HAMILTON, ON, Sept. 17, 2015 /CNW/ - U. S. Steel Canada Inc. ("U. S. Steel Canada" or "the Company") announced today that it will be filing a motion with the Ontario Superior Court of Justice (the "Court") seeking an order to continue its operations and obtain further relief (the "Business Preservation Plan") under the Companies' Creditors Arrangement Act (Canada) (the "CCAA") so that the Company can operate beyond 2015.
"With a Court Order we can preserve work and meet obligations to approximately 2,200 employees and continue to deliver high-quality steel products to our customers from our two Canadian steelmaking facilities," said Michael McQuade, President and General Manager of U. S. Steel Canada. "The Court Order, if granted, would also provide additional time to find a consensual restructuring solution, and to conduct a new Sale and Restructuring Process when market conditions improve."
Despite U. S. Steel Canada`s best efforts under its Sale and Restructuring Process, the unwillingness of stakeholders to agree to compromises proposed in the offers submitted, and the unwillingness of bidders to modify their conditions to be acceptable to stakeholders, has resulted in no executable offer being received to-date. Nor have the principal stakeholders in U. S. Steel Canada been able to reach a consensual restructuring agreement. These factors are further aggravated by the continued deterioration of the North American steel market and the increasing volume of offshore imports.
Also contributing to the need for this court order are the steps taken by U. S. Steel Canada's parent company, United States Steel Corporation, to reallocate Canadian production to its facilities located in the U.S., including some of the highly-profitable steel production that U. S. Steel Canada had previously supplied to the auto industry. The reallocation is intended to take effect in October 2015.
As previously disclosed, U. S. Steel Canada has been operating under CCAA creditor protection since September 16, 2014. This protection was most recently extended until December 11, 2015.
Without this court order, U. S. Steel Canada would unlikely be able to avoid ceasing operations at the end of 2015, jeopardizing employment in Hamilton and Nanticoke.
Proposed Terms of the Court Order Proposed by U. S. Steel Canada
U. S. Steel Canada is asking the Court to direct its parent company, United States Steel Corporation, to continue to provide all intercompany services and goods.
The motion further proposes that U. S. Steel Canada would discontinue immediately the current Sale and Restructuring Process (SARP) with the exception of bids related to land at Hamilton Works. The intention would be to re-run the SARP at an appropriate time in late 2015 or 2016.
With great regret, given the need to conserve cash for the survival of the business, U. S. Steel Canada is also asking the Court, among other items:
- To permit the immediate suspension of all pension funding contributions except contributions for current service. Pension payments from the U. S. Steel Canada registered pension plans and funded supplementary pension plans will continue to be made to retirees and surviving spouses at this time and are not impacted by this motion. However, supplementary pensions paid directly by U. S. Steel Canada to retirees and surviving spouses will be suspended.
- To suspend payment of post-employment health, medical, dental and life insurance benefits in the near term for retirees, surviving spouses and dependants.
- To immediately suspend all real property tax payments.
Under the motion, Ernst & Young Inc. would continue as the Court-appointed Monitor to oversee the business and financial affairs of the company during the CCAA process. The Monitor will continue to make information relevant to the restructuring process available on its website at www.ey.com/ca/USSC as such information becomes available.
None of these measures will take effect until such time as the motion is approved by the Court.
About U. S. Steel Canada, Inc.
U. S. Steel Canada's operations are located at Lake Erie Works, a fully integrated steelmaking facility and at Hamilton Works, home to cokemaking and finishing operations including our premier zinc-coating facility, the world-class Z-Line. U. S. Steel Canada has the capability of producing approximately 2.6 million tons of steel annually and employs approximately 2,200 people.
SOURCE U.S. Steel Canada Inc.
For further information: Company Contact: Trevor Harris, Director, Government and Public Affairs, 905.577.4447, [email protected]; Or Joel Shaffer, Longview Communications Inc., 416-649-8006, [email protected]