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Stelco gets court order approving C$200 million fundraising
By Jeff Pines
Washington, Oct. 19 - Stelco Inc. said it has court approval to proceed with raising C$200 million and to sell non-core assets and said that it has reached a supply agreement with General Motors for 2005.
As previously reported, the Hamilton, Ont., steel company's bondholders will get first crack at offering a C$200 million financing proposal to the company. They will have until Nov. 8. The court has approved the company accepting unsolicited offers from other potential investors, it said.
After Nov. 8, Stelco will be able to solicit other financing offers.
Stelco anticipates due diligence by those interested in offering financing will be completed by Jan. 31, 2005.
UBS Securities Canada Inc. and UBS Securities LLC received court approval to help Stelco with its fundraising efforts.
Under the deal with GM, the car maker will obtain its steel from another source for the first quarter of 2005. For a 30-day period beginning this Tuesday, GM will defer any further sourcing activities for 2005's remaining quarters. If GM gets adequate assurances from Stelco that it can supply the car maker, then GM will agree to buy Stelco steel for the other three quarters of 2005.
The assurances are a labor pact with Stelco's Lake Erie and Hamilton unions to be in place for all of 2005 and Stelco must demonstrate it can get the equity commitment and financing so it can emerge from bankruptcy.
Stelco filed for protection under Canada's Companies' Creditors Arrangement Act on Jan. 29, 2004.
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