U.S. Steel Canada files for creditor protection – by Greg Keenan (Globe and Mail – September 17, 2014)

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Toronto — United States Steel Corp. could sell all or part of the assets of U.S. Steel Canada Inc., as it restructures its Canadian unit, which was granted protection from creditors Tuesday under the Companies’ Creditors Arrangement Act.

U.S. Steel Canada, (USSC) consists of the operations of the former Stelco Inc., that U.S. Steel purchased in 2007. The filing culminates almost seven years of turmoil at what was once Canada’s largest steel maker and one of the country’s blue-chip manufacturers. Since the takeover of Stelco, U.S. Steel has locked out employees at operations in Hamilton, Ont., and Nanticoke, Ont., and engaged in a battle with the federal government companies–later settled–over whether the steel giant was breaking promises it made to Ottawa when it bought Stelco.

“The stay of proceedings and related relief sought in this application will provide USSC with the necessary ‘breathing room’ to allow it to carry out a restructuring, including continuing discussions with its key stakeholders,” U.S. Steel Canada said in a court filing, “and to explore restructuring solutions including, potentially, a consensual restructuring of certain material obligations, a sales process to solicit interest in purchasing all or part of USSC’s business, and/or other restructuring processes.”

The company filed for protection after racking up losses before interest, taxes, depreciation and amortization of $1.5-billion between 2008 and 2013, it said in the filing. That period included the recession of 2008-2009, when steel demand shrank dramatically in North America as auto makers slashed production and construction slowed to a trickle.

Stelco went through a protracted and bitter restructuring under the CCAA that began in 2004, at the time citing a looming pension deficit.

U.S. Steel Canada noted a similar pension crisis in its court filings Tuesday, saying its pension plans for workers in Hamilton and its Lake Erie works in Nanticoke face a solvency deficiency of $838.7-million.

Liabilities for other employee benefits amount to $787.9-million.

Interest payments of $162.5-million are due to U.S. Steel by the end of the year, Paul Steep, a lawyer for the Canadian unit, told the Ontario Superior Court of Justice Tuesday evening.

The parent company is prepared to provide debtor-in-possession financing of $185-million, which should be sufficient through the end of 2015, Mr. Steep said.

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