Stelco announces filing of 38th Monitor's Report

HAMILTON, ON, Sept. 30 /CNW/ - Stelco Inc. (TSX:STE) today announced that
the Thirty-Eighth Report of the Monitor in the matter of the Company's Court-
supervised restructuring has been filed. The full text of the Report can be
accessed through a link available on Stelco's web site.
The Report contains previously-disclosed information on the terms,
conditions and other features of the previously-announced agreements entered
into by the Company with each of Tricap Management Limited ("Tricap"), the
Province of Ontario, the USW International and USW Local 8782. These and other
details relating to the agreements are also contained in materials filed with
the Court.
The Monitor also discusses the break fees payable to Tricap under its
agreement. The Monitor expresses the view that the break fees are reasonable
given, among other factors: the Monitor's assessment of prevailing market
terms for break fees for CCAA financings; the certainty of securing financing
to implement Stelco's restructuring plan with minimal due diligence risk and
conditionality; the view that the cost is worth the benefits conveyed by the
above-noted agreements, and the fact that Tricap is required to commit
significant capital resources until the restructuring plan implementation date
without certainty as to the completion of the financing.
The Report conveys the Monitor's view that the terms, fees and costs of
the secured revolving term loan and the standby agreement under the Tricap
agreement are reasonable in light of the benefits and liquidity reserve
provided to Stelco.
The Monitor also reports that certain affected creditors or their
representatives have advised the Monitor to express concerns and/or opposition
to the Company's restructuring plan. The Report observes that the affected
creditors that have contacted the Monitor directly or indirectly likely
represent over 50%, by dollar value, of the claims of affected creditors. The
Monitor notes that those creditors have indicated that, if a vote were held
today, they would vote against the plan.
The Report notes, however, that a number of the affected creditors that
have contacted the Monitor have also indicated their belief that the filing of
the plan was a productive step and provides a framework within which to
attempt to negotiate a consensual solution. The Monitor also notes that the
above-noted concern or opposition expressed by affected creditors comes prior
to their being provided with an information circular concerning the Company's
restructuring plan. The Monitor expresses the view that the Company will have
the opportunity to continue discussions with the affected creditors in the
period prior to the meetings that will be held to consider and vote on the
plan.
The Monitor observes that the above-noted agreements offer Stelco a
pension funding solution, committed CCAA exit financing and labour co-
operation. Without these agreements, the Monitor notes that Stelco would
likely find itself back in the midst of stalled negotiations.
For these and other reasons, the Report recommends that the Court
authorize Stelco to enter into the restructuring agreements with each of the
Province, Tricap and the USW.

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.

%SEDAR: 00001549E