Bedrock deal closer with union pact
Takeover plan for Stelco requires contract in place
The final pieces of a complex deal to restructure Stelco with a new owner are falling into place with the announcement Thursday of a tentative agreement for Lake Erie union members and a “framework of an agreement” for Hamilton workers.
The developments are significant because presiding Justice Herman Wilton-Siegel has said collective agreements with the unions need to be in place before he will endorse the takeover plan by American venture capital firm Bedrock Industries.
That plan is scheduled to be presented to the Toronto judge on June 9. A judicial endorsement would kick in a 21-day process to pass on the company to Bedrock, ending more than two and a half years of creditor protection under the Companies’ Creditors Arrangement Act (CCAA).
“We’ve reached a tentative deal with Bedrock Industries,” said Bill Ferguson, the president of United Steelworkers Union Local 8782 (a) and 8782(b), which represents workers in Nanticoke.
A “mountain of paperwork” lies ahead, Ferguson said. “But we have a deal and we want to move forward with it with the members and to vote on this offer.”
Union members will vote May 30-31. Details of the tentative agreement are being withheld until then.
“It’s been a long road and we finally got there. We just settled up (Thursday) afternoon,” Ferguson said.
The two 8782 locals have a total 1,100 members with about 800 retirees. Local 1005 in Hamilton has more than 500 active members with 15,000 pensioners.
The 1005 bargaining committee said in a statement Thursday it expects to present a negotiated agreement to its membership next week.
“Currently, we are working on a framework for an agreement which we are planning to present to the membership next week. Dates, times and location of (the) membership meeting (is) to be determined.”
The three paragraph statement said during the negotiations “our priorities remained the same, jobs, pensions and OPEBs (other postemployment benefits).”
Gary Howe, the president of the local, said no further comment would be made.
A spokesperson for Stelco could not be reached.
McMaster business professor Marvin Ryder says of the two unions, 1005 has the most difficult issues.
For one thing, because of the large number of 1005 retirees, the company has said it is willing to fund only 70 per cent of costs of OPEBs, whereas workers associated with 8782 locals were to receive 100 per cent.
As well, 1005 officials are skeptical about proposed plans for the funding and management of their benefits and pensions.
But the company has been pressing that time is running out. In motion documents from May 16, it pointed to a collective agreement with Local 1005 as being one of the final obstacles and “... if such support is not forthcoming, Stelco will require a brief period of time to consider other alternatives, including a liquidation.”
But Ryder said he can’t imagine everyone giving up on a deal that has come so far if there is still prospect of a collective agreement being reached.
“I think the judge would be willing to extend the creditor protection for another month if both sides asked for a little more time,” he said.
A key provision of the plan calls for the steelmaker’s property to be made into a land trust under provincial authority, with Stelco becoming a tenant on about a third of the 325 hectares in Hamilton.
Then the unused land would be remediated and sold or leased to raise funds to help Stelco pension plans stay solvent in the face of hundreds of millions of dollars in unfunded liability, as well as providing some funding for health- care benefits for retirees.
But union officials are skeptical the land can be turned into something of value in the short term.
Retirees are fearful of hanging their fortunes on the scheme.
I think the judge would be willing to extend the creditor protection for another month… MARVIN RYDER MCMASTER UNIVERSITY
A provision of the restructuring calls for unused land to be remediated.