Stelco creditors oppose restructuring plan but are willing to negotiate, monitor says

New York, Sept. 30 - Stelco Inc.'s court-appointed monitor said a majority of creditors have indicated they will vote against the company's planned restructuring - but some have also indicated that they believe the company is making progress and are prepared to negotiate.

The monitor's comments came in its 38th report, made following filing with the Ontario Superior Court of Justice of a restructuring plan agreed with Tricap Management Ltd., the Province of Ontario, the USW International and USW Local 8782.

Creditors representing more than 50% by dollar value of the claims against Stelco have contacted the monitor to express concerns or opposition, the monitor said.

However "a number of the affected creditors that have contacted the monitor have also indicated their belief that the filing of the plan was a productive step and provides a framework within which to attempt to negotiate a consensual solution."

In addition, the contacts came before the creditors were given an information circular on the plan.

"The monitor observes that the above-noted agreements offer Stelco a pension funding solution, committed CCAA [Companies Creditors' Arrangement Act] exit financing and labor co-operation. Without these agreements, the monitor notes that Stelco would likely find itself back in the midst of stalled negotiations," the monitor said in a news release.

As a result, the monitor is recommending that the court authorize Stelco to enter into the restructuring agreements.

On Sept. 20, Stelco announced that it had filed a restructuring plan with the Ontario Superior Court that provides C$630 million in net liquidity and gives unsecured creditors all the new equity in the restructured company, according to a company news release.

Stelco also filed a restructuring agreement with the Province of Ontario that includes an arrangement for funding the company's pension plans.

Stelco, a Hamilton, Ont.-based steel company, filed for bankruptcy under the Companies Creditors' Arrangement Act on Jan. 29, 2004.

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