U.S. Steel Canada says Essar Global restructuring proposal won’t be considered
August 11, 2016 by The Canadian Press
Aug. 11, 2016 – U.S. Steel Canada Inc. is rejecting advances from the Essar Global fund, saying it isn’t qualified to be a buyer of the company formerly known as Stelco, which has been seeking a buyer under a lengthy court-supervised process.
The Hamilton-based company says Essar Global was previously eliminated as a contender in the court-supervised sales process — in part because it failed to provide sufficient evidence that it has the financial ability to buy and operate U.S. Steel Canada.
The Ontario Steel Investments group — a vehicle set up by Essar Global — didn’t announce Tuesday what it would pay for the business, which has its operations in southern Ontario at Hamilton and Nanticoke.
However, Ontario Steel said it’s offering to assume $954 million of employer liabilities under U.S. Steel Canada’s pension plans and a commitment to contribute $25 million per year towards so-called post-retirement benefits for both active and retired employees.
The same group has also offered to buy Essar Steel Algoma Inc. in Sault Ste. Marie, in northern Ontario, which is also under court protection.
U.S. Steel Canada said Tuesday that the Essar consortium’s terms are “substantially similar” to what was previously rejected by the company and the province.
The Ontario government also has an important role in determining what happens to U.S. Steel Canada because of its huge pension liabilities.
Both Essar offers for Algoma Steel and U.S. Steel Canada would also require an agreement with the United Steelworkers, which has current and retired members at both Ontario steel companies.
The union hasn’t commented publicly on Essar Global’s proposal for U.S. Steel Canada, but one of its locals is working on a framework agreement at Algoma Steel.
U.S. Steel Canada has been operating under protection from the Companies’ Creditors Arrangement Act since September 2014. Aug. 5 was one of the interim deadlines within a court-supervised sales process.
The company said Tuesday it’s not considering any further proposals from Essar and “will avoid any distraction that could be detrimental to the company, its employees and pensioners, at a time when the restructuring process is progressing, and negotiations with the current bidders continue.”