July 27, 2005

Stelco management toils to forge accord

TORONTO

Now that Stelco Inc. has released its long-awaited restructuring plan, the company faces the task of selling its strategy to creditors, employees, the government and investors.

Many of the legally insolvent steelmaker’s employee groups have already lashed out at the plan, which seeks to fill the company’s pension gap by 2015.

“Essentially what they’re doing is making the bondholders secured creditors and setting up for failure,” says Bill Ferguson, president of United Steelworkers Local 8782, representing 1,000 workers at the company’s operation in Nanticoke, Ont.

Steelworkers representatives at the Lake Erie plant and at Stelco’s subsidiaries are supporting Brascan-controlled Tricap Management Ltd.’s bid to refinance the company, citing its $500 million up-front payment into the $1.3-billion pension solvency deficit.

However, the group holding the majority of Hamilton-based Stelco’s bonds is firmly opposed to the Tricap plan, which Stelco has already rebuffed.

Stelco’s plan would make $200 million in initial contributions to the pension deficit, followed by cash payments of $98 million per year.

Besides employees, Stelco must contend with the government of Ontario, which has offered preliminary support to Tricap’s proposal.

Last week, Benjamin Zarnett, a lawyer for the Financial Services Commission of Ontario, which regulates pension plans, said “it’s gravely concerning” that the company’s new plan “will not mean long-term viability for Stelco.”

The company’s bankruptcy protection order has been extended until Sept. 9. Stelco entered into bankruptcy protection in 2004.

Canadian Press

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