Perhaps I should have called this article “As the Stelco Turns”.
Down the road from us about an hour and a half is Hamilton, home to two large steel companies Stelco and Dofasco and a bunch of subsidiaries. It’s pretty much a steel town. As is Buffalo, about another hour south of Hamilton. When I was a kid growing up in Toronto, they taught us in school that Hamilton and Buffalo were large steel towns situated where they are because of access to the great lakes, to bring the coal and the iron ore in and the finished steel to market. Seems irrelevant these days, but I guess once a place gets set up as a steel town, it kinda sticks.
Dofasco pulled itself out of bankruptcy (eventually – it took some significant work). Stelco is trying to do the same. But this is like the Algoma story I did a while ago … I’m not sure that the stock market is good for long term investment companies like steel and aluminum mills.
Basically, everyone is scrabbling over Stelco at the moment because steel prices are high. Everyone (the unions, the creditors, probably the board too) wants a piece of the current, fleeting prosperity. But it would be wiser to pay down debts with the money and put the house in order if Stelco is to survive beyond the current steel bubble (which is going to burst sooner or later, probably sooner). But shareholders, and even bond holders, don’t seem to know (or even care) about the steel marketplace …
National Post online
After nearly two years of bankruptcy protection for Stelco Inc.. the insolvent steelmaker’s creditors are expected to vote on the company’s restructuring plan Monday.
The Hamilton-based steelmaker is labouring to pull itself out from 22 months of bankruptcy protection.
After more than a year and a half of fighting with workers and creditors, it circulated a plan earlier this fall detailing how it intends to refinance and emerge as a new company.
On Tuesday, its creditors gathered at a Mississauga, Ont., conference centre to finally cast their ballot on Stelco’s plan. But chief executive Courtney Pratt was forced to apologize as he told them the meeting was being cancelled.
The steelmaker’s bondholders were going to vote the plan down, despite negotiations that stretched right up until the last minute.
Rather than allow that, Stelco decided to postpone the vote until 9 a.m. Nov. 21.
Update later on Monday …
Stelco Inc. announced today that the meeting of its creditors to consider and vote upon a restructuring plan has been further adjourned until Wednesday, November 23, 2005. The Company indicated that the meetings of creditors of its subsidiaries will also be adjourned to the same date.
At the first of the meetings scheduled to take place today, the Company recommended to the Court-appointed Monitor that an adjournment was appropriate so that intensive negotiations among stakeholders can continue and so that a plan can be filed and circulated prior to a vote on Wednesday. The Monitor then exercised its discretion and allowed the adjournment.