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An American company has reached a deal to buy U.S. Steel Canada operations in Hamilton and Nanticoke. While the largest creditor, U.S. Steel has approved the deal, the second largest on the list, the pensioners, are not as positive. Steelworkers Local 1005 calls it a secret deal. The terms will not be made public until a court date in the future but the biggest concern rests with the pension fund.
Bedrock Industries, a venture capital company that makes it’s money buying businesses in distress, restructuring them and reselling, reached a deal with the province and U.S. Steel Canada to buy the company. The terms will be presented to a judge who will decide if it’s in the best interest of all creditors, including pensioners, to go through with it. Gary Howe, the president of Steelworks local 1005 in Hamilton says the deal was made to benefit the corporations and provincial government, not the workers.
“We are going to pay the price for U.S. Steel getting what they want, the province has their deal that’s in their best interest and what ever is left over we will get.”
Howe says it’s unclear how the pension plan will move forward. If operations go south, Bedrock Industries could wind up the pension fund, totaling the money and dividing it with pensioners. A lump sum that could be less than what retirees were expecting to receive.
U.S. Steel Canada has been operating under court-supervised creditor protection for 2 years. There’s been growing uncertainty as to what will happen to the operations but business expert Marvin Ryder believes this new deal is in the best outcome for the current employees.
“If nobody comes forward if there is no white knight over the hill, it is possible, maybe 50% possible that the judge will say you know this company can’t be saved so on December 31st we are going to shut the doors, sell it for parts and liquidate the company.”
While the deal won’t be made public until a court proceeding the Finance Minister says it will re-instate post-employment benefits. U.S. Steel Canada’s debt is close to $3.5 billion at this point, there’s a pension shortfall of about $850 million. Ryder says the union would likely want to hear that the pension fund will be topped up immediately but as far as he can tell, Bedrock doesn’t have that kind of money lying around and it could take 10 to 15 years to pay it down.
