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Stelco Advances toward Restructuring

09/26/2005 - Stelco Inc. announced that it has satisfied the preliminary conditions under the restructuring agreement entered into between the company and the Province of Ontario.

Stelco Inc. announced that it has satisfied the preliminary conditions under the restructuring agreement entered into between the company and the Province of Ontario.

Stelco has also entered into a Memorandum of Agreement with each of USW Locals 8782 (Lake Erie) and 5220 (AltaSteel in Edmonton).

The tentative agreements should be good news for everyone, including bondholders, says Steelworkers' National Director Ken Neumann.

"Our union has worked long and hard to be a part of a process that will protect pensions and ensure a long-term future for Stelco as one of Canada's greatest steel companies," said Neumann. "To oppose Stelco's plan now will put that future in extreme jeopardy."

"The agreements will provide welcome certainty and stability for the company, our employees and customers, and the communities in which we operate,” commented Courtney Pratt. “I want to acknowledge the outstanding efforts of all those involved in achieving these important and responsible agreements.”

No details of the agreements will be released until members have had an opportunity to review them. Dates for membership meetings have not yet been set.

Courtney Pratt, Stelco President and CEO, said, "This marks a truly significant step in our restructuring process. It satisfies the preliminary conditions under our agreement with the Province of Ontario. And it maintains the positive momentum towards a successful restructuring."

Stelco has also reached agreement with Tricap Management Limited for the provision of two financing facilities, subject to Court approval. The first financing facility consists of Tricap’s provision to Stelco of a $350 million bridge facility in the form of a Secured Revolving Term Loan. The second facility is a Standby Agreement under which Tricap will backstop a $75 million rights offering of new Secured Convertible Notes to be issued by Stelco. Tricap will also receive an option to purchase $25 million of the same Notes that will be exercised by Tricap under certain conditions.

The original conditions under the restructuring agreement had also called for Stelco to enter into a corporate issues agreement with the USW relating to certain Stelco governance issues. The parties subsequently agreed not to pursue such an agreement.

Stelco also announced that the Court has extended the stay period until October 4, 2005.