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Stelco Initiates US
Bankruptcy Proceedings

Feb. 13, 2004 — Stelco’s First Report of the Monitor, an update on the corporation's restructuring under the CCAA, has been completed by Ernst & Young Inc. (the Monitor).

The Report provides information on the initiation of proceedings in U.S. Bankruptcy Court, an operational update, requests for amendments to the initial order and for representational order, as described below.

Initiation of Foreign Proceedings—The Monitor, as authorized pursuant to the court order that established the initial stay of proceedings, has sought and received a preliminary injunction order from the U.S. Bankruptcy Court, which preliminary injunction order provides for, among other things, a stay of proceedings against the corporation and the other Stelco companies covered by the CCAA proceedings (collectively, the Applicants).

Preliminary Operational Update—Various documents have been posted by the Applicants on their counsel's website, including materials filed with the court by the Applicants under the CCAA proceedings, a list for service of legal notices, and court orders obtained from the U.S. Bankruptcy Court.

Utilization under the existing senior credit facility was $277.4 million as of February 10, 2004. Total credit available under the existing senior credit facility is $350 million, and a further $75 million will be available under a Debtor-in-Possession (DIP) Facility once it is executed.

Requested Amendments to the Initial Order—The Applicants intend to bring a motion seeking certain amendments to the Initial Order as a result of requests from and negotiations with various stakeholders including the corporation's lenders, construction lien claimants, counsel to retired salaried beneficiaries of the Applicants and bondholders. The Monitor is of the view that the requested amendments to the Initial Order are reasonable and recommends that amendments should be made.

Requested Representational Order for Retired Salaried Employees—The Applicants intend to bring a motion seeking a representation order for retired salaried beneficiaries of the Applicants. The Monitor is of the view that the requested representation order is reasonable and recommends that this order should be made.

Stelco Inc., Canada's largest and most diversified steel producer, is involved in all major segments of the steel industry through its integrated steel business, minimills, and manufactured products businesses. Stelco has a presence in six Canadian provinces and two states of the United States. Consolidated net sales in 2002 were $2.8 billion.

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