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
December 1, 2005 edition
By Naomi
Powell
The Hamilton Spectator
(Dec 1, 2005)
Haggling over "serious
issues" threatens Stelco's fragile restructuring deal.
The steelmaker has postponed tomorrow's
vote on the deal reached last week with the help of $80 million in provincial
and federal money.
"There are some pretty serious
issues being discussed, " Stelco CEO Courtney Pratt said in an interview
last night. "I don't want to pretend that it's trivial stuff."
Pratt said ongoing disagreements over
"non-monetary " items forced the postponement of tomorrow's creditor
vote. He did not provide a new date for the vote, but noted in a release that
"progress is being made. "
The delay comes after the CEO emerged
from intense negotiations last week to announce that the economic elements of a
plan had been agreed upon by all of Stelco's key stakeholders. At that time,
Pratt said he was confident the vote would carry thanks to the support of the
steelmaker's most powerful creditors, the senior bondholders.
The bondholders, who had previously vowed
to veto the plan, backed down after Stelco sweetened the deal with the help of
an additional $80 million in contributions from the provincial and federal
governments.
Pratt would not identify which
"non-monetary" issues have arisen since then to prevent Stelco from
finally inking a deal.
"I can't tell you the details
except to say it's pretty complicated putting together a deal like this, "
he said. "There is a range of issues."
One non-monetary issue that has sparked
debate in the past is the question of who will control the company's board of
directors once it has emerged from bankruptcy protection. Stelco's plan calls
for its current directors to be terminated and a new board named -- but it does
not spell out exactly how it would be chosen.
In court documents filed in September,
Stelco's bondholders took issue with a vague clause in Stelco's plan, which
they interpreted as giving the province veto rights over any appointment.
Matthew Heckler, a bondholder whose Connecticut-based Wexford Capital Opportunities
Fund controls a significant amount of Stelco debt, called the provincial veto
"simply unreasonable and inappropriate".
The deal would cancel existing shares
and give 100 per cent of new stock to unsecured creditors. He argued that means
bondholders should have more say in determining the board.
Pratt would not confirm if the board
was under discussion.
In other developments, a group of
Stelco creditors has asked Superior Court Justice James Farley to remove
himself from Stelco's restructuring.
Reports on last week's deal quoted
Pratt saying Farley was "intimately involved" in the negotiations. In
a letter to the judge, lawyer Paul Macdonald suggested the judge step down to
avoid the appearance of bias.
After creditors voted down a plan in
Algoma Steel's 2001 restructuring, Farley played the role of mediator between
creditors. After brokering the deal, he asked another judge to approve it.
Pratt responded to Macdonald's request
with a letter of his own yesterday.
"The essence of what I actually
told the media is this: While Justice Farley was, indeed, involved in the
discussions among stakeholder groups, that involvement consisted of pressing
the parties to come together to reach an agreement," he wrote. "At no
time did he participate in the actual negotiations between the parties."
Stelco's current board of directors
must approve the plan before it is sent to creditors for a vote. Due to the
delays in talks, however, the plan has yet to go to the board, Pratt said.
The company now plans to postpone its date
for emerging from bankruptcy protection to Feb.1.
npowell@thespec.com
905-526-4620