Steelworkers call on Stelco to admit bankruptcy was a sham or end Deutsche restructuring plan

New York, Jan. 14 - The United Steelworkers called on Stelco to admit that its bankruptcy filing was a "sham" or to "disassociate" itself from a restructuring proposal from Deutsche Bank.

The call came from the union's national director Ken Neumann in a letter to Stelco chief executive officer Courtney Pratt.

Neumann said he made his challenge in response to comments from Pratt that Stelco's proposed restructuring with Deutsche Bank does not address pension plan deficiencies.

"A key basis ... for Stelco's application for court protection from creditors was its assertion that the pension deficit was an obligation that so overwhelmed the value of Stelco's assets as to make the company insolvent," Neumann said in the letter.

"It is doubtful in the extreme that Stelco would have been granted insolvency protection without the representations it made about the pension deficit."

Chief restructuring officer "Hap Stephen swore before the court that in a fairly conducted sale under legal process, the value of Stelco's working capital and other assets would be greatly impaired by the increased pension deficiencies that would be generated on a wind-up of the pension plans."

But Neumann noted that Pratt said in December that the Deutsche Bank plan does not address the pension problem.

"If Stelco now takes the position that the restructuring process will not address the pension deficiency ... we assume that you take the position that Stelco will remain insolvent upon its exit from CCAA [protection under the Companies' Creditors Arrangement Act]," Neumann added in the letter.

The bottom line, Neumann said in a news release, is that Pratt's December statements indicate that either Stelco was never insolvent or that the company has signed on to a deal that will still leave it insolvent once it emerges from CCAA.

Stelco, a Hamilton, Ont., steelmaker, filed for protection under the Companies' Creditors Arrangement Act on Jan. 29, 2004.

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