Stelco announces filing of 32nd Monitor's Report

HAMILTON, ON, June 21 /CNW/ - Stelco Inc. (TSX:STE) today announced that
the Thirty-Second Report of the Monitor in the matter of the Company's Court-
supervised restructuring was filed this afternoon. The full text of the Report
can be accessed through a link available on Stelco's Web site.
The Report provides an update on a number of matters, some of which have
been disclosed previously by the Company. These include an update on the
issuance of Stelco's guidance update on June 1, 2005; cash flow results for
the entities that filed under CCAA, including variances from the forecast
included in the Monitor's 26th Report; and the mediation process.
Production and shipping: The Report noted that production of semi-
finished steel has decreased during 2005 in response to a softening in steel
market demand and operational issues at the Hamilton facility. Total
consolidated semi-finished production for the year-to-date ended May 31, 2005
was 2,166,000 net tons, compared to 2,292,000 net tons during the same period
in 2004.
The Monitor noted that product shipment volumes have declined during 2005
in response to a softening of steel markets. On a consolidated basis, total
shipments for the year-to-date ended May 31, 2005 were 1,967,000 net tons,
compared to 2,065,000 net tons during the same period in 2004.
Market conditions: The Monitor noted Stelco's indication that the
softening in steel market demand and pricing has continued through 2005,
especially in the construction sector and, to a lesser extent, the automotive
sector. The Report also noted the volatility of raw material and energy input
costs such as scrap, coke, coal, iron ore, electricity and natural gas. The
Monitor added that Stelco's future financial results will be highly dependent
on the direction of those input costs and the strength of North American steel
markets.
Cash flow forecasts: The Monitor noted that Appendix F to the Report
contains cash flow forecasts for the applicants that filed under CCAA for the
period ended June 11, 2005 through to September 23, 2005. The Report noted
that Stelco is forecasting that the total facility utilization of the Existing
Stelco Financing Agreement will increase by $39.8 million during this period
to stand at $113 million as at September 23, 2005. This marks a reversal from
previous months, during which the total facility utilization had declined.
This reversal is attributable in large part to a relative reduction in
accounts receivable collection caused by forecast lower shipping volumes and
reduced spot market selling prices (see market conditions above) as well as to
continued capital expenditure disbursements related to the Phase II upgrade at
the Lake Erie hot strip mill and two mini-cogeneration projects at Lake Erie
and Hamilton. The Report noted that Stelco will not need to draw upon the DIP
Facility during the period in question.
The asset sale process: The Report provided an update on various
initiatives under the asset sale process. The transactions for the sale of
Welland Pipe's U&O mill and for the plate mill assets of Plateco have closed.
Stelpipe, Stelco and Romspen are currently negotiating the terms of a
definitive agreement concerning the sale of the assets of Stelpipe. The
Monitor noted that Stelco currently expects to seek Court approval of that
transaction in July 2005. The Report added that Stelco is continuing its
review of offers it has received for other non-core subsidiaries and is
currently pursuing discussions with a number of bidders with respect to their
offers. The Monitor noted that the proceeds from any sale of the non-core
subsidiaries will provide Stelco with additional funds to assist in the
recapitalization of the integrated steel business.
An extension to the stay period: The Report noted that Stelco will seek
an extension of the stay period, which expires at midnight on July 8, 2005, to
September 23, 2005. The Monitor added that the extension is necessary for
Stelco to continue discussions with stakeholders, including through the
mediation process, to develop and file a plan of arrangement or compromise,
and to complete the claims procedure. The Monitor stated that such an
extension is in the interest of all stakeholders and recommended that the
request be granted.

About Stelco
Stelco Inc. is a large, diversified steel producer. Stelco is involved in
major segments of the steel industry through its integrated steel business,
mini-mills, and manufactured products businesses. This news release may
contain forward-looking information with respect to the Corporation's business
operations, financial performance and conditions. Actual results may differ
from expected results for a variety of reasons including factors discussed in
the Corporation's Management's Discussion and Analysis section of the
Corporation's 2004 Annual Report. To learn more about Stelco and its
businesses, please refer to our Web site at www.stelco.ca.
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