Province unhappy with how U.S. Steel proposes to finance its Canadian arm under court-supervised creditor protection
TORONTO—Queen’s Park is raising objections about how U.S. Steel Corp. 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 Queen’s Park has filed an objection with the court to protect the interests of the provincial government and the Ontario steel maker’s employees, retirees, creditors and their communities.
“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.
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 Inc., with operations at Lake Erie Works in Nanticoke, Ont., and Hamilton Works in Hamilton, Ont., has the capability of producing approximately 2.6 million tonnes 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 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 government by the Companies’ Creditors Arrangement Act (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.