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 December 23, 2005 edition
By Steve Arnold
The Hamilton Spectator
(Dec 23, 2005)
Stelco's court appointed monitor says
the company's long awaited restructuring plan is the fairest deal possible for
the most stakeholders.
That conclusion is a body blow to
shareholders who hope to overturn the plan in a legal challenge because it
leaves them with nothing. In a report issued yesterday, the monitor recommended
the restructuring be approved at a court hearing set for Jan. 17. Shareholders
will be there with a motion asking for a court ordered sale of the company.
The monitor, Stelco said in a news
release, "states the view that the plan approved on Dec. 9, 2005,
represents a fair and reasonable compromise among stakeholder groups and is
fair and reasonable in terms of its effect on the affected creditors."
Changing to give shareholders anything,
it added, would likely mean Stelco wouldn't be able to come out of bankruptcy
protection, leading to the sale of the Lake Erie plant as a going concern and
the closure of Hilton Works in Hamilton.
In that situation, the report added,
Stelco's unsecured creditors would have been left with 13 cents to 28 cents on
the dollar for their claims. Central to the shareholders' hopes is their
argument that the restructuring plan's assumption of steel prices at about $458
a tonne is far too conservative.
Those prices would mean the value of
Stelco is $635 million to $785 million or $257 million to $407 million less
than the value of its outstanding interest bearing debt and obligations frozen
under creditor protection.
"The monitor notes that ... the
enterprise value of Stelco's integrated steel business is not sufficient to
satisfy in full all of Stelco's liabilities," the company said. "As a
result, the report notes that the estimated enterprise value is insufficient to
provide value for existing shareholders.
"In light of these considerations
... the monitor concludes that the affected creditors will not receive a full
recovery on their claims. As a result ... the monitor expresses the view that
the plan approved by affected creditors is not unfair or unreasonable to the
existing shareholders." The shareholders' valuation assumes steel prices
of $525 a tonne, giving them equity of $1.1 billion to $1.3 billion.
sarnold@thespec.com
905-526-3496