HAMILTON, April 2 /CNW/ - Stelco Inc. today provided an information
update following the Company's emergence from its Court-supervised
restructuring as of midnight at the end of March 31, 2006.
As the Company indicated earlier that day, it had satisfied the
conditions to implementation of its restructuring plan under the Companies'
Creditors Arrangement Act ("CCAA") and the reorganization of its corporate
structure under the Canada Business Corporations Act. The transactions
contemplated under these plans have been completed.
The new Stelco is positioned to establish itself as a viable and
competitive steel producer for the long term. It has a new $600 million asset
backed loan facility; a $375 million secured revolving term loan; a low
interest loan of $150 million from the Province of Ontario; a plan in place to
pay its pension plan deficiency, and $143,000,000 in new equity through the
issuance of New Common Shares to Tricap Management Limited, Sunrise Partners
Limited Partnership, Appaloosa Management L.P., Mr. Rodney Mott (the Company's
new president and chief executive officer), and other former creditors that
elected to receive additional common share equity in lieu of a portion of the
cash distributions which they otherwise would have received.
A new board of directors has assumed office. Its members, as announced on
previous occasions, are Messrs. Courtney Pratt (Chairman), Dennis Belcher,
Laurie Bennett, Steve Cohn, Pierre Dupuis, Peter Gordon, John Lacey, Cyrus
Madon and Tony Molluso.
Upon the Company's emergence from the CCAA process and the assumption of
office by the new board of directors, the resolution appointing Rodney Mott as
Stelco's president and chief executive officer as of April 1, 2006 took
immediate effect.
The board of directors has authorized a personal investment in the
Company by Mr. Mott, who will purchase 1 million New Common Shares of the
Company at a purchase price of $5.50 per share, for total proceeds of $5.5
million. The transaction is expected to be completed on Monday, April 3, 2006.
The board has also adopted an employee Stock Option Plan subject to
necessary approvals. Like similar plans in other companies, it is designed to
assist in the retention and motivation of key employees. The Plan is also
intended to assist in the Company's pursuit of improved shareholder value and
long-term financial performance.
2.61 million New Common Shares are reserved for issuance under the Stock
Option Plan. The board has now allotted 1.94 million of those shares,
including an allotment to Mr. Mott of stock options for the purchase of 1.04
million of those 1.94 million shares, at an exercise price of $5.50 per New
Common Share. The options will vest over a four-year period in equal
installments on a semi-annual basis beginning in September 2006.
A number of new securities issued in connection with Stelco's
restructuring plan will be listed and commence trading on the Toronto Stock
Exchange on Monday, April 3, 2006. The New Common Shares, carrying one vote
per share, will trade under the stock symbol STE. The New Secured Floating
Rate Notes, to be quoted and traded in U.S. funds, will trade under the stock
symbol STE.NT.U. The New Warrants, each of which entitles the holder to
purchase one New Common Share at a price of $11.00 on or after June 28, 2006
until March 31, 2013, will trade under the stock symbol STE.WT.
The securities and cash being distributed to Affected Creditors under the
Restructuring Plan will be distributed on Monday, April 3, 2006. However, no
securities or cash are being distributed to Affected Creditors who held the
9.5% convertible subordinated debentures due 2007 which the Court supervising
Stelco's restructuring has ordered be held by the Monitor, in trust, pending
resolution of the litigation over the entitlement to these distributions.
Also, with respect to Affected Creditors who held Stelco's 8% debentures due
2006 or 10.4% debentures due 2009, $2,200,000 and $1,800,000 respectively of
the cash payable to those Affected Creditors has been paid to the respective
trustees of those debentures, in trust, in respect of the litigation over the
entitlement to the distributions as between the Corporation's previous
debentureholders.
After taking into account the issuance of securities under the
Restructuring Plan and to Mr. Mott and other employees, Stelco will then have
outstanding:
-- 27,100,000 New Common Shares;
-- 2,269,600 New Warrants; and
-- US$235,070,000 of New Secured Floating Rate Notes,
plus options to purchase 1.94 million of the Company's New Common Shares.
Interest on the New Secured Floating Rate Notes will be payable in
semi-annual installments on March 31 and September 30 of each year and will
float with the London Interbank Offering Rate. The interest rate applicable
from March 31, 2006 to September 30, 2006 is 10.61%.
Copies of indentures in respect of the New Secured Floating Rate Notes
and the New Warrants will be available at www.mccarthy.ca/en/ccaa/ today and
will be posted on www.sedar.com early in the coming week.
About Stelco
Stelco is one of Canada's longest-established steel companies. It is
focused on its two Ontario-based integrated steel businesses located in
Hamilton and in Nanticoke. These operations produce high quality value-added
hot rolled, cold rolled, coated sheet and bar products. 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 2005 Annual Report. To learn more about Stelco and its
businesses, please refer to our Web site at www.stelco.ca.
