A junior Canadian steel company is pushing a bid to bring former Hamilton steel maker Stelco back to life and put the company now owned by United States Steel Corp. back into Canadian hands.
Lakeside Steel Inc., led by Hamilton-born and raised Vic Alboini, said yesterday that it has filed for intervenor status in Federal Court hearings into alleged breaches by U.S. Steel of job and production commitments it made two years ago in getting government approval for its $1.2-billion takeover of Stelco.
Pittsburgh-based U.S. Steel has said the global recession left it with no choice but to shut down most of its Canadian operations this spring, according to documents filed in court.
The shutdown put about 1,500 former Stelco employees out of work and has devastated the steel-industry reliant industrial community of Hamilton, about 65 kilometres southwest of Toronto.
Ottawa is taking the unprecedented step of suing the American industrial giant to force it to live up to its commitments.
Lakeside already owns Stelco's steel pipe and tubular assets, which it bought in 2005, a year after Stelco filed for bankruptcy protection from creditors.
It wants to see U.S. Steel forced to sell the former Stelco and is looking to step in as a buyer.
"The Lakeside alternative being proposed to the court would repatriate a former Canadian icon and resume operations immediately at the Hamilton and Nanticoke facilities," Mr. Alboini, chairman and chief executive of Lakeside, said yesterday.
"We believe this is a viable business solution to address the difficult reality at U.S. Steel Canada."
The move is both patriotic, but also good timing for Lakeside since the value of the former Stelco has plummeted as a result of reduced steel production in the global recession.
"I think it's an opportunity," said Mr. Alboini, whose worked as a summer student at Stelco years ago, and whose father also had a job at the iconic steel maker.
"We've come through a period of global carnage. Steel demand has fallen dramatically, the share price of steel companies have come way off."
U.S. Steel paid about $1.2-billion and assumed about $800-million in debt, for Stelco in the fall of 2007. At the time the Hamilton company had annual revenue of about $2.4-billion.
Mr. Alboini wasn't specific on what he thought Stelco was worth today. He said the value depends on the company's current debt load. He estimates annual revenue is roughly $1-billion today.
If the debt was still $800-million "the equity value has dropped dramatically," he said.
"We just don't know what they've done," Mr. Alboini said of U.S. Steel.
"But it's not a big price. I think the price is going to be in the startup and meeting the commitments."
Mr. Alboini is also president and CEO of Toronto-based merchant bank Jaguar Financial Corp., which owns 25 per cent of Lakeside. It also owns 18 per cent of Royal Laser Corp. Mr. Alboini said the two companies are looking at "all types of acquisitions" with an eye to increasing production.
"All we've done today is take the first small step," Mr. Alboini said.
"We have a plan in place to try to create a Canadian-owed icon, or to repatriate a Canadian-owned company that has a North American focus."
Lakeside, based in Welland, Ont., makes steel pipe and tubing for the oil and gas, mining, automotive and commercial and industries.