The Stel Salaried
Pensioners Organization wishes to thank The Hamilton Spectator for permission
to post the following article by Reporter Tara Perkins published in the March
5, 2005 edition
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Mar. 5, 2005. 12:58 AM |
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Judge expedites appeal to rejoin
Stelco board |
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By Tara Perkins |
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A judge has fast-tracked the case of two shareholder activists who are fighting to get back their seats on Stelco's board of directors, despite opposition from the steelmaker's employees. Yesterday, Justice John Laskin agreed to expedite the case, which means the court of appeal will decide whether or not to hear it this month, rather than in the fall. Michael Woollcombe and Roland Keiper say they need to be reinstated to Stelco's board urgently, while the company is in the critical phase of deciding how to refinance itself. On Feb. 18, Stelco announced it was adding the two men to its seven-member board. That's the same day the directors began evaluating bids to buy or refinance the company. Keiper has been an active critic of Stelco's restructuring. He holds millions of dollars worth of Stelco stock and has fought on behalf of the company's shareholders, saying Stelco's bankruptcy protection process was not allowing the full value of the company to be realized. Shares often become worthless when a company is in court protection, as stakeholders including creditors and employees jostle for payment. Stelco's case is unusual because the company began racking up profits shortly after it filed last January. One week after the board appointments were announced, the judge overseeing Stelco's protection had the two new directors removed. In his reasons for that ruling, Justice James Farley noted that Stelco's board knew that Keiper and Woollcombe -- who are supported by more than a third of Stelco's shareholders -- probably held the power to have the entire board replaced by calling a shareholders' meeting. If shareholders kicked out Stelco's entire board, the restructuring could have been jeopardized, Farley said. "The board reasonably interpreted the situation as being one of an iron hand in a velvet glove," Farley wrote. "With all due respect for the board and completely understanding and sympathizing with their dilemma, they made the wrong decision for the wrong reasons in my opinion." Yesterday, Justice Laskin wrote that Keiper and Woollcombe have an "arguable" case for wanting their seats back. He also said Farley was concerned the two men would "maximize shareholder value, and not ... act in the best long-term interests of the company." Laskin has fast-tracked the case despite hearing arguments on Thursday from Stelco's union and salaried employees. David Jacobs, the lawyer representing Stelco's Lake Erie and Stelwire unions, told the judge that "at heart, this is a personal interest matter." He said the fact that Stelco and its board were not arguing for Keiper and Woollcombe's reinstatement is "telling," and that the board continues to function without the additional members. The union also argued that the urgency of the case has disappeared now that Stelco has decided to toss out all of the bids for the company and plans to refinance on its own. Corporate lawyers say the case is important because it's extremely rare for a judge to interfere with the choice of a company's directors. On March 18, three court of appeal judges will decide whether or not the court will agree to hear the case. tperkins@thespec.com 905-526-4620 |