The union representing workers at U.S. Steel Canada Inc. is cautiously optimistic a proposed acquisition of the company by a U.S.-based holding company will lead to a “good final deal” for retirees at the struggling steelmaker.
“We have been in discussions for quite some time with the province and various potential buyers about a restructuring of U.S. Steel Canada that would be good for our members and our retirees,” said Marty Warren, the United Steelworkers’ Ontario director, in a news release following Wednesday’s announcement of a memorandum of understanding between Bedrock Industries and the Ontario government to support the acquisition of U.S. Steel Canada.
The comments follow months of legal wrangling over issues such as pensions and retiree benefits as U.S. Steel Canada seeks a buyer while operating under bankruptcy protection under the Companies’ Creditors Arrangement Act. The company, which faces a large pension shortfall, cut off retiree health benefits last year as part of the CCAA proceedings.
“The deal announced [Wednesday] is far from perfect, given the challenges that arise from such a lengthy and complex insolvency process,” said Warren.
“However, after two years in CCAA protection and after numerous discussions with other bidders, we believe this could lead to a good final deal for the union’s members and retirees.”
U.S. Steel Canada, formerly known as Stelco Inc., has been operating under CCAA protection since September 2014. In August, it rejected a bid in August by a consortium set up by the Essar Global fund. The successful bidder, Bedrock, is a U.S. holding company focused on owning and operating metals, mining and natural resources assets.
According to the government, Bedrock has committed to working with the various parties involved, including the union, salaried employees and the government. Among the outstanding issues, according the union, is the need for Bedrock to complete negotiations for new collective agreements with United Steelworkers Local 1005 in Hamilton, Ont., and Local 8782 in Nanticoke, Ont. “For its part, Ontario has agreed to a framework to support an acquisition proposal from Bedrock intended to protect pensions and assist in providing post-employment benefits,” the Ministry of Finance said in a news release yesterday.
“The province has also agreed to support the development of industrial lands on behalf of pensioners in an effort to promote the economic development of the Hamilton region while ensuring that the environment continues to be protected,” the statement added. According to a source quoted by the Hamilton Spectator, the idea is to use the proceeds from land development to benefit the pensioners.
The memorandum of understanding between the Ontario government and Bedrock, as well as the proposed restructuring, remains subject to many conditions, including acceptance by U.S. Steel Canada, ratified collective bargaining agreements with the union, agreements with certain stakeholders, government approvals and the approval of the court supervising the CCAA proceeding.
“Subject to finalizing this complex deal to the union’s satisfaction, this transaction appears to be the best available way to secure jobs for our members and offer as much protection to our retirees as possible,” said Tony DePaulo, assistant to the union’s Ontario director.
According to the Globe and Mail, the deal provides for Bedrock to invest $500 million in the company and includes a pension contribution and a payment to U.S. Steel Canada’s former parent, U.S. Steel Corp. As one of U.S. Steel Canada’s major creditors, U.S. Steel Corp. is a a key player in the outcome of the proposed acquisition.