Deal done, Stelco be­gins on new road

‘Peo­ple are ap­pre­hen­sive’ as Amer­i­can in­vest­ment firm Bedrock of­fi­cially takes the reins

The Hamilton Spectator - - FRONT PAGE - JOANNA FRKETICH

“Long and gru­elling for every­one” is how union leader Gary Howe de­scribes the nearly three years it has taken to get to Bedrock In­dus­tries’ ac­qui­si­tion of Stelco Inc.

While the $500-million deal closed Fri­day, the hard work is just be­gin­ning, says one of Canada’s lead­ing aca­demic ex­perts on the steel in­dus­try.

“I don’t think there is go­ing to be some magic bul­let,” said Peter War­rian, se­nior re­search fel­low at the Munk School of Global Af­fairs at the Univer­sity of Toronto.

“There is a whole lot of work that has to be done. Every­one has just got to roll up their sleeves.”

He calls the U.S. Steel takeover of Stelco “the out­lier” dur­ing a time when Canadian steel­mak­ers were bought by foreign com­pa­nies that im­proved ef­fi­ciency, en­vi­ron­men­tal records and prod­ucts.

“You’ve had 10 lost years and you have to make that up now,” said War­rian, for­mer re­search di­rec­tor of the United Steel­work­ers of Amer­ica and Chief Econ­o­mist of On­tario.

“The world’s moved on. The real task is

how are you go­ing to deal with the mar­ket to­day and go for­ward.

“They’ve got some new ideas … They’re com­mit­ted to rein­vest­ing. They’ll need that to catch up to the mar­ket­place.”

War­rian calls the “un­be­liev­ably com­pli­cated” ac­qui­si­tion by the Amer­i­can ven­ture cap­i­tal firm “the best deal un­der the cir­cum­stances.”

“I’m glad it has come to­gether be­cause the clock was run­ning on this,” he said.

“Now we’ll see what hap­pens with the re­newed Stelco.”

With the deal closed, Stelco emerged from the pro­tec­tion of the Com­pa­nies’ Cred­i­tors Ar­range­ment Act (CCAA), which it has op­er­ated un­der since be­ing granted an ini­tial stay of pro­ceed­ings in Septem­ber 2014.

“Peo­ple re­ally got their hopes up with U.S. Steel and it was a huge let­down, so peo­ple are ap­pre­hen­sive,” says Howe, pres­i­dent of United Steel­work­ers lo­cal 1005.

“But Bedrock says the right things so I think the mem­bers are will­ing to give them a chance.”

The sale pre­serves 2,200 jobs at Hamil­ton Works on the shores of Lake On­tario and Lake Erie Works in Nan­ti­coke.

It pro­vides some pro­tec­tion to pen­sions and ben­e­fits for al­most 12,000 re­tirees.

“This is an ex­cit­ing day for Stelco and for all of those who have worked so hard to po­si­tion this com­pany for suc­cess,” Alan Kestenbaum, chair of Bedrock In­dus­tries said in a state­ment from New York.

“We are well aware of Stelco’s sto­ried his­tory and the spe­cial po­si­tion it holds in the hearts of those in the com­mu­ni­ties of Hamil­ton and Nan­ti­coke in which it op­er­ates, and across Canada.”

He noted the sig­nif­i­cance of the deal clos­ing on the eve of Canada Day.

“As Canada pre­pares to cel­e­brate its 150th an­niver­sary, it is fit­ting that we are cel­e­brat­ing the re­birth of Stelco, a com­pany that played an in­te­gral role in build­ing the na­tion, start­ing in 1910 as The Steel Com­pany of Canada,” said Kestenbaum. “We look for­ward to mark­ing many more mile­stones in the com­ing years as we build this Canadian icon to­gether.”

On­tario Fi­nance Min­is­ter Charles Sousa said the deal en­sures Stelco’s con­tin­ued op­er­a­tion as a “vi­able and grow­ing” com­pany.

“Our govern­ment’s ob­jec­tive from the out­set was to sup­port a process that would lead to sus­tain­able op­er­a­tions for Stelco, while pro­tect­ing em­ploy­ees, pen­sions and the lands,” he said in a state­ment.

He too ac­knowl­edged there is a long road ahead.

“With the trans­ac­tion now com­plete, the prov­ince will con­tinue to work with Bedrock and stake­hold­ers to ful­fil the terms of the agree­ments, in­clud­ing for the fu­ture of the Stelco lands, to se­cure max­i­mum value for pen­sion­ers while con­sult­ing with the city with re­spect to on­go­ing lo­cal eco­nomic de­vel­op­ment and goals.”

Bedrock will not have li­a­bil­ity for his­tor­i­cal con­tam­i­na­tion at Stelco prop­erty be­cause a provin­cially back­stopped land trust called LandCo will take over own­er­ship of the 818 acres on Hamil­ton’s bayfront.

Stelco will rent one-third of the prop­erty while the land trust em­barks on a multi-year quest to re­me­di­ate and de­velop the parcels to raise money to put to­ward pen­sion costs and ben­e­fits for re­tirees.

“From a city per­spec­tive, the land deal and how we de­velop that deal is go­ing to be our No. 1 fo­cus,” said Coun. Sam Merulla, chair of the city’s Steel Com­mit­tee.

“We’ve now en­gaged in di­a­logue with the (Hamil­ton) Port Author­ity and have sup­port from Bedrock with re­spect to what our vi­sion is and where we head with the land deal in the fu­ture.”

Merulla said up to this point the city’s pri­or­ity was the pro­tec­tion of the pen­sion­ers and sav­ing “well-pay­ing” jobs, which he be­lieves this deal so­lid­i­fies.

“From a res­i­dent’s per­spec­tive it’s a good deal,” said Merulla.

“From a pen­sioner’s per­spec­tive it’s a great deal.”

Bedrock will con­trib­ute $160 million to $430 million to com­pany pen­sion funds — de­pend­ing on busi­ness re­sults — but that will be all of its com­mit­ment to­ward a $1-bil­lion un­funded li­a­bil­ity.

Much of the credit for the deal clos­ing goes to Stelco’s staff, said Michael McQuade, pres­i­dent of Stelco, in a state­ment.

“I look upon the col­lec­tive ef­forts of our em­ploy­ees over the past 33 months with [a] sense of grat­i­tude and hu­mil­ity, as their con­tri­bu­tions have led to this suc­cess­ful out­come for our busi­ness.”

Newspapers in English

Newspapers from Canada

© PressReader. All rights reserved.