Affidavit spells out restructuring plans

After speculation from both the steelworkers union and business experts, we now have some details as to U.S. Steel Canada’s plan to restucture it’s finances if granted creditor’s protection.

An affidavit obtained by CHCH News shows the Canadian subsidiary of the steel giant is planning on selling the Hamilton and Lake Erie operations by October 31st of next year.

CHCH obtained the affidavit of U.S. Steel Canada’s President and General Manager Michael McQuade earlier today. It spells out the company’s reasoning for requesting creditor protection and what they would do if it’s granted.

It includes the company’s reasoning to request $185-million financing from their American parent company U.S. Steel which should allow business to run normally until December 2015.

In the meantime, if granted, the company would search for potential buyers of both the Hamilton and Lake Erie operations and would do so by October 31st of next year. It also says there are over 770 active employees working in Hamilton and just under 13-thousand pensioners associated with the Hamilton Works.

U.S. Steel Canada plans on putting the Hamilton operation for sale within two months because it will provide the company with an understanding of their options for both Hamilton and the company as a whole. Lake Erie is expected to be up for sale next March.

McQuade adds that the United Steelworkers Union Local 1005 was asked to take part in the discussions — they turned down that opportunity and that the company is moving on to the courts.

Marvin Ryder of McMaster University’s DeGroote School of Business tells us what we should expect next if the creditor’s protection is granted: “Then they’ll go back to a judge and say here is step one step two step three. And again, they’ll be a hearing. The judge is going to say ‘do I think that’s reasonable and the creditors get to say whether they think it’s reasonable, if this whole thing is granted. So it is a complicated legal maneuver. To the average person, it’s going to be like water torture. In other words, it’s going to be a drip, drip, drip, drip over the next fifteen months.”

What the affidavit didn’t include was how U.S. Steel is on the clock in owing the Ontario government that $150-million it was leant back in 2006. What Mr. Ryder suggests will most likely happen during the restructuring is that the company will have the repayment date extended.