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 February 11, 2006 edition
By Naomi Powell
The Hamilton Spectator
TORONTO (Feb 11, 2006)
Justice James Farley ordered all lawyers involved in
Stelco's restructuring into Toronto's Osgoode Hall yesterday, demanding they
come up with a firm date for when the steelmaker will finally emerge from
bankruptcy protection.
The move came after Stelco requested permission to postpone
its emergence from bankruptcy protection from Feb. 28 to March 31, citing
delays in finalizing the company's pension agreement with the province.
"I must tell you I cannot realistically accept
that," Farley said.
Prior to walking out of the room, Farley ordered lawyers to
each bring a client representative who had the power to draft documents.
The judge reserved his decision on whether to allow a plan
by Tricap Management to split the company into nine subsidiaries. That plan
faced criticism from Stelco's largest union representing workers at Hamilton
Hilton Works.
Local 1005 of the United Steelworkers is neither opposing
nor supporting the split, but has serious concerns about "the
fallout" down the line, said the union's lawyer Sharon White.
Tricap Management has argued its plan is designed to
increase taxation benefits and make it easier to raise money for each
subsidiary.
But Local 1005 president Rolf Gerstenberger says splitting
the company's operations will make it easier to sell them off piecemeal. The
union has said Hilton Works, with its aging facilities and heavy pension
liabilities, could have difficulty finding a buyer and could be cratered in
such a scenario.
Stelco's Lake Erie operations are among the most efficient
in North America and its workforce carries a far smaller pension debt. To
assuage fears at Local 1005, Tricap has offered to freeze dividend payments on
the company's stock until it has fully re-funded the pension.
Tricap Management, a restructuring fund run by Brookfield
Asset Management, is demanding the split of Stelco assets in exchange for a
$375-million bridge loan and a $50-million cash contribution. Tricap will own
38 per cent of Stelco once it emerges from protection.
Stelco CEO Courtney Pratt said the company and Tricap are
working through details in a pension agreement with Ontario. That agreement
would see the province provide a $150-million loan toward a total $400-million
down payment on the $1.3-billion pension shortfall.
Pratt said one of the issues slowing Stelco's progress out
of creditor protection is how the $400-million down payment should be divided
among Stelco's four individual pension funds.
"I'm frustrated, the judge is frustrated, everybody is
frustrated at the position that we're in now," Pratt said.
In addition, a lawyer representing the company's court
appointed monitor told Farley that a syndicate of lenders, which is to provide
about $600 million in new money to Stelco, is also still concerned about where
its debt will rank in relation to the pension debt.
The lawyer also noted that for accounting purposes, Stelco
would prefer to emerge from creditor protection at the end of March, rather
than on Feb. 28, as initially planned.
"Politely put, balderdash," Farley said. "Now
we're being told this is being driven by a month-end accounting
situation?"
npowell@thespec.com
905-526-4620