Stelco files for bankrutpcy to aid in restructuring

By Jeff Pines

Washington, Jan. 29 - Stelco Inc. said it obtained court approval to restructure under the Canadian Companies' Creditors Arrangement Act.

The order also covers CHT Steel and the previously closed Welland Pipe. The company's filing does not cover AltaSteel, Norambar and Stelfil.

"A thorough financial and strategic review has concluded that we face a serious viability issue. Our problems include a high cost structure, a deteriorating cash position and an inability to compete against other steel companies that have benefited from their own restructurings. The company cannot continue to produce losses and consume considerable amounts of cash. We need to reduce our costs, improve productivity, focus on key operations and products, and become more competitive," said Courtney Pratt, Stelco's president and chief executive officer in a press release.

If the order is approved, Stelco's existing lending syndicate will maintain the company's $350 credit facility and grant it access to another $75 million in debtor-in-possession financing. The lending syndicate is led by CIT Business Credit Canada Inc. and also includes GE Commercial Finance and Fleet Capital.

If the court approves, Ernst & Young will be the court-appointed monitor and help the company develop a restructuring plan.

Hamilton, Ont.-based Stelco is Canada's largest steel company.

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