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
2, 2005 edition
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Mar. 2, 2005. 12:31 AM |
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Stelco rejects all bidders |
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By Tara Perkins |
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Stelco has rejected all suitors because their bids were too low. "Our process unfortunately did not turn up any acceptable proposals from strategic or financial bidders," said CEO Courtney Pratt. "We will now be working with our financial advisers to aggressively attract new capital." The United Steelworkers said it is prepared to work with the company, calling Stelco's decision "a unique opportunity." "If the company is prepared to engage the union as a full and equal partner, we will roll up our sleeves and get it done," said Bill Ferguson, president of the Steelworkers' Lake Erie Local 8782. Yesterday's decision stunned observers who expected the steelmaker to select a bid that would lead the ailing steelmaker out of court protection. And the company made its choice as two shareholder activists fought to retain their places on the board of directors. A judge ordered them off Friday. Yesterday, Roland Keiper and Michael Woollcombe asked the court of appeal to put them back on Stelco's board before a bidder is chosen. On Friday, the judge overseeing Stelco's bankruptcy protection removed the two from the board, saying Stelco should not have added the new directors just as it began evaluating offers to buy or refinance the company. Keiper is the president of Toronto-based Clearwater Capital Management, which has been pushing the board to ensure Stelco's shareholders benefit from the steelmaker's recent turn to profitability. Keiper, his business partner and their families have millions of dollars invested in the steelmaker. Woollcombe, a lawyer and shareholder activist, was working with Clearwater. Normally shareholders are paid last and receive little to nothing when a company emerges from bankruptcy protection. Stelco's employee groups argue that any money given to shareholders will come from their pockets, potentially decreasing the amount that's put into Stelco's $1.3-billion pension deficit. In his written reasons for his decision, Justice James Farley said that Keiper and the other shareholders who supported him could have the power to replace Stelco's entire board if a shareholders' meeting is called. That would threaten Stelco's bankruptcy protection process. "The board made the decision to appoint (Keiper) and (Woollcombe) in that poisoned atmosphere," Farley wrote, later adding "they made the wrong decision for the wrong reasons in my opinion." Although Keiper had vowed to work in the best interests of all Stelco's stakeholders in his role as director, Farley wrote that "it is hard for the leopard to change its spots, notwithstanding that it has agreed to be spotless in the future." Keiper and Woollcombe's lawyers argue that a bankruptcy judge does not have the power to remove directors. And they said it's "very important" that the two men be able to serve on the board "during this critical phase" when Stelco chooses a winning bid. The appeal court will hear Woollcombe and Keiper's arguments tomorrow. It will then decide whether to accept the case. Bruce Leonard, chair of the International Insolvency Institute, said Farley's comments suggest the two men may have had ulterior motives for joining the board. But he suspects the court of appeal will not undermine the judge's authority. Rick Powers, a governance professor at the University of Toronto, said Farley's move appears to be a little heavy-handed, but that he's acting in the spirit of bankruptcy laws which traditionally put shareholders at the end of the list. tperkins@thespec.com 905-526-4620 |