Steel Mills

It’s Debt, Says Ontario Judge

March 1, 2016

Ontario Superior Court Justice Herman Wilton-Siegel settled the question of whether a $2.2 million claim by US Steel on its former subsidiary US Steel Canada is equity or debt. It’s debt says the judge.

In a decision on Monday, Wilton-Siegel said US Steel’s investment in its Canadian operation was in the form of loans that were expected to be repaid.

“All advances under the [two loans] were documented as such and were distinguished, both in terms of documentation and accounting, from equity injections,” wrote Wilton-Siegel.

US Steel said in an email that it is “pleased with the outcome of yesterday’s determination.”

Workers are not pleased. The decision will push US Steel’s claims to the top of the creditors list which may leave little left for shoring up pensions.

“The union is reviewing this decision and discussing its options with counsel,” said USW Ontario Director Marty Warren.

“We can certainly say that we disagree with much of what the judge has decided,” said Warren. “If U.S. Steel was technically insolvent before it tried to convert its equity or unsecured debt into secured debt, then it should not be allowed to do it.”

Warren added that the issue is “not resolved yet—not by a long shot.”

“There is a second part to this trial that has not even started and then there is the question of an appeal,” said Warren.

The second part of the trial is the presentation of corporate conduct said USW Local 8782 President Bill Ferguson in a recent membership update.

Commenting on the court decision, Ferguson said, “U.S. Steel controlled everything, took our work to the U.S., shut us down and tried to run us into the ground. And now they even get back the money they paid to buy us in the first place – it’s a disgrace.”

“This is an insult to thousands of workers and pensioners who should be considered first and foremost in this process,” said Gary Howe, USW Local 1005 President, representing U.S. Steel Canada’s Hamilton employees.

US Steel Canada had no comment on the decision. Trevor Harris, Director, Government and Public Affairs said the company is focusing on the sales process.

“U. S. Steel Canada is focused on operating our business and furthering the restructuring process,” wrote Harris in an email. “Specifically, we are working with our advisors, the Chief Restructuring Officer and the Court Monitor to review Letters of Intent that have been submitted by interested parties during Phase I of the Sale and Investment Process (SISP).”