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
January 18, 2006 edition
By Naomi Powell
The Hamilton Spectator
TORONTO (Jan 18, 2006)
Final court approval of Stelco's restructuring deal was
delayed by another day after a furious judge flogged lawyers for failing to
hammer out crucial financing deals.
Justice James Farley, the judge supervising Stelco's
controversial two-year restructuring, accused all involved in the deals of
"sitting on their thumbs" and ordered them to work through the night
to land the deals. The company will appear before Farley again today.
"Your clients, the clients involved in this case, are
big shooters and they'd better get down to it," Farley told legal counsel
for Tricap Management.
During the same raucous hearing yesterday, Stelco's
shareholders made a last ditch effort to save some of their investment, which
would be wiped out under the restructuring deal so that new shares can be
awarded to creditors and the financiers.
Peter Jervis, a lawyer for the shareholder group, asked
Farley to delay approving the plan for 30 days while his clients approach major
steel companies about buying Stelco. Given the current wave of consolidation in
the global steel industry and the bidding war over Dofasco Inc., the
shareholders believe an "angel or white knight" for Stelco can't be
far behind. A sale process, they argue, would reveal the true value of the
company and its stock.
Dofasco's stock has soared in recent days after back-to-back
offers for the company from Germany's ThyssenKrupp AG and Luxembourg's Arcelor
SA, the world's second biggest steelmaker. Arcelor is currently leading the
bidding with an offer of $71 per share.
"There has been interest and real interest from very
real players," Jervis said. One of those players is currently involved in
the bidding war for Dofasco, Jervis said. He refused to name the company.
Lawyers for Stelco and its court-appointed monitor disputed
that there was a suitor in the wings, arguing not a single potential buyer for
the troubled company has come forward in the past three months.
"The market has been very focussed on Hamilton-based
steel companies," said Robert Thornton, legal counsel for the monitor.
"Yet there hasn't been one phone call, one letter, one expression of
interest in Stelco. The market has spoken."
The shareholder group has approached Mittal Steel Co. NV,
the world's biggest steel company and an aggressive consolidator, Jervis said.
The firm was preparing a bid for Stelco at one point, he said, but was scared
off when the Ontario government threatened to make the steelmaker pay off its
$1.3- billion pension deficit within five years.
But Derrick Tay, a lawyer for Mittal, told Farley his only
instructions from the steel giant yesterday were to secure approval of the
restructuring deal. Mittal has purchased three of Stelco's non-core
subsidiaries in a deal that hinges on that approval.
Stelco's treatment of its creditors is justified, lawyer
Michael Barrack argued, because creditors do not receive full compensation
under the terms of the deal. In a restructuring scenario, shareholders are paid
last and only if the creditors are paid in full. Stelco's plan gives creditors
65 cents for every dollar of debt they are owed.
npowell@thespec.com
905-526-4620