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Ontario Court Receives Stelco Restructuring Plan
03/14/2017 - Stelco Inc. has submitted a reorganization plan that, if successful, would keep the business intact and preserve more than 2,100 jobs, it has announced.
The plan, filed in the Ontario Superior Court of Justice, establishes how the integrated steelmaker intends to restructure its liabilities, and, if approved, would pave the road toward completing a sale to U.S.-based private investment firm Bedrock Industries.
Stelco has been working toward a restructuring since September 2014, when it, as a subsidiary of United States Steel Corp., filed for protection under Canada’s Companies’ Creditors Arrangement Act. More than two years later, it now appears to be approaching the exit.
"Sustained, constructive efforts from a number of parties have gotten this process to the point where we can see light at the end of the tunnel," Bill Aziz, Stelco’s chief restructuring officer, said in a statement.
“Stelco has an opportunity to re-emerge as a strong, independent Canadian steel producer. This is the best – and only – outcome that addresses the interests of stakeholders," he said.
If the plan bears out, Stelco, formerly U. S. Steel Canada, would emerge as a stand-alone business and would continue to make steel at its mills in Hamilton and Nanticoke.
As part of the restructuring, the new Stelco also would no longer be responsible for covering existing deficits in its pension and retiree benefits plans, although it would continue contributing to the plans -- up to CA$430 million over the next 20 years for the pension plans alone.
Additionally, Stelco would convey all of the land on which its mills sit to a special real estate entity and, in turn, lease back approximately 2,500 acres for its operations. The entity would look to sell or lease the remaining acreage for redevelopment. The proceeds from any deal would be used to help fund the pension plans.
On the whole, completing the restructuring and sale would allow Stelco to emerge with a de-leveraged balance sheet on new equity from Bedrock and available debt financing of at least CA$125 million, according to court-appointed monitor in Stelco’s creditor protection case.
That, the monitor said, would help ensure that Stelco is ready to execute on a post-restructuring business plan, which would provide for any necessary capital expenditures and offer a path for re-establishing and growing its automotive steel business.
The plan has the support of Ontario government, one of two United Steelworkers union locals, and the court-appointed monitor in the creditor protection case.
“While there is likely no solution that would be viewed as ‘perfect’ by all stakeholders, … the proposed (transaction) has numerous features that make it advantageous in the circumstances as it will, if completed successfully, create a number of benefits for stakeholders,” he wrote in a December report.
Stelco has been working toward a restructuring since September 2014, when it, as a subsidiary of United States Steel Corp., filed for protection under Canada’s Companies’ Creditors Arrangement Act. More than two years later, it now appears to be approaching the exit.
"Sustained, constructive efforts from a number of parties have gotten this process to the point where we can see light at the end of the tunnel," Bill Aziz, Stelco’s chief restructuring officer, said in a statement.
“Stelco has an opportunity to re-emerge as a strong, independent Canadian steel producer. This is the best – and only – outcome that addresses the interests of stakeholders," he said.
If the plan bears out, Stelco, formerly U. S. Steel Canada, would emerge as a stand-alone business and would continue to make steel at its mills in Hamilton and Nanticoke.
As part of the restructuring, the new Stelco also would no longer be responsible for covering existing deficits in its pension and retiree benefits plans, although it would continue contributing to the plans -- up to CA$430 million over the next 20 years for the pension plans alone.
Additionally, Stelco would convey all of the land on which its mills sit to a special real estate entity and, in turn, lease back approximately 2,500 acres for its operations. The entity would look to sell or lease the remaining acreage for redevelopment. The proceeds from any deal would be used to help fund the pension plans.
On the whole, completing the restructuring and sale would allow Stelco to emerge with a de-leveraged balance sheet on new equity from Bedrock and available debt financing of at least CA$125 million, according to court-appointed monitor in Stelco’s creditor protection case.
That, the monitor said, would help ensure that Stelco is ready to execute on a post-restructuring business plan, which would provide for any necessary capital expenditures and offer a path for re-establishing and growing its automotive steel business.
The plan has the support of Ontario government, one of two United Steelworkers union locals, and the court-appointed monitor in the creditor protection case.
“While there is likely no solution that would be viewed as ‘perfect’ by all stakeholders, … the proposed (transaction) has numerous features that make it advantageous in the circumstances as it will, if completed successfully, create a number of benefits for stakeholders,” he wrote in a December report.
