More on the Algoma story …
Algoma Steel Inc. announced late Monday its board of directors has called a special meeting of shareholders to be held in Toronto on March 22, 2006.
The meeting had been sought by Paulson & Co. Inc. of New York, the holder of 19 per cent of Algoma’s common shares, who is demanding a recapitalization that would enable the company to distribute at least $400 million in cash to its shareholders.
Paulson also wants Algoma shareholders to vote on a resolution that would replace a majority of Algoma’s current directors with nominees of Paulson.
Earlier, the United Steelworkers union, which represents current and retired employees at Algoma, filed motions in Ontario Superior Court on Monday seeking to block Paulson’s cash distribution plan.
The union said Algoma Steel records indicate that a capital investment of $50 million a year is required just to keep the operation running. In addition, Algoma Steel has significant unfunded pension and health-care benefit liabilities, it said.
“Paulson’s proposed cash grab would leave the company financially vulnerable at a time when steel prices have begun to retreat from the record highs they reached in the past year,” union spokesman Wayne Fraser said in a statement.
“Algoma’s cash is vital to the company’s future. Without it, the company will not be able to retire its high-interest debt or complete a planned blast furnace reline.”
Also some coverage here: Bloomberg.com
and here Globe and Mail
which included this interesting tail paragraph
Algoma, which has dived into bankruptcy protection twice in the past 15 years, says it needs to hold on to some of its cash because steel prices and costs are uncertain right now. The steel maker recently reported a third-quarter profit of $30.8-million, down from $121.6-million a year earlier, when steel prices had hit a record high.
My previous articles about Algoma:
Algoma Steel Rejects big Shareholders
Algoma Steel drops out of bidding war for Stelco
Big Steel faces it’s next Revolution
Algoma Steel earns $10.1M profit
and another blogger who liked our reporting … The Stalward – Plundering Algoma Steel
By the way, here’s the weather on Sunday in Algoma District, Sault St. Marie area. I tried to upload the picture from the weather article above, but it didn’t work, not sure why.