The Stel Salaried
Pensioners Organization wishes to thank The Hamilton Spectator for permission
to post the following article by Reporter Meredith Macleod, published in the
December 10, 2005 edition
By Meredith
Macleod
The Hamilton Spectator
(Dec 10, 2005)
Mingled in with some howling winds last
night were some big sighs of relief over a creditor vote that is expected to
lead Stelco back from the brink.
It's been a stressful, tiresome and
worry-filled 23 months as Hamilton's biggest private sector employer lumbered
through creditor protection.
The relief was palpable as local
leaders heard the news that 78 per cent of creditors approved a deal to bring
Stelco out of bankruptcy proceedings.
"This is such good news for
Hamilton that they've come to a deal," said Mayor Larry Di Ianni.
"This puts to an end a very
stressful and difficult time for this city. I'm looking forward to seeing this
company build again with all the tax, employment and social program benefits
Stelco brings," said the mayor.
A no vote yesterday would have likely
meant a sale of the harbourfront icon, perhaps in pieces. The company employs
7,000 workers and supports 11,500 retirees.
Adding to the suspense, several
attempts to hold a vote over the last few weeks were postponed when it was
clear the bondholders weren't on side.
The final plan still includes the
$150-million provincial loan and financing from Tricap Management but includes
a bigger piece of Stelco's equity for hedge funds and restructuring funds.
"I think Hamilton's going to be a
lot happier city with this news," said a beaming Stelco CEO Courtney Pratt
after the vote.
Di Ianni said the strong endorsement of
the deal is an important signal.
"It sends a fairly strong message
that there is widespread support and that management, unions, shareholders and
bondholders are all pulling in the same direction."
While the process isn't over, the vote
is seen as a turning point in the arduous creditor protection. Stelco will be
in court Monday to report the deal to Justice James Farley and to request an
extension of the protection.
Stelco says it hopes to seek court
approval for the plan before the end of the year and to come out of creditor
protection early in 2006. Shareholders, who lose everything in the deal, say
they will continue to fight.
Hamilton Chamber of Commerce CEO John
Dolbec said the deal will be met with a "tremendous sigh of relief"
in the business community.
"It's impossible to overestimate
the impact Stelco has on the local economy. A sneeze at Stelco would develop
into a cold in the rest of the economy."
Marie Bountrogianni, Liberal cabinet
minister and MPP for Hamilton Mountain said Stelco has been her government's
"No. 1 priority. I'm proud of my government. We were there from Day
1."
A crucial peg in the deal was a
$150-million loan from the province that will be paid against Stelco's
$1.3-billion pension deficit.
Andrea Horwath, NDP MPP for Hamilton
East said retirees can rest easy that their pensions are finally secure.
"This issue goes well beyond the
workers and the plant. It has huge ramifications for all of Ontario."
Hamilton East-Stoney Creek MP Tony
Valeri said the deal is "fantastic news for Hamilton."
Valeri said he's confident Stelco will
emerge a stronger company by making investments in technology and seeking out
new markets.
Valeri said he set out two principles
for the restructuring - that it not happen on the backs of pensioners and that
the federal government be there to assist.
"I'm happy to be able to keep that
commitment. But a lot of people deserve credit, the union, the company,
Courtney Pratt, the bondholders."
McMaster business professor Marvin
Ryder characterized the deal as one with a lot of winners and losers who lose
big.
The winners are the city, the workers,
retirees, taxpayers, Stelco's customers and bondholders who will get much more
return than if the company was broken up and sold off.
"It's really incredible after all
is said and done that the workers have not lost a thing. That's highly unusual
in a restructuring."
The losers are shareholders who now
hold cancelled shares. He said the hedge funds will likely try to make as much
money on Stelco for a couple of years before a buyer "really interested in
owning a steel company" comes forward.
As is always the case with Stelco, not
everyone is happy with the deal.
Rolf Gerstenberger, president of Local
1005 at Hilton Works, said the deal is a "real coup for the vultures hard
at work gobbling up Stelco."
He said it's "very
disturbing" Stelco will be in the hands of hedge funds Sunrise of Toronto
and Appaloosa of New Jersey, along with Tricap, who will get 88 per cent of the
shares for $137 million. "None of these people seem interested in the
viability of Stelco. Everyone should be worried about this feeding frenzy here
at the end."
mmacleod@thespec.com
905-526-3408
Doug Pollitt, Toronto stockbroker
THOUGHTS ON THE DEAL
"I believe we'll see a more
focused company and that augurs well for the future of Stelco and this
city."
-- Mayor Larry Di Ianni
"I can't imagine better news. This
is a nice Christmas gift to the city and the region and removes the cloud
that's been hanging over our heads."
-- Chamber of Commerce CEO John Dolbec
"I'm breathing a huge sigh of
relief that this is resolved. We can start moving forward again."
-- Hamilton East NDP MPP Andrea Horwath
"The families will have a much
better Christmas now. This is wonderful news."
-- Marie Bountrogianni, Liberal Hamilton Mountain MPP
"It's great news. It clearly is the key last step in the
puzzle. It's all really formalities from here on out."
-- McMaster business professor Marvin Ryder
"These deals come together at the 11th hour. This time it's
at the 11th hour and 59th second. No one wanted to contemplate receivership or
breaking up this company."
-- Richard McLaren, UWO business professor
"This agreement serves no other purpose than to feather the
beds of the powerful and screw the shareholders."