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Stelco Restructuring Means
End of the Line for CHT

Feb. 20, 2004 — In the process of its restructuring, Stelco has determined that it will not reopen CHT, its wholly owned subsidiary in Richmond Hill, Ont.

CHT's facilities were idled in November 2003 following Stelco’s temporary idling of its Hamilton Plate Mill beginning in April 2003. The closures were precipitated by difficult market conditions for plate in North America.

Stelco, with the assistance of Ernst & Young (the Monitor), will consider the next steps to take with a view to attempting to find a buyer or buyers for its remaining assets.

Ernst & Young Inc. completed its Second Report of the Monitor, which provides an update on Stelco’s restructuring under the CCAA. The Report provides information on requests for extending the stay period and representation of active and retired salaried employees, as summarized here. Information is also included regarding creditor notification and an update on Stelco’s financial performance and ongoing operations.

Request for Extension to Stay Period — Applicants are seeking an extension of the stay period until and including May 28, 2004. Without the extension, the stay period will expire at midnight on February 27, 2004.

The Applicants will need the extension in order to commence negotiations with their various stakeholders, including their creditors and labor unions. Negotiations must occur before the Applicants will be in a position to develop a plan of arrangement.

Notices Issued to Creditors — Ernst & Young has mailed notice to known creditors of the corporation and all other Stelco companies covered by the CCAA proceedings (the Applicants) notifying the creditor of the Initial Order. Ernst & Young has also established a telephone number to allow creditors to obtain additional information concerning the CCAA proceedings.

Financial Performance and Operational Update — Consolidated financial statements for the fiscal quarter and year ending December 31, 2003, are expected to be released in mid-March 2004.

The corporation's total facility utilization pursuant to the existing senior credit facility was $293.4 million on the date the Initial Order was granted. As at February 13, 2004, the facility utilization pursuant to the existing senior credit facility was $282.4 million.

Each of the other Applicants maintains their own bank accounts, however, each is reliant on advances from the corporation to satisfy funding requirements which cannot be satisfied from cash on hand. In turn, any excess cash held by the other Applicants is paid to the corporation to reduce inter-company advances owed to the corporation. The cash flows since the date of the Initial Order for each of the other Applicants are summarized as follows:

• Stelpipe Ltd. had net disbursements in excess of receipts of $2.0 million since the date of the Initial Order, which includes payments to the corporation of $8 million.
• Stelwire Ltd. had net receipts over disbursements of $0.8 million since the date of the Initial Order, which includes payments to the corporation of $2.0 million.
• Welland Pipe Ltd. had net disbursements in excess of receipts of $41,000 since the date of the Initial Order.
• CHT Steel Co. Inc. had disbursements in excess of receipts of $59,000 since the date of the Initial Order.

Representation for Retired and Active Salaried Employees — The court has granted a representation order for retired salaried beneficiaries of the Applicants on February 13, 2004.

The Stelco and Subsidiaries Salaried Employees Association (SASSEA) brought a motion in this proceeding, originally returnable on February 13, 2004, and adjourned sine die, on consent, seeking a representation order for the active salaried non-union employees of the Applicants. The Applicants have advised the Monitor that the parties are still in discussion with respect to the relief sought in SASSEA's motion.

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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