possibility, but to bring government money into it often takes
just this kind of brinksmanship."
The threat darkened Monday after the
company admitted its controversial restructuring plan had no chance of getting
approved at a series of creditor meetings.
Farley, a Superior Court Justice,
adjourned those meetings to Nov. 21 to allow more negotiations but warned he
would entertain "alternative" plans if a deal wasn't reached by then.
Many see this as a veiled liquidation threat.
The creditors revealed Monday they want
the provincial government to kick in another $100 million on top of the $100
million loan Ontario is contributing to the steelmaker's pension plan.
The current proposal offers them about
66 cents on the dollar, mostly in IOUs and shares. To raise the money, the
bondholders urged government to double its contribution to the pension deficit
downpayment, freeing Stelco cash for them.
Alex Morrison, Stelco's court-
appointed monitor, has warned that liquidation is likely if creditors don't
support the restructuring plan. In liquidation, the monitor has estimated
bondholders would get between 17 and 33 cents on the dollar. Stelco owes its
creditors about $640 million including $275 million to the bondholders.
Stelco's restructuring plan proposes
retiring its $1.3-billion pension deficit with a downpayment of $400 million
with the rest paid off over 10 years. The provincial government is lending the
company $100 million toward that first instalment.
Now into its 22nd month, Stelco's
restructuring under creditor protection has become one of the longest
bankruptcy cases in Canadian history.
Farley, who oversees proceedings, has
warned several times his patience is wearing thin, raising a fear he may not
renew the court order which is keeping Stelco's creditors from forcing it into
bankruptcy. The Stelco plan requires no concessions of workers or pensioners,
prompting lawyer Richard Orzy, representing Stelco's bondholders, to accuse
Ontario and United Steel Workers of playing chicken with the company's future.
sarnold@thespec.com
905-526-3496
With files from Joan Walters