Jan. 20, 2006 — The sanction hearing for Stelco Inc.’s CCAA restructuring plan, which began on Tuesday, January 17, 2006, was adjourned Wednesday afternoon, January 18. While the Court has not yet made its decision in the matter of a sanction order, it has indicated that it wants to be certain that the restructuring plan is capable of being implemented.

To that end, the hearing identified several issues to be addressed in the coming days and weeks in the context of the sanction order application, with the first being finalization of terms for Stelco's $600 million asset-based loan. A second issue is finalization of terms for the company's $375 million Tricap bridge loan facility. The company has committed to delivering signed term sheets in these matters to the Court-appointed Monitor by Friday, January 20, 2006.

An additional issue to be resolved is the reorganization of the company's corporate structure. The Court-appointed Monitor had indicated that this step was a possibility, and the three new equity sponsors have now identified the structure they wish to have in place. It is also a condition of Stelco's financing from Tricap that Tricap must be satisfied with the company's financial and corporate structure as a condition of its participation in the restructuring plan.

Details of the proposed structure were contained in documents filed with the Court by Tricap. Under this structure, Stelco would primarily serve as a holding company, with the operating businesses and assets transferred into newly created limited partnerships. Materials filed by Tricap indicate its belief that this structure will provide Stelco with, among other benefits, greater flexibility at lower cost in meeting its future financing needs. In this proposed structure, Stelco itself would remain responsible for all employment-related obligations, including pension plans.

The company indicated its view that Tricap's goal is shared by all stakeholders — to provide Stelco with the best possible opportunity to succeed as it emerges from the CCAA process. Tricap and the other equity sponsors have indicated that they consider this new structure to be essential in achieving that goal.

Stelco's next scheduled Court appearance is likely to be on February 10, 2006, at which time Stelco will seek approval of the corporate reorganization. The reorganization is subject to the approval of Stelco's board of directors.

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.