Court postpones bid by Stelco shareholders to examine former director

Wait! Hold the presses! Just when you thought the Stelco thing was finally settling down comes this little nugget (in the middle of a larger report).

The restructuring plan essentially wipes out the value of Stelco’s current shares. The shareholder group alleges that the forecasts the plan is based on lowball the Hamilton-based steelmaker’s value.

Navigant’s report uses Stelco’s valuation model, but substitutes steel price forecasts consultant received from Metal Bulletin Research. The report concludes that Stelco’s shareholder equity is worth between $1.1 billion and $1.3 billion, which translates into between $10.76 and $12.71 a share.

In court documents prepared for Friday’s hearing, Murray Pollitt, president of Pollitt & Co., alleged that Stelco’s management and board actively undermined Stelco’s shareholder equity through inaccurate information released to its stakeholders.

‘It is my belief that Stelco was cynically using the (creditor protection) process to compromise the legitimate interests of its various stakeholders including its employees and the unions, its retired pensioners, its creditors and, most significantly, its equity holders,’ Pollitt said.

In an affidavit, James May, a consultant with Metal Bulletin, said his base estimate for hot rolled steel coil in 2006 is $525 per ton. Stelco’s forecast was $458 per ton.

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