Steel Mills

US Steel Canada Granted CCAA Extension While it Works on Bedrock Deal

December 1, 2016

US Steel Canada has been granted an extension of its CCAA protection while it hammers out a deal with suitor Bedrock Industries. The stay period for USSC was due to terminate on November 30, 2016 and has now been extended to March 31, 2017.

According to the 32nd court monitor’s report by Alex Morrison, US Steel Canada had a cash balance of CAD $233.6 million as of November 4, 2016—nearly $89 million better than the previous forecast of $144.7 million. The positive variance was due to higher sales collection from Canadian customers and lower than forecast disbursements for raw materials, including utilities.

USSC is expected to end the extension period on March 31 with a cash balance of $236.4 million.

The sales process for USSC is continuing with Bedrock Industries which signed a Memorandum of Understanding with the government of Ontario on September 21, 2016. On November 1, US Steel announced it had reached an agreement with Bedrock regarding USS’s secured and unsecured claims against USSC. The agreement includes US Steel providing the Canadian company a five year supply of iron ore pellets.

In the monitors report, Morrison called the announcements “significant steps toward a going-concern solution for USSC.”

Before a transaction can be completed it must be approved by the Ontario Superior Court and voted on by union members at the Lake Erie Works and Hamilton Works.

The United Steelworkers Local 1005 and Local 8682 have been meeting with Bedrock but there are still issues to be resolved concerning the key concerns of pensions and benefits.

“Our key things are jobs, pensions and benefits. All three are basically outstanding. We’re a ways away from signing anything,” said Gary Howe, president of Local 1005 in a comment to the Hamilton Spectator. “We certainly have a few major issues to deal with.”

Bill Ferguson, president of Local 8682, signed a letter of support for the Bedrock deal but also noted a resolution on pensions and benefits had not been reached.

In the meantime, US Steel Canada spokesperson Trevor Harris, said, “We are running a viable business at this stage of the game, obviously with the caveat that there are substantial protections in place with CCAA.”