TORONTO (Reuters) – The United Steelworkers of America said on Wednesday it has signed a letter of intent with Brascan Corp. to offer a plan to recapitalize Stelco Inc. and bring Canada’s biggest steelmaker out of bankruptcy protection.
The Steelworkers said the C$1.35 billion ($1 billion) financing plan includes an immediate C$500 million contribution to Stelco’s pension plans and C$100 million to repay the company’s creditors.
The remaining C$750 million would be retained within Stelco so the steelmaker can fund its capital expenditure program and general corporate purposes.
The Steelworkers union represents almost 5,000 of Stelco’s roughly 8,900 employees.
Stelco, which entered bankruptcy protection in January 2004, is working on a plan to raise capital on equity and debt markets after snubbing several takeover offers to help it emerge from the Companies’ Creditors Arrangement Act.
A spokeswoman for the Hamilton, Ontario-based steelmaker said Stelco is looking over details of the Steelworkers-Brascan plan and expects to release comments shortly.
A few hours later,
Stelco Rejects Offer From Steelworkers And Brascan
Stelco Inc. turned down a financing plan from the United Steelworkers of America and Brascan Corp. on Wednesday as the insolvent steelmaker said it has started working toward raising capital on its own.
Stelco said Brascan already had its a chance to step into the process when the company was entertaining takeover offers during a court-approved process that ended in February.
The steelmaker snubbed several takeover offers to help it escape the Companies’ Creditors Arrangement Act and later got court approval to work on its own plan for raising capital.