Steel Mills

US Steel Canada Bankruptcy Hearing On Hold

October 7, 2014

The bankruptcy protection hearing for US Steel Canada was cut short on Monday morning and again on Tuesday as lawyers worked behind the scenes to negotiate a deal on the debtor in possession loan (DIP) and employee pensions.

The first meeting scheduled for Monday at 10:00 a.m. in Toronto did not begin until 11:00 a.m. and was quickly adjourned. Steel workers from the local USW in attendance boarded busses for home vowing to return for future court dates.

The hearing was adjourned by Supreme Court Justice Herman Wilton-Siegels until Tuesday, 2:00 p.m. when it was again adjourned so that lawyers could continue to work on a financing plan for the Canadian operations. On Monday, the judge told steelworkers, who came to voice their concerns about jobs and pension, that a second adjournment was likely and acknowledged the importance of the proceedings to the dozens in attendance. A third hearing is scheduled for Wednesday.

In a rally outside of the Toronto Court House on Monday, Rolf Gerstenberger, President of USW Local 1005 said, “The CCAA is being used to give the hiving off of USS Canada from USS the legal stamp of approval. It is being done by approving the Debtor-in-Posession (DIP) facility.”

Gerstenberger concluded by saying, “We will cooperate with any restructuring that is morally sound but we will not remain silent when we are being scammed.”

The Ontario government opposes the proposed DIP plan on the grounds it gives US Steel too much control over the Canadian operations. The DIP would provide a $185 million loan from US Steel to US Steel Canada to maintain operations through December 2015. The loan would be at an interest rate of 5 percent (7 percent if defaulted) and would require USS Canada to pay a commitment fee of $3.7 million ($5.5 million if the loan is paid off early). US Steel is also requesting that special restructuring charges it incurs be ranked above other USS Canada debts.

Ontario is also concerned about repayment of a $150 million loan that is owed to the province by US Steel.