HAMILTON, ON, Jan. 20 /CNW/ - Stelco Inc. (TSX:STE) today announced that
the Forty-Eighth Report of the Monitor in the matter of the Company's
Court-supervised restructuring has been filed. The full text of the Report,
including appendices, can be accessed through a link available on Stelco's web
site.
The Report provides updating information on previously disclosed
developments of recent days. The Monitor expresses the view that there has
been considerable progress in resolving issues this week. These issues
include:
Term sheets: The Report notes that the finalization of the $600 million
asset based loan and the $375 million bridge loan are conditions precedent to
the implementation of the restructuring plan and are critical components of
the liquidity and financing contemplated for the restructured Stelco. The
Report states that Stelco advised the Court that it expected to be in a
position to deliver term sheets in the matter of these loan facilities to the
Monitor by 5:00 p.m. today. The Report notes that the letters and term sheets
delivered to the Monitor by the Company are appended to the Report, and that
the term sheets have been approved by Stelco's board of directors, subject to
obtaining the approval of the credit committees of the asset based loan
providers. The Report notes that the asset based loan providers will recommend
that such approval be granted.
Conditions precedent: The Report notes that the term sheets contain
certain conditions precedent to the implementation of the financings, which
the Monitor notes is not unusual for exit financing at this stage of a major
CCAA restructuring. The Report adds that the parties to the loan facilities
have indicated to the Monitor that they are committed to working to fulfill
those conditions precedent.
The Report notes that the parties to the asset based loan have indicated
to the Monitor that they have reached sufficient consensus between themselves
and with the Province. As a result, the parties have indicated that they do
not believe that any issues remain which could reasonably be expected to
prevent the transactions contemplated in the term sheet from being
implemented.
The Report notes that the parties to the bridge loan have indicated to
the Monitor that details concerning the condition with respect to the proposed
corporate reorganization of Stelco remain to be finalized. At the same time,
the Report adds that the parties have confirmed to the Monitor that, subject
to obtaining Court approval of the proposed reorganization, they do not
believe that any issues remain which could reasonably be expected to prevent
the transactions contemplated in the bridge loan term sheet from being
implemented.
The Monitor indicates that the Province has confirmed that, to the extent
that the transactions contemplated in the term sheets affect pensions and
related liabilities, the Province is committed to working with the parties to
satisfy the conditions precedent in the term sheets. The Report adds that the
Province has confirmed that it is also committed to working to resolve any
remaining issues that may affect pension and related liabilities arising from
the proposed corporate reorganization.
Outlook: The Report states that, as is typical in restructurings of this
size and complexity, there is significant work to be done to settle definitive
documentation and to implement the contemplated transactions. The Monitor
states that it is optimistic that the transactions contemplated by the term
sheets can be implemented.
Board composition: The Report notes that the Monitor has been in
discussion with counsel for the Informal Committee of Senior Bondholders ("the
bondholders") regarding the composition of the new board of directors. The
Report adds that the bondholders have proposed that Mr. Dennis Belcher be
appointed to the new board in lieu of the vacant spot currently designated for
Stelco's next chief executive officer. The Report notes that the three
significant equity holders and the Company have agreed to this change, and
that Mr. Belcher is prepared to stand as a director of the board on plan
implementation. The Report adds that it is contemplated that, after the plan
implementation date, the board will be expanded to add Stelco's next chief
executive officer when that position is filled. The Monitor indicates its
understanding that the issue of the composition of the new board is now
resolved.
Dennis Belcher held increasingly senior executive positions during more
than 40 years in Canada's financial services industry, principally with The
Bank of Nova Scotia. He retired as Executive Vice President, Credit and Risk
Management of that bank in 2002. He has served as a director on the boards of
a number of public companies, and has authored publications dealing with such
matters as risk assessment, restructuring and project financing.
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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