The Stel Salaried
Pensioners Organization wishes to thank The Hamilton Spectator for permission
to post the following article published in the February 10, 2005 edition
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Feb. 10, 2005. 12:41 AM |
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Algoma Pulls Out |
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Five Stelco bidders remain after Sault steelmaker
cites 'risks and obligations' |
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By Tara Perkins |
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Algoma has pulled out of the bidding war for Stelco, narrowing the race to five bidders. "Algoma's due diligence has confirmed that there are significant potential benefits in a combination of Algoma and Stelco, but given the risks and obligations associated with the acquisition, we have concluded that proceeding with the transaction would not be in the best interests of our shareholders," Algoma CEO Denis Turcotte said in a release late yesterday. At the same time, the Sault Ste. Marie-based steelmaker announced it earned $122.2 million in the three months ending Dec. 31, compared to $10.1 million in the same period a year earlier. Stelco CEO Courtney Pratt was disappointed to learn of the withdrawal yesterday. Earlier in the day, Pratt told reporters he hoped all bidders would submit binding offers to buy or refinance the company by the final deadline of Monday. Pratt was speaking outside a Toronto courtroom, where Justice James Farley extended the steelmaker's bankruptcy protection until April 29, despite opposition from the union. Rumours have been circulating recently that the bidding war for Stelco has cooled. Steelworkers' international president Leo Gerard said one of the expected bidders, Mittal Steel, will not be submitting an offer. The companies that have said they are considering submitting a bid are now U.S. Steel, Russia's Severstal and a joint venture between Sherritt International and the Ontario Teachers' Pension Plan. Sources say TD Securities is the final bidder. Those companies all have until Monday to submit a binding offer higher than the $900-million floor deal Stelco arranged with Deutsche Bank. The German bank is also allowed to submit a new bid by Monday. Last night, Pratt said he's not aware of Algoma's reasons for withdrawing. The Steelworkers had said Algoma was not one of their favoured bidders because Turcotte had suggested concessions would be required to make a deal work. Pratt said Stelco will not be making any decisions on the 14th. The board will take time to examine all of the bids before making a recommendation to Stelco's stakeholders and the court. The process will become more complicated if the union and company favour different bidders. Pratt said that in that case, the two groups will likely be forced into discussions until they can come up with a solution. In the past weeks, local presidents from five Stelco divisions -- AltaSteel, Norambar, Stelfil, Stelwire and Lake Erie -- have been holding discussions with bidders. They hope to reach an agreement with whichever bidder offers the best solution to Stelco's pension deficit. Their favoured buyer will also offer acceptable collective agreements to AltaSteel and Lake Erie, both of which are without contracts. Hamilton's local 1005 is sitting out of those negotiations because it opposes Stelco's bankruptcy protection. In court yesterday morning, Andrew Hatnay, a lawyer for Stelco's 4,000 salaried pensioners, pointed out that Stelco's pension deficit has worsened by $220 million since the firm went into bankruptcy protection. Farley said Stelco's pension woes are the fault of provincial legislation, and would be exactly the same whether the steelmaker had filed for court protection or not. Pratt said all of the bidders know about the pension issue. "They understand the importance in the bidding process of addressing it one way or another." tperkins@thespec.com 905-526-4620 |