Will June 9 mean a brave new dawn for Stelco?
Judge expected to rule on restructuring plan
“There are a lot of things to work out. I think the whole thing needs more time.” GARY HOWE PRESIDENT, LOCAL 1005
A newly-restructured Stelco could be cut loose to stand on its own with a new owner as early as next month — ending more than two and a half years of creditor protection.
The company has asked a Toronto court to set a “sanction hearing” on June 9 at which Justice Herman Wilton-Siegel would be expected to rule on a deal with venture capital firm Bedrock Industries.
The plan — which has support from all major stakeholders, except the union locals that represent the workers — will have a much better chance of gaining acceptance if ongoing negotiations with United Steelworkers locals 1005 and 8782A and 8782B produce collective agreements before the hearing.
Wilton-Siegel has said collective agreements need to be in place before he signs off.
Union leaders say that of the three contracts, the one for 1005 will be the most difficult.
There are only 520 active members in 1005 but their votes represent the interests of more than 15,000 retirees who are upset at having their pension health benefits removed for the past 18 months and are skeptical about proposed plans for the funding and management of their benefits and pensions.
Also contentious is the fact that 1005 pensioners will be expected to accept 70 per cent of their health care benefits,
called other post-employment benefits — whereas Nanticoke union members will get 100 per cent.
This is a reflection of the much higher benefit costs in Hamilton under the fund because there are far more pensioners and fewer active employees.
But William Aziz, chief restructuring officer, said in a statement issued in April that “the plan and proposed restructuring transaction with Bedrock Industries L.P. represents the best — and only — outcome that balances the realities of the situation with the interests of the many stakeholders.”
The June 9 date was chosen, Aziz said, “to allow ample time to reach and ratify agreements with the two USW locals ahead of that date.”
But Gary Howe, president of Local 1005, disputes that.
“There are a lot of things to work out,” he said in an interview this week. “I think the whole thing needs more time.”
As well as the collective agreements, he said, there are decisions to be made about the administrative authority over the proposed land trusts involving the former Hilton Works in Hamilton and Nanticoke. Trusts need to be established to manage health benefits, among other things.
The current version of the restructuring plan calls for Bedrock to contribute $80 million toward environmental cleanup while land at both the former Hilton Works in Hamilton and Lake Erie Works in Nanticoke is rolled into a land trust, administered by the province along with other stakeholders. Stelco would become a tenant at both sites.
Only about a third of the 325 hectares at the Hamilton site would be used by Stelco, with plans by the province to remediate and sell the unused property to, in part, generate funds for pension plans and health care benefits.
“I suspect it will be possible to get
I suspect it will be possible to get an agreement at the Lake Erie Works. MARVIN RYDER
an agreement at the Lake Erie Works,” said McMaster University business professor Marvin Ryder. “The question becomes: What if Hamilton holds out?
“I’m not sure how the judge would proceed. If he gets five of six pieces right, he might order some form of binding arbitration.”
Howe acknowledges that’s a possibility and agrees that the pressure will be on for a 1005 collective agreement if the local finds itself to be the last holdout in the restructuring deal.
Stelco has asked a Toronto court to set a “sanction hearing” on June 9 at which a judge is expected to rule on a deal with venture capital firm Bedrock Industries.