|
Stelco's pensioners have asked Premier Dalton McGuinty to force the
steelmaker to fix its pension deficit.
"Without your intervention, the bidders and financiers will take
care of themselves and profit handsomely from Stelco's restructuring,
leaving the company's retirees and the province's (Pension Benefits
Guarantee Fund) vulnerable and unprotected," lawyer Murray Gold
wrote to McGuinty.
Gold is representing about 4,000 salaried Stelco retirees. He said
pensions "are promises made, and peoples' lives depend" on
them.
In 1996, Stelco took advantage of a provincial law that allowed big
companies to stop topping up their pension plans.
The province established the "too big to fail" law believing
that big companies like Stelco could never go bankrupt.
It allowed Stelco to make smaller payments into its pension funds each
year.
Stelco is paying enough to cover the costs of its current pensioners,
but isn't putting enough away to cover pension costs the event of another
financial crisis.
"As a result (of the law), Stelco's pension plans are now
woefully underfunded on a solvency basis, jeopardizing the retirement
pensions of thousands of families in Ontario and threatening the
viability of the Province's Pension Benefits Guarantee Fund," Gold
wrote.
The law is no longer on the books.
But the province allows companies like Stelco and General Motors, that
were already using it to continue doing so.
A spokesperson for McGuinty said Gold's letter is "under
consideration. We're monitoring the situation closely and our goal is a
long-term solution," he said.
Stelco pointed to its $1.2 billion pension deficit when it filed for
bankruptcy protection earlier this year, Gold noted in an interview.
If Stelco ever goes bankrupt, the province would be on the hook for
about two-thirds of that. But the guarantee fund does not have that
money.
Gold wants the steelmaker to address the problem while it is
restructuring.
Hap Stephen, Stelco's chief restructuring officer, said the pensioners
are in a much better position than they were prior to restructuring.
Stelco's recent $900 million refinancing deal with Deutsche Bank
guarantees the pensioners will not have to take any concessions, he said.
Gold said the deal gives $400 million to the company's bondholders,
and he'd like to see that money go to the pension fund. He said Stelco
has not been forthcoming or responsive to the issue.
"Retired people don't have any bargaining power, that's why we
turn to the government," he said.
The pension plans for Stelco's salaried workers are better funded than
the union's plans, but still have deficits. The union, representing the
majority of Stelco's retirees, also wants the pension deficit addressed.
Stephen said the company is listening to the retirees, but it can't
commit to putting more money into the plan yet. That decision will be up
to whichever bidder winds up owning Stelco at the end of its
restructuring process, Stephen said.
"We are trying to balance very different competing interests
here," Stephen said. "The shareholders, they would like to get
more money out of bidders too."
Sitting in the headquarters of United Steelworkers 1005 yesterday,
Stelco retiree Mike Linta said he's fed up.
"Stelco's now spending millions of dollars on restructuring and they're
not accomplishing anything," he said.
Linta, 69, is both a pensioner and a shareholder.
He remembers lining up at a downtown Midland Walwyn brokerage office
on a November day in 1992 to buy his Stelco shares.
More than 800,000 shares were sold to thousands of Hamiltonians at the
King Street office in those weeks.
The brokerage had announced that it would wave its fee on Stelco
stock, so the community could show its support for the beleaguered
company.
tperkins@thespec.com
905-526-4620
|