Restructuring officer backs proposed U.S. Steel Canada deal
Wednesday's deal between U.S. Steel and Bedrock reminds steelworkers of another 'secret deal'
The man overseeing U.S. Steel Canada's court supervised restructuring is backing the sale to Bedrock Industries as a step closer to keeping the steelmaker operating.
Bill Aziz, chief restructuring officer for U.S. Steel Canada, described the agreement as a "key milestone" and said, as a result, that the "potential for a going-concern transaction gains momentum."
The deal is getting a much more cautious reaction from other stakeholders, however most of whom say they need need to know more detail.
The provincial arm of the steelworkers union says it believes the deal is the company's best chance at staying in the steelmaking game.
The "cautious optimism" expressed by United Steelworkers Ontario director Marty Warren hits a different tone than local union reps in Hamilton, who were more skeptical about the impact of the deal.
The Province has been working hard ... to help arrive at the best possible outcome for employees, pension members and the local economy. We are encouraged by this key milestone.- Finance Minister Charles Sousa
The lack of detail in the announcement about jobs, pensions, environmental considerations and what will happen with the excess land on Hamilton's waterfront that the former Stelco sits on left workers with many questions.
Mayor Fred Eisenberger echoed those concerns Wednesday, even as he credited the province for facilitating a situation that would allow the issue "to move forward."
"Our primary concern throughout this entire process has always been the pensioners and the benefits and the employees, and then following after that, the tax issue and the land disposition and how is it going to be utilized for future job potential," he said.
"We are cautiously optimistic that the agreement ... can be a positive step towards a successful restructuring of the former Stelco operations in Hamilton and Nanticoke," added Warren.
U.S. Steel bought the former Stelco in 2007, and is the largest and most powerful creditor, so its sign-off represented a big hurdle to clear. If the deal goes through, U.S. Steel would get $126 million in satisfaction of its claims, which the company contended topped $2.2 billion, would provide "shared services" to the Canadian company and would supply its iron ore pellets through 2021.
- Read More: Bedrock Industries reaches deal to buy U.S. Steel Canada
- Read More: Province backs Bedrock bid for U.S Steel Canada
But Warren noted there are many "outstanding issues that must be addressed" and the unions will have "final say" once they see the terms of the deal and work to negotiate collective agreements before voting.
Aziz also noted there remains much work to be done.
"With the Province of Ontario also on board, our focus continues to be on working with Bedrock and our stakeholders to complete the court-supervised restructuring, subject to various approvals."
Province in favour
Bedrock is an investment fund that buys distressed companies and restructures them.
The company and the province announced a memorandum of understanding in September, and the province said it believed Bedrock could help U.S. Steel Canada emerge from the Companies' Creditors Arrangement Act bankruptcy protection process it's been under since 2014.
The province of Ontario is owed money by U.S. Steel Canada and has concerns about pensions, benefits for retirees, ongoing jobs and decades-old environmental liability. That makes it a big player in the process for how the company emerges.
The province said the deal struck in September "advances (the) process to save jobs, industry and pensions in Hamilton and at Lake Erie." There was no word on any changes to the deal in order to be agreed to by U.S. Steel.
The province has said a sale to Bedrock would be "intended to protect pensions and assist in providing post-employment benefits." The province also said it would "support the development of industrial lands" on behalf of pensioners. That could look like a trust set up to use proceeds from selling the land to help fund benefits and support for pensioners going forward.
Another secret deal?
But the reaction Wednesday by Hamilton's steelworkers chapter, Local 1005, suggested a vote on the deal may be contentious.
After a years-long saga that has involved secrets and deals being struck out of the view of pensioners and workers, Local 1005 president Gary Howe pointed out that the union has yet to see the deal struck with the province.
And the new deal with U.S. Steel triggers memories of the notorious "secret deal" struck between the federal government and the Pittsburgh company after the U.S. parent reneged on its agreements to keep the Canadian mills operating.
"It's interesting that two American companies are negotiating in secret to purchase a Canadian company," he said. "Meanwhile, the pensioners are going to take the hit.
"This whole process is not geared towards workers or people, it's geared towards making money."
It's also still unknown if the two local unions – the Nanticoke-based Local 8782 or the Hamilton-based Local 1005 – will negotiate the same deals for their pensions and benefits, or whether their members will vote to accept the terms.