USW and City of Hamilton Concerned by Stelco/Bedrock Deal

The proposal will require Bedrock to contribute $30 million to Stelco’s pension plan immediately, $10 million per year for the next five years, and $15 million annually beginning in 2022. An additional payment of $30 million will be made to cover health care and benefits along with annual payments of $15 million and 6.5 percent or up to $11 million of free cash flow directed to benefits.

Bedrock will pay $61 million to the Ontario Ministry of Environment and Climate change to cover environmental cleanup of Stelco’s brown fields. US Steel will get $120 million (Canadian) for its secured claim debt.

In his December 13 Monitor’s Report, Alex Morrision of Ernst & Young, Inc., wrote that the sale of the company to Bedrock will allow it to “emerge as a stand-alone steel manufacturer with a restructured balance sheet and sufficient liquidity so that it will have stability and be able to compete in challenging steel market conditions.”

USW Local 1005 says workers and retirees in Hamilton will see benefits reduced by 30 percent while their sister facility in Nanticoke will receive 100 percent funding.

“The big issue is there’s not enough money for [benefits] and there’s not enough money going into the pension,” said Local 1005 president Gary Howe, in comments to the Globe and Mail.

With a history of broken promises, layoffs and bankruptcy, workers from both locals are concerned about long term viability of the company and their pensions under new owner Bedrock. Of special concern is the province announcement that “while the new company is committed to making contributions to the pension plan, it is not obligated to fund any deficit in the pension plans for service accrued prior to completion of the restructuring transaction.”

The shortfall of pension funding is estimated at around $830 million.

The City of Hamilton is peeved that the plan will not include $7.8 million of property taxes that are due as of March 31, 2017. Hamilton city officials also complained that they were not consulted about plans to sell off and develop excess Stelco lands to help fund the pension plan.

UPDATE 12-15-2016:  Judge Herman J. Wilton-Siegel gave permission today for the restructuring agreement between Stelco and Bedrock Industries to proceed. The judge dismissed objections from the City of Hamilton and USW during the court hearing heard today, telling workers from USW Local 1005 and the City that there is still time to negotiate with Bedrock before a sales transaction is approved.