No jiggery-pokery, judge says

Court extends Stelco deadline until Monday Bondholders still want better deal in restructuring

A judge has warned Stelco’s stakeholders not to resort to “ jiggery- pokery” as he extended court protection for the steel giant until Monday so creditors can vote on an amended restructuring plan.

“ I am directing and ordering there not be any jiggery- pokery,” Mr. Justice James Farley told lawyers yesterday in grantsent ing the extension.

“ It’s far too important for all stakeholders to engage in jiggerypokery.”

Stelco, which has operated under court protection for almost two years despite making money most of that time, doesn’t know if there will be enough support among creditors for the amended plan in voting on Friday.

Representatives for bondholders, who have not supported the amended plan, asked Farley for another month so they could craft a better deal.

Richard Orzy, a lawyer for an informal committee of bondholders, repeated earlier arguments that a longer extension would not hurt Hamilton- based Stelco.

“ We need until Jan. 16 to pre- a fully funded plan,” Orzy said in his request for time to attract new lenders for another deal.

However, Farley said the bondholders still have a few days to negotiate changes before Friday’s vote. “ Don’t let me hold you up in meaningful discussions,” he said in granting the short extension.

Stelco has cancelled a vote on the plan several times during the last few weeks because the company realized there was not enough support. The plan needs the backing of creditors holding two thirds of Stelco’s debt.

After a weekend of talks, the plan still features $375 million in financing from Tricap Management and a $ 150 million loan from the Ontario government. The money would help the company pay back creditors, upgrade operations and reduce a huge pension plan deficit. Under the plan, Tricap and other investors would control the company’s new stock while existing shareholders would get nothing because Stelco says the company doesn’t have enough value to pay off creditors. The plan had broad support among stakeholders including bondholders last week. But representatives for the bondholders say there have been changes that give Tricap an unfair advantage in gaining new equity.

If creditors reject the amended plan, Stelco faces possible receivership and further uncertainty regarding its future. A group of lenders has indicated it will seek to call in a receiver if the plan fails.