Investment Firm Takes a Step Toward Acquiring U.S. Steel Canada
09/23/2016 - The Ontario provincial government and an American investment firm have set broader terms of a restructuring plan for U. S. Steel Canada Inc., which has been operating under creditor protection for two years.
In an announcement Wednesday, the government said it has agreed to a framework under which it would support New York-based Bedrock Industries proposed acquisition of the ailing steelmaker.
The provincial government didn’t immediately disclose details of the plan, but said it would help protect jobs and retirements benefits and help ensure continued operation of U. S. Steel Canada’s facilities. The (Toronto) Globe and Mail newspaper, meanwhile, reported that the firm is prepared to invest approximately $500 million in the operation.
That investment would include a capital infusion, a pension contribution and payments to the province and United States Steel Corp., the newspaper said.
The provincial government has been involved in the restructuring process because of a $150 million loan it had made to U. S. Steel at the time it acquired the business. The loan was used to help cover a pension deficit, the newspaper said.
In a statement, Ontario Minister of Finance Charles Sousa said the government has been working with the company and other stakeholders throughout U. S. Canada’s creditor protection case.
“This (memorandum of understanding) helps us to move forward on the province’s priorities such as preserving jobs, protecting pensions and the environment while developing the industrial lands. We are hopeful that this will clear the way for a restructuring process that results in a viable, healthy company that supports continued operations in Ontario and in local economies,” he said.
The United Steelworkers union, which represents employees at U. S. Steel Canada and also have been involved in the discussions, said that Bedrock intends to continue operating plants in Hamilton and Nanticoke.
"We are encouraged by many aspects of the agreement announced today between the Ontario government and Bedrock Industries," USW Ontario Director Marty Warren said in a statement.
He, however, said the union remains guarded.
"The deal announced today is far from perfect, given the challenges that arise from such a lengthy and complex insolvency process," he said. "However, after two years (under Canada’s Companies’ Creditors Arrangement Act) protection and after numerous discussions with other bidders, we believe this could lead to a good final deal for the union's members and retirees."
According to its website, Bedrock’s area of investment expertise is in metals, mining and energy – coal, oil and natural gas -- and focuses on deals of between US$50 million and US$500 million.
"Bedrock is not known in the steel industry, but principal board member Alan Kestenbaum has a reputation as quite a preserver of value. He seems to have a knack for finding value, for finding companies that can be fixed up and improved," steel industry analyst Charles Bradford told The Hamilton Spectator newspaper.
The provincial government didn’t immediately disclose details of the plan, but said it would help protect jobs and retirements benefits and help ensure continued operation of U. S. Steel Canada’s facilities. The (Toronto) Globe and Mail newspaper, meanwhile, reported that the firm is prepared to invest approximately $500 million in the operation.
That investment would include a capital infusion, a pension contribution and payments to the province and United States Steel Corp., the newspaper said.
The provincial government has been involved in the restructuring process because of a $150 million loan it had made to U. S. Steel at the time it acquired the business. The loan was used to help cover a pension deficit, the newspaper said.
In a statement, Ontario Minister of Finance Charles Sousa said the government has been working with the company and other stakeholders throughout U. S. Canada’s creditor protection case.
“This (memorandum of understanding) helps us to move forward on the province’s priorities such as preserving jobs, protecting pensions and the environment while developing the industrial lands. We are hopeful that this will clear the way for a restructuring process that results in a viable, healthy company that supports continued operations in Ontario and in local economies,” he said.
The United Steelworkers union, which represents employees at U. S. Steel Canada and also have been involved in the discussions, said that Bedrock intends to continue operating plants in Hamilton and Nanticoke.
"We are encouraged by many aspects of the agreement announced today between the Ontario government and Bedrock Industries," USW Ontario Director Marty Warren said in a statement.
He, however, said the union remains guarded.
"The deal announced today is far from perfect, given the challenges that arise from such a lengthy and complex insolvency process," he said. "However, after two years (under Canada’s Companies’ Creditors Arrangement Act) protection and after numerous discussions with other bidders, we believe this could lead to a good final deal for the union's members and retirees."
According to its website, Bedrock’s area of investment expertise is in metals, mining and energy – coal, oil and natural gas -- and focuses on deals of between US$50 million and US$500 million.
"Bedrock is not known in the steel industry, but principal board member Alan Kestenbaum has a reputation as quite a preserver of value. He seems to have a knack for finding value, for finding companies that can be fixed up and improved," steel industry analyst Charles Bradford told The Hamilton Spectator newspaper.
