Stelco plan gets court approval; creditors unhappy

Stelco plan gets court approval; creditors unhappy

In the latest chapter of Stelco’s ongoing restructuring saga, the Ontario Superior Court has given the company permission to complete a $100 million (Canadian CA$) loan agreement with the province, as well as a CA$450 million financing deal with Tricap Management Ltd. Justice James Farley has also extended Stelco’s bankruptcy protection until December 5. These provisions granted Tuesday (October 4) pave the way for a November 15 creditor vote on a final restructuring plan. Gaining creditor approval is the final hurdle Stelco must clear in the series of exhaustive court proceedings, characterized by Judge Farley as “impasse upon impasse.” The creditor vote may prove to be yet another dead-end, as court documents filed by the creditors protest strongly against the refinancing plan. The bondholders believe the province is trying to “steamroll” creditors, allowing Stelco to restructure at the expense of its creditors. The bondholders’ main complaint with the plan is that it would let Tricap reap millions of dollars while virtually wiping out the shareholders. Meanwhile, workers at the company’s Lake Erie plant have been offered $3’000 each to sign a new labor contract, which offers a seven-cent-per-hour wage increase. “This isn’t the biggest contract we’ve ever had, but we’re coming out of (bankruptcy protection) with some increases,” said Bill Ferguson, president of the USW Lake Erie local. While the province and the USW approve of Stelco’s plan, the fate of the company now lies in the hands of the creditors.