TORONTO – The Ontario government is raising objections about how U.S. Steel proposes to finance its Canadian arm while the former Stelco attempts to forge a court-supervised compromise with its creditors.
Finance Minister Charles Sousa says the province has filed an objection with the court to protect the interests of the government as well as the Ontario steelmaker’s workers and other stakeholders.
“Ontario supports a restructuring that is based on consensus and that gives the best value to employees, retirees, creditors and communities,” Sousa said in a statement Friday.
The government said it’s concerned that some of the conditions attached to about $185 million in temporary funding from Pittsburgh-based U.S. Steel could have a negative impact on employees and retirees of its Canadian subsidiary.
U.S. Steel Canada, with operations at Lake Erie Works and Hamilton Works, has the capability of producing approximately 2.6 million tons of steel annually. It employs about 2,000 people and has thousands of retired employees.
The company has said it hopes to sell both properties by next October. A sale process for Hamilton Works, which has been permanently closed since December 2013 after being idled in late 2010, could begin within months with a sale of Lake Erie Works in Nanticoke to begin in March.
U.S. Steel Canada has accumulated an operating loss of about $2.4 billion since 2009 and filed for court protection from creditors on Sept. 16.
The province is one of U.S. Steel Canada’s creditors due to a $150-million loan to the company.
U.S. Steel Canada has said it will carry on business as usual while it develops and implements a comprehensive restructuring solution under a process governed by the Companies’ Creditors Arrangement Act, or CCAA.
Typically, a company in CCAA attempts to obtain a commitment for money – referred to as debtor-in-possession financing – that can be used to pay its expenses during a process taking months or years to complete.
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