Steel Mills
Court Approves Separation of US Steel From USS Canada
Written by John Packard
October 11, 2015
Late on Friday, a Canadian judge ruled U.S. Steel could sever ties with U.S. Steel Canada and that the Canadian facility would to forward as a new entity. The judge also ruled in favor of U.S. Steel as he permitted the company to suspend health care benefits to 20,600 pensioners as well as property taxes. We do not know for how long as the judge is expected to release details on his ruling on Tuesday of this week.
As part of the agreement, U.S. Steel will “not be generating any sales on behalf of USSC” and that they intend to load its production on the company’s U.S. based steel mills.
The USW is looking for ways to operate the two mills: Hamilton and Lake Erie Works.
Here is what U.S. Steel had to say late on Friday after the ruling was announced:
Today, United States Steel Corporation (NYSE:X) announced that the Ontario Superior Court of Justice has approved a mutually agreed upon transition plan with U. S. Steel Canada (USSC) as part of USSC’s restructuring under Canada’s Companies’ Creditors Arrangement Act (CCAA) process. The agreement is an important step in separating the two parties.
Highlights of this agreement include:
• U. S. Steel will not be generating any sales on behalf of USSC;
• Going forward U. S. Steel will load its production on its U.S.-based mills;
• U. S. Steel shall transition away from providing any technical and engineering services associated with product development or sales with USSC, and U. S. Steel will not support any field quality claims made against USSC;
• U. S. Steel will continue to provide all shared services that USSC relies upon for up to 24 months, with the exception of sales;
• Should USSC enter into a new sale and restructuring process (SARP) in the future, U. S. Steel will not be a bidder.
On Sept. 16, 2014, USSC’s board of directors unanimously decided to apply for relief from its creditors pursuant to Canada’s Companies’ Creditors Arrangement Act. As a result of the 2014 CCAA filing, USSC and its subsidiaries were deconsolidated from U. S. Steel’s financial statements on a prospective basis. Despite efforts in the months following the CCAA filing, no negotiated or other settlement was achieved.
Prior to the Sept. 2014 CCAA filing, USSC recorded a loss from operations in each year for five years, with an aggregate operating loss of approximately $2.4 billion, or in excess of $16.00 per diluted share, since December 2009. Additionally, USSC represented approximately $1 billion of U. S. Steel’s consolidated Employee Benefits liability as of June 30, 2014.
John Packard
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