Steel Mills
US Steel Canada Seeks New Lender
Written by Sandy Williams
July 18, 2015
US Steel Canada is requesting a new DIP (Debtor in Possession) Lender to replace parent company US Steel Corp. in its creditor protection proceedings. An agreement has been made with Brookfield Capital Partners Ltd for financing up to $150 million Canadian. Brookfield was one of the hedge funds that originally helped Stelco out of creditor protection in 2006.
US Steel Canada received a letter from US Steel Holdings on July 7 saying USSC was in default on its DIP agreement because it “failed to provide the DIP Lender with an Updated Monthly Budget.”
USSC responded that it disagreed with the default assertion, arguing that US Steel was aware that information provided to US Steel Canada by US Steel “contained material errors” that needed to be identified and corrected, causing a delay in submission of the monthly budget report.
“Given the background, USSC was very surprised to receive your letter,” said counsel for USSC in the response to US Steel.
None of the funds available from US Steel were ever withdrawn for use by US Steel Canada. USSC said in its motion for a replacement DIP, that stakeholders were concerned about the influence that parent company US Steel may have over USSC as DIP and questioned “whether funding would be advanced under the USS DIP Facility when needed or whether future disputes over alleged defaults would occur.”
The Superior Court of Ontario will hear the motion for DIP replacement on July 24, 2015.
Sandy Williams
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