Stelco sign letter of intent to sell subsidiaries

Stelco sign letter of intent to sell subsidiaries

Embattled Canadian steelmaker Stelco Inc. signaled its intentions to further climb out of its reorganization fiasco by signing a letter of intent to sell three subsidiaries to Mittal Canada. Mittal is reportedly interested in acquiring Stelwire in Ontario as well as Quebec-based Stelfil and Norambar. Stelco did not disclose the sale price but is trying to free up some cash so it can pay down its Canadian $1.3 billion (CA$) pension deficit. A Stelco representative declined to comment directly to SteelOrbis’s request for an interview. In the company’s official statement Courtney Pratt, Stelco president and CEO, said, "This marks an important step in the process of pursuing a transaction that would be good for all concerned. We're committed to working with Mittal to conclude a definitive agreement as quickly as possible." The union recently changed its mind about the sale saying that while at first it opposed the deal, it now feels the three companies would be better off with a different company. A USW official told SteelOrbis that the sale is a far better off for the three wire companies as Stelco has made it clear it intends to get out of the wire business. Under Stelco’s steerage, several plants were in danger of closing and jobs would have been lost. He went on to say that discussions have taken place and if all goes well, the deal should be finalized in the early part of next year. Nevertheless, Stelco’s bondholders are spoiling for a fight on the remaining issue of the company’s two financing plans which serve as the basis of Stelco’s recovery plan. The bondholders have bluntly stated that they will vote the plan down.