The Stel Salaried
Pensioners Organization wishes to thank The Hamilton Spectator for permission
to post the following article by Reporter Tara Perkins, published in the
January 17, 2006 edition
By Tara Perkins
The Canadian Press
TORONTO (Jan 17, 2006)
Stelco Inc. revealed its proposed new board of directors
yesterday, as chosen by the firms that will own the steelmaker if its
restructuring plan is approved.
Executives and lawyers of the Hamilton-based steelmaker will
appear in Ontario Superior Court today asking for approval of the plan.
They will face off against a group of stockholders that says
the plan unfairly wipes out the value of Stelco's current shares. They want the
company to put itself up for sale.
The shareholder group, which includes Toronto investment
firm Pollitt & Co. and AGF Management Ltd., alleges the plan is based on
pessimistic steel forecasts for 2006.
In an affidavit, a consultant with Metal Bulletin said his
base estimate for hot rolled steel coil in 2006 is $525 US a tonne, while
Stelco's forecast was $458 a tonne.
The shareholders have also pointed to the bidding war for
Stelco's rival, Dofasco Inc., which received a $71-per-share offer from the
world's biggest steelmaker yesterday that represents a 61 per cent premium to
Dofasco's share price before the bidding war.
Stelco filed for bankruptcy protection in January 2004. If
its plan is approved, it should be able to leave court protection by the
spring. Under the plan, Tricap Management Ltd., a restructuring fund owned by
Brookfield Asset Management, the former Brascan Corp., will own at least 34 per
cent of Stelco, in return for a $375-million loan and other financing.
Two other financiers, Sunrise Partners LP and Appaloosa
Management LP, would own a combined Stelco stake of at least 34.9 per cent.
The plan allows Tricap to choose four directors for the
steelmaker's new board, which would take over once the plan is implemented.
Sunrise and Appaloosa are each able to choose one director, while the remaining
directors must be acceptable to all.
Tricap's proposed directors are Peter Gordon, managing
partner of Tricap Management Ltd., Cyrus Madon, managing director of Tricap and
former CFO of Royal LePage, John Lacey, chairman of The Alderwoods Group Inc.,
and Tony Molluso, CEO of Concert Industries.
Sunrise proposes Laurie Bennett, former partner of Ernst
& Young, while Appaloosa named Steve Cohn, managing director of New
York-based Alvarez & Marsal, LLC.
The remaining three directors would be Pierre Dupuis, former
chief operating officer of Dorel Industries Inc., Courtney Pratt, current CEO
of Stelco and the steelmaker's new CEO.
All of the potential directors have said they are willing to
serve on the new board, Stelco said.
Last week, the company revealed that Pratt has been asked to
step down as CEO, but the financiers have suggested they want him to become
chairman.
In court documents prepared for today's court hearing, chief
restructuring officer Hap Stephen defended the company's plan, which was
achieved after overcoming numerous hurdles. "The plan is not oppressive of
the equity holders," Stephen said.
Stephen said "it is virtually certain that the only
option available to Stelco would be a sale/liquidation of Stelco's assets"
unless there is a plan that is accepted by the province, the union and
creditors.
Shareholders allege Stelco's true value is high enough that
there is money to pay off creditors and leave some left over for shareholders.