A second effort to sell the former Stelco plants in Hamilton and Nanticoke will go ahead. The controversial plan by U.S. Steel Canada was opposed by the province, workers and retirees and the American parent company now working to cut the Canadian arm loose. But it was given court approval Tuesday after lawyers spent five hours huddled in closed door meetings trying to overcome the objections.

Details of the settlement weren't released pending a written decision from Justice Herman Wilton-Siegel. There was no formal hearing presenting the decision.

Union lawyer Ken Rosenberg said the compromise will allow the start of the sales process after settling worker concerns on issues such as how much access to bidder information Pittsburgh-based U.S. Steel will have.

Workers had asked for the American company that purchased Stelco in 2007 to be barred from the process because it is now a competitor of U.S. Steel Canada.

"The language we've been able to work out will address our concerns and the concerns of U.S. Steel," Rosenberg said.

Gary Howe, president of the United Steelworkers Local 1005 in Hamilton, said the compromise is "very similar" to the plan drafted by U.S. Steel Canada.

Under the plan USSC took to court, "teaser letters" to potential buyers were to go out as early as Feb. 1 inviting non-binding expressions of interest in the company's assets by Feb. 29. Those bids would be evaluated with the goal of selecting winning offers by the end of October.

In defending that plan, the Canadian company said in a court filing the proposal is a "a clear and structured process to pursue restructuring alternatives that it believes will optimize the chances of securing the best possible sale or investment proposal for the benefit of USSC's stakeholders."

The union, along with the group representing active and retired salaried workers, objected to parts of the plan that gave U.S. Steel access to details of bids for the former Stelco. They argued that the American parent separating itself from the former Stelco would gain information to thwart potential buyers and liquidate a competitor.

USSC argued that failing to start the search for a buyer now may jeopardize the ability of a new owner to bid for auto supply contracts, a process typically carried out in the third quarter of the year.

In its submission, U.S. Steel argued it is entitled to information about potential bids because it is the largest creditor of USSC, "with a direct economic interest" in the restructuring.

Along with the other key stakeholders, U.S. Steel "should be entitled to participate in the process and review bids received pursuant to the sales process," the company said.

"In this case, USS should not be penalized for the fact that it loaned USSC over $2 billion in debt itself rather than requiring USSC to obtain third party financing. Similarly, the fact that USS also invested over $2 billion in equity in USSC should not prejudice USS's rights as a creditor in the restructuring."

Whether the Pittsburgh company is in fact the largest creditor will be tested in a six-day trial slated to start Thursday. Opponents argue the company is simply trying to translate what it spent to buy Stelco into debt.

In other decisions Tuesday, USSC's creditor protection order was extended to April 29.

In addition, a motion to make some small changes in the contract of Bill Aziz, the company's chief restructuring officer was delayed. The contract says he is to be paid a "success" fee of $1 million for restructuring the company. The union and others want that clarified to say liquidating the former Stelco does not constitute success.

 

thespec.com

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