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Stelco Issues Additional Restructuring Update

01/30/2006 -  

Jan. 30, 2006 — Stelco Inc.’s Court-appointed Monitor has filed its forty-ninth report regarding the company's Court-supervised restructuring. The Report provides updated information regarding Stelco's sale of its interest in Norambar Inc., Stelwire Ltd. and Stelfil Ltée to Mittal Canada Inc. The Court approved this transaction on December 12, 2005. The Report notes that Stelwire is the only one of the three non-core subsidiaries that is an applicant under the CCAA proceedings.

Stelco announced the outcome of the share election process undertaken by affected creditors under the company's approved restructuring plan.

Under the company's restructuring plan, affected creditors could elect to receive all or part of their distribution from the cash pool in new common shares. A total of 5.624 million shares were available for that purpose, to be shared pro rata if affected creditors subscribed collectively for more than this number.

The total value of affected creditor claims for purposes of the company's restructuring plan is approximately $546,703,308.

Stelco advises that the affected creditors elected to receive all of the 5.624 million shares that were available.

Each affected creditor who made such an election will receive approximately 33.1% of the new common shares they elected to receive.

Stelco and Mittal are seeking to close the transaction on January 31, 2006. The company's restructuring plan, however, will not be implemented by that date. This has raised concerns on the part of Mittal regarding Stelwire's status as a CCAA applicant and liability for affected claims.

The Monitor notes that it has worked with Stelco and Mittal to find a way to address Mittal's concerns in order to allow the transaction to close on January 31, 2006. The Report states that Stelco will seek a Court Order to the effect that on the closing of the transaction:

  1. The Initial Order and subsequent Court Orders in the CCAA proceedings will not be construed in any way that restricts Mittal's ability to carry on the business of Stelwire.
  2. The Monitor's powers and duties in respect of Stelwire will be limited.
  3. Holders of affected claims will have no further recourse to Stelwire unless provided for in the restructuring plan.
  4. If the plan is not implemented, the affected claims that have recourse against Stelwire or the property of Stelwire shall only have recourse to the sale proceeds from the sale transaction.

The Monitor recommends that Stelco's application in this regard be granted as a means of facilitating the closing of the transaction.

The company also announced that it has accepted an offer of financing from Tricap Management Limited regarding the $375 million bridge loan facility contemplated under Stelco's restructuring plan.


Stelco Inc. is a large, diversified steel producer involved in major segments of the steel industry through its integrated steel business, minimills and manufactured products businesses.