Salaried workers, retirees agree in principle for Bedrock takeover terms but union locals holding out
Agreement in principle for Bedrock Industries to take over firm
Stelco says it’s closer to negotiating a deal with Bedrock Industries Group to take over the company after cobbling together an agreement in principle with its salaried employees and retirees.
“Momentum continues to build towards this great company having an opportunity to re-emerge as a strong, independent Canadian steel producer,” Bill Aziz, chief restructuring officer for Stelco, said in a statement Wednesday.
“We are getting closer to the best — and only — outcome that balances the realities of the situation with the interests of the many stakeholders.”
If the deal with Bedrock receives support from other stakeholders, it will go to Toronto court Judge Herman J. Wilton-Siegel for final approval sometime over the next several weeks. Approval by the judge will mean the company will emerge from creditor protection — under the Companies’ Creditors Arrangement Act (CCAA) — something it has been in since the fall of 2014.
However, stumbling blocks remain. The judge has previously said a final deal will also have to include collective agreements with United Steelworkers Local 1005 and Local 8782, which represents workers in Hamilton and Nanticoke, respectively.
And those agreements have yet to be completed.
Gary Howe, the president of Local 1005, says no progress has been made on 1005 contract negotiations. He said last week the union sent its contract proposals to Bedrock but hasn’t heard anything back. He feels the deal with the salaried workers and retirees “was not a big hurdle to get over. The big thing will be getting an agreement with us.”
A key part of the negotiations will be over health-care benefits — known as other post-employment benefits (OPEBs). Retirees currently do not receive the benefits because of a court order.
The plan is to have the new company, under Bedrock, pay 70 per cent of the previous entitlement to 1005 workers. And Howe says workers find that unacceptable.
A spokesperson for Local 8782 could not be reached for comment.
Lawyer Andrew Hatnay — who represents 550 active salaried workers 3,800 retired salaried workers — said “we intend to vote in favour of the plan.”
Under the plan, workers agreed to receive 70 per cent of their health benefit — the same as the proposal to 1005 workers — with the caveat that the arrangement could be negotiated upward at a later date.
Also negotiated were improvements to a severance deal for 29 salaried employees who were cut from staff in February, Hatnay said.
Meanwhile, the stage is being set for a vote next Thursday that will see unsecured creditors decide on a proposal that would see them receive a portion of what they are owed. Stelco spokesperson Trevor Harris said the company is optimistic the creditors will accept the deal.
One of the unsecured creditors is the City of Hamilton, which is owed about $6.3 million in unpaid taxes. Stelco has said the city should recoup its owed taxes by putting a lien on the property.