Creditors give Stelco plan thumbs up

Creditors give Stelco plan thumbs up

Canadian steelmaker Stelco Inc. announced late Friday evening that its creditors had approved its third amended restructuring plan. The plan was approved by over 78 percent of the affected creditors representing nearly 88 percent of the total value of affected claims voted at the meeting. Stelco president and CEO, Courtney Pratt said, "We truly appreciate the support shown by our creditors today. The approved plan is fair, reasonable and responsible. It balances the competing interests of our stakeholders. And it paves the way for Stelco to emerge from Court protection and to become a viable and competitive steel producer for the long term". Details of the plan have been revealed on Stelco's website, among them: - The availability of a $600 million asset-based revolving loan facility. - The availability of a $375 million revolving bridge facility being negotiated with Tricap Management Limited. - A $150 million Unsecured Subordinated 1% Note, issued to the Province of Ontario in exchange for a $150 million cash contribution. If the pension solvency deficiency is fully funded by year 10, then 75% of the Note would be forgiven at maturity, with the balance payable in cash or shares. - Warrants, with a seven-year maturity, issued to the Province of Ontario to purchase up to approximately 3% of the fully diluted equity (or approximately 851,100 new common shares) at an exercise price of $11.00 per new common share. Highlights affecting the long-fought pension battle are: - An upfront cash contribution of $400 million. - Fixed annual cash funding payments of $65 million each year between 2006-2010 and $70 million each year between 2011-2015. - There may be increased payments through annual cash sweep payments, commencing in 2007, based on cash flow and liquidity tests. - Any solvency deficiency at the end of 2015 will be funded through the normal 5-year pension funding rules. Stelco hopes to implement the plan in early 2006.