Stelco provides update on
restructuring
HAMILTON,
ON, Feb 18, 2004 (Canada NewsWire via COMTEX) -- Stelco Inc. provides the
following update on its restructuring under the Companies Creditors Arrangement
Act (the "CCAA"):
Second
Report of the Monitor
The
Second Report of the Monitor (the "Report"), an update on the
Corporation's restructuring under the CCAA, has been completed by Ernst &
Young Inc. (the "Monitor") and is now available at
www.mccarthy.ca/en/ccaa (the "Counsel's Web site").
The
Report provides information on the following and other matters:
Request
for Extension to Stay Period
Pursuant
to the Initial Order (as defined below), the stay period expires at midnight on
February 27, 2004. The Applicants (as defined below) are seeking an extension
of the stay period until and including May 28, 2004.
An
extension to the stay period is necessary for the Applicants to commence
negotiations with their various stakeholders, including their creditors and
labour unions. These negotiations must occur before the Applicants will be in a
position to develop a plan of arrangement.
Notices
Issued to Creditors
Pursuant
to the court order (the "Initial Order") that established the initial
stay of proceedings on January 29, 2004, the Monitor has mailed a notice to
every known creditor of (i) the Corporation and (ii) the other Stelco companies
covered by the CCAA proceedings (collectively, the "Applicants")
having a claim of more than $250 against the Applicants, notifying the creditor
of the making of the Initial Order and advising that a copy of the Initial
Order is available at the Counsel's Web site. The Monitor has established a
telephone number to allow creditors to contact the Monitor to obtain additional
information concerning these CCAA proceedings.
Financial
Performance and Operational Update Since the Date of the
Initial
Order
The
Corporation is in the process of preparing its consolidated financial
statements for the fiscal quarter and year ending December 31, 2003, which are
expected to be released in mid-March 2004.
The
Corporation's total facility utilization pursuant to the existing senior credit
facility was $293.4 million on the date the Initial Order was granted. As at
February 13, 2004, the facility utilization pursuant to the existing senior
credit facility was $282.4 million.
Each
of the other Applicants maintains their own bank accounts, however, each is
reliant on advances from the Corporation to satisfy funding requirements which
cannot be satisfied from cash on hand. In turn, any excess cash held by the
other Applicants is paid to the Corporation to reduce inter- company advances
owed to the Corporation. The cash flows since the date of the Initial Order for
each of the other Applicants are summarized as follows:
a)
Stelpipe Ltd. had net disbursements in excess of receipts of $2.0
million since the date of the Initial
Order, which includes payments
to the Corporation of $8 million.
b)
Stelwire Ltd. had net receipts over disbursements of $0.8 million
since the date of the Initial Order,
which includes payments to the
Corporation of $2.0 million.
c)
Welland Pipe Ltd. had net disbursements in excess of receipts of
$41,000 since the date of the Initial
Order.
d)
CHT Steel Company Inc. ("CHT") had disbursements in excess of
receipts of $59,000 since the date of
the Initial Order.
Representation for Retired Salaried
Employees
The
court has granted a representation order for retired salaried beneficiaries of
the Applicants on February 13, 2004.
Requested
Representation for Active Salaried Employees
The
Stelco and Subsidiaries Salaried Employees Association ("SASSEA")
brought a motion in this proceeding, originally returnable on February 13,
2004, and adjourned sine die, on consent, seeking a representation order for
the active salaried non-union employees of the Applicants.
The
Applicants have advised the Monitor that the parties are still in discussion
with respect to the relief sought in SASSEA's motion.
Status
of CHT
CHT
is a wholly owned subsidiary of the Corporation located in Richmond Hill,
Ontario. CHT specialized in the heat treating of steel plate. Its only major
customer was the Corporation's Hamilton plate mill operation ("Stelco's
Plate Mill"). CHT provided heat-treating services pursuant to tolling
arrangements for Stelco's Plate Mill.
The
Corporation has determined that CHT will not reopen operations. The
Corporation, with the assistance of the Monitor, will consider the next steps
to take with a view to attempting to find a buyer or buyers for its remaining
assets.
In
April 2003, the Corporation temporarily idled Stelco's Plate Mill as a result
of market conditions for plate in North America that made it difficult for the
Corporation to sell plate profitably. As a result of the idling of Stelco's
Plate Mill, CHT's facilities were idled in November 2003 after completion of
the processing of the remaining plate that had been supplied previously by
Stelco's Plate Mill. CHT is financially dependent on the Corporation and the
processing charges paid by it. CHT has no outside funding.