The Stel Salaried Pensioners Organization wishes to thank The Hamilton Spectator for permission to post the following article by Reporter Meredith Macleod published in the October 20, 2004 edition
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Oct. 20, 2004. 01:07 AM |
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Court OKs sale of subsidiaries |
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By Meredith Macleod |
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Parts of Stelco are up for sale today. The company received court permission yesterday to launch its plan to raise at least $360 million. That will begin with selling off subsidiaries in Hamilton, Burlington, Welland, Quebec and Alberta. Stelco is also searching out equity investors and, potentially, a buyer for its core facilities in Hamilton Hilton Works and Nanticoke. The plan has the support of bondholders, secured lenders, salaried employees, court monitors Ernst & Young and the union representing workers at Stelpipe in Welland. The United Steelworkers of America tried to convince Ontario Superior Court Justice James Farley that breaking up Stelco isn't a good start to the process of trying to secure the company's future. "While they are seeking solicitations for the whole package, they start parcelling off other sections," said USWA lawyer Ken Rosenberg. "There is no logical sense in that. It's flawed and inconsistent in the extreme." He said Stelco officials have already determined that breaking up the company is the way to go, even though they haven't tested the market to see if there is a buyer interested in the whole operation. "It's not just about getting the money, it's about wisely investing and wisely managing it. There might be a buyer that believes those assets are the most critical." Rosenberg also warned that "piecemealing" Stelco would "complicate already complicated labour relations." The company is negotiating a collective agreement with 1,000 employees at Nanticoke's Laker Erie works. The two sides have set a deadline of Oct. 31 to reach a deal. Farley didn't buy the union's argument. He said selling off assets could give the company some flexibility in getting back on its feet. Then he issued a stern warning to the union. "You will not, in any way, hold up any appropriate disposal of Stelco." Farley says Stelco's plan allows for healthy stakeholder input and that "any particular outcome will not be a foregone conclusion before it is presented to the court." Stelco's chief restructuring officer, Hap Stephen, would not say what the operations targeted for sale are worth. He did say that each are profitable. "We can now proceed to get some capital in to save this company," Stephen said of the judge's ruling. The company will try to demonstrate progress on its plan when it asks for an extension on its bankruptcy protection on Nov. 26, said Stephen. "If this wasn't under CCAA, there wouldn't be a discussion with anyone else about selling assets. The union wouldn't have a say." Stelco plans to sell off Stelwire in Hamilton and Burlington, Stelpipe in Welland, Quebec's Norambar and Stelfil and AltaSteel and Camrose Pipe Company in Alberta. Selling off profitable side plants and subsidiaries to concentrate on making value-added steel for the automotive sector doesn't make sense to Paul Miller, a Hilton Works steelworker. "I'm concerned ... what will happen down the road when the car market goes for a flop. These rod, bar and wire plants could be a goldmine. They're putting all their eggs in one basket." But Bay Street steel analyst Paul D'Amico says that's the only strategy that will save Stelco. "The problem is a lack of focus now. Who makes more money, a general practitioner or a surgeon? You always make more when you're specialized." Stelco officials say they have so far received no purchase offers. There have been "expressions of interest," but without the court's approval of its capital plan, Stelco could not proceed. "This is an excellent time to raise capital and that will benefit all stakeholders," said Stelco lawyer Michael Barrack. "The window for raising may not last forever." The USWA argued that an agreement to give Stelco's bondholders until Nov. 8 to develop a plan to raise $200 million worth of equity gave that group an unfair "leg up" in the process. Rosenberg said the court should hold off on approving Stelco's money-raising plan until third-quarter results are announced Nov. 9. The company has agreed not to seek any buyers for its core facilities until after seeing the bondholders' offer. "This is a case that has gone absolutely nowhere for eight months. For people to be outraged about three weeks is beyond me," said bondholder lawyer Kevin Zych. Farley said the rights offering could "create an aspect of stability" and that the move by bondholders does not prevent any other group from attempting to raise equity in Stelco. mmacleod@thespec.com 905-526-3408 |
