TORONTO -- Whoever buys Stelco Inc. will have to address its $1.3-billion pension plan deficit over a shorter time, after the Ontario government decided the Hamilton steelmaker won't be spared from having to make special payments to top up the fund. The company said yesterday it had received a letter from James Arnett, special steel industry adviser for the Ontario government, stating that Stelco "will not be entitled" to the pension contribution exemption after the company emerges from creditor protection.
Stelco hopes to exit bankruptcy protection this spring or summer. Companies interested in buying or refinancing Stelco -- who have until Monday to submit offers -- will have to make larger, more immediate payments to deal with the pension shortfalls than they would if the exemption remained in place.
Stelco's pension plans, if they were wound up in the case of a company collapse, would have a deficit worth $1.3 billion. Over the years it did not have to make special payments to ensure its solvency under a provision in Ontario's Pension Benefits Act. An exemption allows companies of a certain size to put off solvency payments for pension plans in exchange for paying higher premiums to Ontario's Pension Benefits Guarantee Fund, which acts as insurance for company pensions.