Steel Mills
Canadian Judge Lets Objections to US Steel Debt Remain in Proceedings
Written by Sandy Williams
August 20, 2015
US Steel Corp. lost its bid to keep objections to its debt claims out of the CCAA proceedings for US Steel Canada. US Steel claims it is owed $2.2 billion by USSC, an amount that the United Steelworkers, the province, and former Stelco president Bob Milbourne question.
Justice Herman Wilton-Siegel in his decision wrote that there were “good reasons” for keeping objections in the restructuring proceedings including improving the chance to find a solution in that will keep the Canadian mills operating.
According to the USW, US Steel operated US Steel Canada in a way that caused it to “significantly underperform, thereby incurring substantial losses rather than achieving profitability and requiring it to incur significant debt.” “In essence,” wrote Wilton-Siegel, “the USW argues that USSC would not have needed to commence these CCAA proceedings but for the decisions taken by USS regarding the operations of USSC.”
Milbourne argued that, that “in its management of the former assets of Stelco as part of its North American flat-rolled group of steel plants, USS took actions to idle the blast furnaces and steelmaking units of USSC, which resulted in significant losses to USSC, while USS continued to supply the former customer base of USSC from its steel plants in the United States.”
According to the objectors, some of US Steel’s claim is not really debt but equity investment in the company and, therefore, should be at the bottom of the creditors list.
By reducing the amount owed to US Steel, the USW hopes to increase the cash available for the underfunded pension plans of 14,000 retirees. The plans are underfunded by more than $830 million.
Objectors also worry that if the $2.2 billion claim is left to stand, US Steel will use it in a credit bid to buy Lake Erie Works, canceling some of the debt to pay for the transaction. Reducing some of the debt would also reduce US Steel’s leverage in a restructuring plan for the Canadian mills.
A previous attempt by the objectors to use a legal doctrine called “equitable subordination” to reduce US Steel’s claims failed. Although the procedure can be used to bottom-list debt when a company has acted unfairly, it cannot be used in a CCCA protection case.
Sandy Williams
Read more from Sandy WilliamsLatest in Steel Mills
Cliffs steadfast in commitment to Middletown decarb project
Cleveland-Cliffs Inc. on Monday reiterated its commitment to a major decarbonization project at its Middletown Works in Ohio, despite an earlier report suggesting otherwise.
Nucor expects lower steel prices to drive Q3 earnings decline
Nucor blamed lower steel prices for weaker third-quarter results in earnings guidance released on Tuesday.
SDI guides toward lower Q3 earnings on weaker flat-rolled steel prices
Steel Dynamics Inc. (SDI) expects lower third-quarter earnings on the heels of “meaningfully lower” prices at its flat-rolled steel operations. The Fort Wayne, Ind.-based steelmaker expects Q3’24 earnings of $1.94 to $1.98 per diluted share, according to figures released on Monday. That’s down from $2.72 per share in Q2’24 and down from $3.47 per share in Q3’23.
Stelco shareholders OK $2.5B sale to Cliffs
Stelco shareholders voted overwhelmingly on Monday to OK the $2.5-billion sale of the Canadian flat-rolled steelmaker to Cleveland-Cliffs. Indeed, 99.97% of those who cast ballots voted to approve the deal, according the Hamilton, Ontario-based steelmaker.
White House may delay decision on USS-Nippon deal until after election: report
The White House decision on blocking Nippon Steel’s play for Pittsburgh-based U.S. Steel might be pushed back until after the upcoming presidential election, according to a report in the Washington Post.