Ontario taps Bedrock Industries to restructure, takeover U.S. Steel Canada
Barriers to the deal remain, but MOU between the province and a U.S. holding company aims to finalize the restructuring of the troubled steel firm
HAMILTON, Ont.—The years-long saga surrounding the court-supervised restructuring of U.S. Steel Canada may be nearing its end.
The Ontario government and Bedrock Industries Group—a U.S. holding company focused on companies in the mining, metals and natural resources industries—have signed a Memorandum of Understanding (MOU) to facilitate the restructuring of the major Ontario steel producer with operations in Hamilton and Nanticoke.
Though the terms of the agreement will remain confidential until released by the court, the provincial government says it has agreed to “a framework to support an acquisition proposal from Bedrock intended to protect pensions and assist in providing post-employment benefits.”
Previously known as Stelco, USSC filed for creditor protection under the Companies’ Creditors Arrangement Act (CCAA) in 2014 and has been navigating a host of worker pension and asset-related issues during its restructuring. Ontario allowed the company to split with its U.S. parent last fall, following a tumultuous few years of U.S. Steel ownership.
According to Ontario Finance Minister, Charles Sousa, the MOU will help the province “clear the way” for a viable restructuring process at USSC.
“We have been working with the company and other affected parties through the CCAA process to support the best possible outcome for employees, pension members and other stakeholders under these challenging circumstances,” he said. “This MOU helps us to move forward on the Province’s priorities such as preserving jobs, protecting pensions and the environment while developing the industrial lands.”
For its part, Bedrock said it is committed to working with all stakeholders, including worker groups—which will be imperative to finalizing the agreement.
Though the MOU marks progress in the restructuring process, the deal remains subject to a large number of conditions, including ratified labour agreements with numerous United Steelworkers (USW) union locals, as well as the approval of USSC, the court and other stakeholders.
USW officials said they were “encouraged” by the framework agreement, which has the potential to put an end to a “stressful and painful two years for our members and pensioners.”
“We have been in discussions for quite some time with the province and various potential buyers about a restructuring of U.S. Steel Canada that would be good for our members and our retirees,” Marty Warren, the union’s Ontario Director, said.
“The deal announced today is far from perfect, given the challenges that arise from such a lengthy and complex insolvency process,” he said. “However, after two years in CCAA protection and after numerous discussions with other bidders, we believe this could lead to a good final deal for the Union’s members and retirees.”
Throughout the restructuring process the union has been highly-critical of U.S. Steel’s treatment of its workers and pensioners.