The Stel Salaried Pensioners Organization wishes to
thank The Hamilton Spectator for permission to post the following article
published in the April 4, 2006 edition
TORONTO (CP) - Shares of newly restructured steel maker
Stelco Inc. (TSX:STE) soared more than 23 per cent Tuesday on their second day
of trading.
The stock gained $4.51 to end the day at $24 on the Toronto
Stock Exchange. The shares were issued to Stelco's financiers, creditors and
new CEO at $5.50 apiece over the weekend, after the Hamilton-based company
emerged from bankruptcy protection at midnight last Friday.
Average investors weren't able to buy the shares until the
open of trading Monday morning, at which point the number of buy orders had
already pushed the opening price up to $15.
About four million shares of Stelco changed hands in its
first two days of trading. The company has about 27.1 basic shares outstanding,
or 31.3 million on a fully diluted basis.
Stelco's previous shares were wiped out by its restructuring
and delisted last month.
The quick rise in the price of the new shares - and the
concurrent profits earned by those who were given the stock at $5.50 apiece -
has angered some of the company's old shareholders.
The (bankruptcy protection) proceedings, in the end,
amounted to a tale of Robin Hood run backwards, said one money manager whose
firm used to hold Stelco stock for clients.
On Sunday, Stelco disclosed that its incoming CEO, Rodney
Mott, was going to buy one million shares of the company at $5.50 apiece.
Mott, who took the helm of Stelco on Monday, was the CEO of
Ohio-based International Steel Group Inc. when it was bought by Mittal Steel
last year in a blockbuster $4.5-billion-US deal that turned Mittal into the
world's biggest steel maker and kicked off a wave of industry consolidation.
Many observers said his decision to purchase Stelco shares
have fuelled their subsequent rise on the stock market.
At the end of day Tuesday, Mott had booked a paper profit of
$18.5 million on his new shares.
Tricap Management Ltd., a Toronto-based restructuring fund
controlled by Brookfield Asset Management (TSX:BAM) - the former Brascan - had
a two-day paper profit of about $184 million on its Stelco shares.
Tricap arranged a $375-million loan for the restructuring
steelmaker. It owned about 9.93 million shares prior to the start of trading
Monday. One person involved in the restructuring said Tricap is likely barred
from trading its shares for a period of time because of the amount of insider
information it absorbed during Stelco's restructuring.
In exchange for its loan and other financing, Tricap pushed
Stelco to reorganize into nine units and chose some of the steel maker's new
board members.
Two other financing firms, Sunrise Partners Ltd. Partnership
and Appaloosa Management LP, also hold large stakes in Stelco.
Late Tuesday, Appaloosa disclosed it has control over 4.96
million Stelco shares and is entitled to an additional 43,849 shares - an 18.5
per cent stake.
The financing firm said it is also owns 56,546 warrants as a
Stelco creditor. Each warrant entitles the holder to acquire one Stelco share
between June 2006 and March 2013 for $11 each.
However, title to 14,821 plan shares and 19,112 warrants to
which Appaloosa is otherwise entitled under the plan is the subject of a
dispute among various creditors of Stelco, it said.