June 29, 2005

Stelco’s bankruptcy court protection extended

TORONTO

Stelco Inc. was granted a 10-day extension to its bankruptcy-court protection Monday, far less time than the steelmaker was originally seeking after the failure of mediation talks among its stakeholders.

The Hamilton steelmaker had proposed a date in mid-August after employee groups fought the company’s bid to extend its creditor protection until the end of September.

The decision of Ontario Superior Court Justice James Farley marked a rare instance in which the judge, who has been overseeing Stelco’s rocky restructuring efforts for 17 months, did not rule in favour of the court-appointed monitor, Ernst & Young, which said the stakeholders needed a longer “cooling-off period” and urged them not to do anything in haste.

Farley has ordered the stakeholders to cool off until July 4 and then resume talks over such contentious items as Stelco’s huge pension deficit.

“Obviously, we feel that we should strike while the iron’s hot,” Bill Ferguson, president of the United Steelworkers local representing Stelco’s Nanticoke, Ont., employees, said after the court hearing.

“We would’ve preferred to start tomorrow.”

“We have been in this process 17 months, we don’t need a cooling-off period,” lawyer Ken Rosenberg, representing the union, argued in court. “We need to be put in a room and the door has to be locked.”

Steelworkers union lawyer David Jacobs told the judge that Stelco needs to make a decision, not sit back and attempt to be a neutral third-party as its stakeholders work to reach an agreement.

A month-long mediation process, which sought to find an acceptable restructuring plan, crumbled last week when former Ontario judge George Adams quit as mediator, saying no solution had been reached.

Observers speculate that the talks fell apart due to differences between the employee groups, which want to see a large sum of money put against Stelco’s $1.3-billion pension deficit, and its bondholders, who wish to be reimbursed with Stelco’s cash.

The Canadian Press

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