Thursday September 18, 2014
By Graeme MacKay, The Hamilton Spectator – Thursday September 18, 2014
U.S. Steel Canada files for bankruptcy protection
U.S. Steel Canada is under court-ordered protection from its creditors.
The move, announced Tuesday, sat well with investors on U.S. markets on Wednesday. U.S. Steel was up 12 percent at $46.34 at 9:04 a.m. in New York. The stock (X:US) gained 40 percent this year through Tuesday’s close, Bloomberg reported.
In announcing the move, the company’s American parent said the Hamilton and Nanticoke plants have lost more than $2.4 billion over the last five years and the bleeding has to stop.
Michael McQuade, president and general manager of the former Stelco, said in a statement that financial restructuring is the only way to improving chances for the future.
“Despite substantial efforts over the past several years to make U.S. Steel Canada profitable, it is clear that restructuring … is critical to improving our long-term business outlook,” he said.
Canadian spokesperson Trevor Harris said it will be “business as usual and status quo for the time being” as restructuring negotiations get started.
The news release from the parent company noted pension costs as one of its major hurdles, saying the Canadian operation accounts for about $1 billion of its employee benefits liability. For 15,000 pensioners, that is a warning they could lose a chunk of their retirement income.
Pensioners would be out of pocket if the company wound up its Canadian pension plans in the current underfunded state. Some estimates have said that loss could be as high as 30 per cent.
That pension statement echoes claims Stelco made in 2004, when it sought protection under the Companies Creditors Arrangements Act (CCAA) saying the cost of topping up its badly under-funded pension plans was driving it out of business. (Source: Hamilton Spectator)
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