U.S. Steel Canada plant near Nanticoke, Ontario.Fred Lum/The Globe and Mail
As the restructuring of U.S. Steel Canada Inc. drags on, the United Steelworkers union is seeking reinstatement of health-care benefits for its members, salaried employees and retirees want pension payments restored and the company's former parent says the whole process is taking too long.
Those issues are scheduled to come to a head next week when the Ontario Superior Court rules on U.S. Steel Canada's (USSC) request to extend protection under the Companies' Creditors Arrangement Act until Nov. 30. An extension to that date would mean the company operated under court protection for more than two years and for a longer period than its predecessor company, Stelco Inc.
The potential sale of U.S. Steel Canada is proceeding, the company said in a court filing, but more time is needed "to facilitate negotiations and consultations between remaining bidders and stakeholders to determine whether a going-concern transaction for the entire business is possible; and if not, to proceed with an alternative transaction or combination or transactions, whether going concern or otherwise."
The salaried employees and retirees support the extension, but they have served notice that their claim against U.S. Steel Canada for lapsed pension payments ranks ahead of the $2.2-billion in claims made by United States Steel Corp.
"The pension plan beneficiaries are priority creditors – ranking ahead of United States Steel – over the amounts currently owing by U.S. Steel Canada," Bill Missen, a salaried retiree, said in a court filing.
The court granted the company relief from making full monthly payments, but by the end of July, it will owe $124.6-million to its defined benefit pension plans, Mr. Missen said. If the payments are skipped through to the end of 2016, the plans will be owed $213.7-million.
The union, meanwhile, is urging the court to turn down a request by the company to pay retention bonuses of $1.6-million to managers who are considered key parts of the operation.
Instead, the money should be used to help restore health-care benefits to unionized retirees, the union said in its submission to the court.
Those payments were suspended last year, although the Ontario government has financed an emergency fund to help pay for some costs.
"We see retirees who have exhausted all their savings and who must now scramble to find the money to buy medical supplies or to go to the dentist," Tony DePaulo, an assistant to USW District 6 director Marty Warren said in an affidavit. "Given the hardship experienced by the retirees, it is virtually inconceivable to them that USSC has given management bonuses and salary raises at a time when it has claimed [benefits] must be suspended because it cannot afford to pay for the benefits."
U.S. Steel's motion said court protection should not be extended beyond Aug. 12.
"If a deal has been reached with a potential purchaser, a timetable to present a plan and finalize the potential sale will need to be established," U.S. Steel said. If there is no purchaser, there should be a discussion about whether the sales process should continue or whether alternative steps should be taken, the steel maker said.
The withdrawal by New York-based private equity fund KPS Capital Partners LP last week from bidding for U.S. Steel Canada and Essar Steel Algoma Inc. has left Bedrock Industries Group LLC as one bidder for U.S. Steel Canada, sources said.