Steel Mills

US Steel Canada Claims Trial Ends, No Decision Yet

Written by Sandy Williams

Closing arguments were heard Wednesday in the eight-day trial to determine if US Steel is owed more than $2.2 billion in debt by US Steel Canada.

Lawyers for the union and province said that US Steel is calling equity investments debt as a way to recoup the cost of buying the former Stelco facilities.

“What is this term loan? We say it is fundamentally disguised equity,” union lawyer Gord Capern said in his summation. “This is simply part of the equity investment U.S. Steel needed to make to buy Stelco.”

US Steel says it provided a term loan and revolver loan to US Steel Canada to shore up desperately needed operating cash for the Canadian assets.

The opposing lawyers say the funding should be classified as equity because US Steel dictated the terms of the transactions as an owner would, not a lender, without discussion with US Steel Canada. The term loan under dispute had a 30-year lifespan, requiring no payment of principal and interest payments were waived in 2008.

“It would be hard to imagine a set of facts in the real world better suited to debt recharacterization than the ones before you,” said provincial lawyer Peter Ruby.

During earnings call on Wednesday, US Steel sounded prepared to accept whatever the ruling may be in the claims case.

“Whatever the process results, we will get some portion of our claims,” said Dan Lesnak, General Manager of Investor Relations. “We do have a – our number on our book has been reserved down to $180 million. So to the extent we get less, we would have a non-cash charge. To the extent we get more, that will be some benefit. Anything we get will be cash positive. It’ll be new cash coming in the door.”

Justice Herman Wilton-Siegel reserved his decision, stating he would try to decide the case within the next two weeks.

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