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 March 25, 2006 edition
By Steve Arnold
The Hamilton Spectator
(Mar 25, 2006)
In its last week under the sheltering arms of bankruptcy
protection Stelco Inc. has reported heavy new losses.
The Hamilton steelmaker, expected to leave court-ordered
protection from its creditors next Friday, reported losses yesterday of $120
million for the fourth quarter of 2005 and a net loss of $73 million for the
entire year.
In conference calls with industry analysts and reporters,
outgoing president Courtney Pratt said everything is on schedule for the company
to meet its March 31 deadline to leave protection.
"We are looking forward to the company exiting
(protection), to moving on and to returning as a major player," he said.
"We are very confident, and this isn't just the company speaking, that we
will exit on March 31."
To meet the goal, he said, lawyers for the company and its
combative debtholders have been locked in negotiations all week hammering out
the final wording of the assorted documents which will create the new Stelco.
"It has been a week of complex negotiations that have
required a lot of lawyering," he said. "We've resolved all of the
business issues, it's just getting the documents done now."
Those documents include formal agreements for financing the
settlement of Stelco's $1.3 billion pension deficit, providing new sources of
credit and new debts.
Under the restructuring plan given court approval in January
Stelco will emerge from protection as a holding company for the shares of nine
operating firms owning the Hamilton and Lake Erie steel mills, property and
other assets.
The majority of its new shares will be owned by the three
hedge funds providing the bulk of the company's new capital.
Pratt said there won't be a court hearing to mark the
company's exit from 26 months of protection -- documents will be signed, the
current protection order will expire at midnight March 31 and a new era for the
steel company will dawn.
Among the first problems to be handled in that new era, he
said, will be negotiating a new collective agreement with Local 1005 of the
United Steelworkers. The union for employees at the Hilton Works complex in
Hamilton has refused to take part in any of the restructuring efforts,
proclaiming its existing contract as the only rule for dealing with the
company. That pact expires July 31.
Union members are to elect a new executive April 3, after
which Pratt said talks will start on a deal considered vital for the future of
both the company and its massive Hamilton operations.
"We anticipate discussions getting underway very soon
after (the union elections)," he said. "These talks are important not
just to Hilton Works, but to the future of the company. We need a collective
agreement that works for the company, something that enables the company to be
consistently profitable."
Stelco's road into that new future will be charted by a new
board of directors and a new president -- American steel industry veteran
Rodney Mott. He has been on deck in Hamilton consulting for Stelco's new owners
for the last two weeks and will take over when protection ends. Pratt will then
become chairman of the board.
"I would have liked to carry on, but I understand the
decision," Pratt said.
In its financial report, Stelco blamed its losses on the
costs of restructuring ($76 million in 2005), sagging demand and higher costs
for coke, coal, iron ore and electricity.
The company's new shares are expected to debut April 3 for
about $5.50
sarnold@thespec.com
905-526-3496