Holders of Stelco Inc. debt squared off with company lawyers and employee representatives yesterday on the company's restructuring plan, with Mr. Justice James Farley of the Ontario Superior Court saying he will issue a decision today on whether the plan can go to a vote.
Debt holders first sought an adjournment of the company's request that the restructuring plan go to a vote on Nov. 15, but Judge Farley turned them down and agreed to hear arguments on the plan and key Stelco agreements with the Ontario government, Tricap Management Ltd. and two United Steelworkers locals.
Those deals form the basis of the restructuring plan that Stelco hopes will allow it to emerge from protection under the Companies' Creditors Arrangement Act by the end of the year.
Lawyers for bondholders reiterated yesterday, however, that they're the only ones with a vote and, at the moment, they will defeat the plan. "The proposed plan will not succeed," Richard Orzy, a lawyer for the bondholders, told Judge Farley yesterday.
The agreements that underlie the plan include a $450-million Tricap refinancing, a $100-million loan from Ontario that will contribute to a $400-million down payment on Stelco's $1.3-billion pension solvency deficiency and new contracts with USW locals in Nanticoke, Ont., and Edmonton.
The new contract at local 8782 at Stelco's crucial Lake Erie Works in Nanticoke includes a $3,000 signing bonus for the mill's 1,000 workers, and wage increases ranging from 8 per cent to 11 per cent over three years, including a cost-of-living adjustment.
In addition, there will be profit sharing cheques, but no increase in pension payouts for the length of the three-year agreement.
Members of the local were given details of the new contract yesterday, but won't vote on it until after Stelco's creditors vote on the restructuring plan next month.
If there are substantial changes to that plan, the union leadership is no longer required to recommend that members vote in favour of the agreement.
If they turn down the contract, the clock will start ticking again on a 90-day strike notice that the local issued during the summer, but suspended after reaching a new tentative agreement last month in intense negotiations with the company. There are about 30 days left on the strike clock.
The agreements were supported by lawyers for the company, the Ontario government, the international arm of the union and five of six Stelco USW locals, salaried employees and salaried retirees.
At stake for employees are their jobs and their livelihoods, said John Varley, a lawyer for the salaried employees. "At stake to the bondholders is a blip on their quarterly reports," he told a standing-room-only courtroom.
Mr. Orzy said the creditors were kept out of the serious negotiations even though they're the only group that has a vote on the plan.
"The fix is in between the province, the United Steelworkers, Tricap and Stelco," he declared.
A lawyer for Tricap said during the morning session that the Brascan Corp. restructuring fund was not prepared to extend a deadline of yesterday for its agreement, but later relented and said it was acceptable for Judge Farley to issue a decision today.