Stelco Inc. (ticker: STE.to, exchange: Toronto Stock
Exchange) News Release - 4/27/2004
Please Click Here to
visit the Stelco website for a PDF version of the Situation Overview
Presentation.
Provides analysis of Company's current situation and outlook
without a restructuring Indicates an expected net loss of $563 million for 2003
HAMILTON, ON, Apr 27, 2004 (Canada NewsWire via COMTEX) --
Stelco Inc. (TSX:STE) today posted on its Web site presentation materials being
shown to various groups involved in the Company's restructuring.
The presentation materials provide an in-depth analysis of
the Company's current situation, outlook and major issues that threaten its
viability. This information is being provided to key groups including
creditors, employees and retirees to provide a context for discussions as
Stelco develops its restructuring plans over the next few months.
Commenting on the presentation materials, Courtney Pratt,
Stelco's President and Chief Executive Officer, said, "It's clear that the
Company could not and cannot continue without change. Without a restructuring,
Stelco is not viable. Significant change is required if the Company is to
survive. The disclosure of this information reflects our commitment to share as
much data as possible with groups who have a role to play in our restructuring.
It's imperative that they be informed of our situation and our outlook if no
changes are made."
The presentation materials review such areas as the
Company's business operations; competitive situation, employment, pension, raw
material, and other costs; sales forecast, and the projected usage of its
credit facilities even with the benefit of a filing under the Companies'
Creditors Arrangement Act.
Pratt added, "We hope the information we're sharing
will engage all interested groups in the discussions that must begin soon. The
process must proceed if we are to achieve the best available outcome for our
employees, retirees, other concerned groups, and the communities in which we
operate.
"While we want to share as much information as
possible, certain information is confidential for competitive reasons. That is
why we've asked groups to sign non-disclosure agreements before being provided
with sensitive information beyond that being released today."
Highlights of the material released today, outlining the
situation and outlook without a restructuring, include:
* Most of the
Company's operations are currently unprofitable
* The Company has
recorded losses of $587 million before tax since 2000
* Independent
observers predict that recent steel price increases are not sustainable
* Employment costs represent 41% of the
Company's manufacturing cost excluding raw material
* Energy and
related costs are expected to remain significantly above previous levels
* The Company
lacks funds required to invest in future repairs, maintenance, and capital
projects
* Funding pension
plans is projected to rise by 400% between 2001 and 2006
* The Company
believes it has a viable business model in terms of its core assets and market
position if it can lower its costs and attract needed capital/
* The alternative
to a restructuring - a liquidation - will result in the substantial closure of
assets, wind-up of pensions, termination of benefits, and much greater job loss
The presentation material can be found on the Company's Web
site at www.stelco.ca
The Company also indicated that it expects to release annual
audited financial results for 2003 and results for the first quarter of 2004 on
May 6, 2004. It is expected that a conference call to discuss these results
will be held at 4:00 p.m. that day.
On a preliminary basis, for 2003 Stelco incurred a loss
before tax of $365 million and a net loss of $563 million, or $5.61 per common
share. The net loss includes significant non-cash write-offs, including $87
million (pre-tax) of plate mill assets and a $304 million future income tax
asset valuation allowance. Cash usage in 2003 was $114 million and net
short-term debt (bank indebtedness less cash and cash equivalents) was $192
million at year-end.
Stelco Inc. is a large and diversified Canadian steel
producer. It is involved in all major segments of the steel industry through
its integrated steel business, mini-mills, and manufactured products
businesses. Stelco has a presence in six Canadian provinces and in two states
of the United States. Consolidated net sales in 2002 were $2.8 billion.
This news release may contain forward-looking information
with respect to the Corporation's business operations, financial performance
and conditions. Actual results may differ from expected results for a variety
of reasons including factors discussed in the Corporation's Management's
Discussion and Analysis section of the Corporation's 2002 Annual Report.
To learn more about Stelco and its businesses, please refer to our Web site at www.stelco.ca.
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VIEW ADDITIONAL COMPANY-SPECIFIC INFORMATION:
http://www.newswire.ca/en/releases/orgDisplay.cgi?okey=23131
For further information:
please contact:
Tim Huxley, Vice President - Corporate Affairs
(905) 528-2511, Extension 4070