Stelco’s takeover by U.S. Steel no net benefit for Canada – by Jennifer Wells (Toronto Star – January 30, 2016)

The 2007 takeover ended in insolvency and is now mired in the courts. It’s hard to imagine a sorrier corporate saga than U.S. Steel’s disastrous foray into Canada.

I refer, of course, to the 2007 takeover of Stelco, just one of a spree of foreign takeovers that substantially contributed to a diminishment of Ontario’s profile on the world economic stage. (Think Falconbridge, Inco, Rio Algom.)

At the height of the foreign takeover mania, the federal government of the day offered repeated assurances that the Investment Canada Act provided all the protections necessary to ensure such transactions would be of “net benefit” to Canada.

In remaking Stelco into U.S. Steel Canada Inc., the Pittsburgh parent committed to a number of binding undertakings, 31 in all. Chief among them were production levels (an increase in annual steel production to at least 4.3 million tons a year) and employment (no fewer than 3,950 full-time employees).

Seven years later, in September, 2014, the Canadian operation was granted protection under the Companies’ Creditors Arrangement Act, which is still winding its way through the courts. So that pretty much tells you that events did not unfold as planned.

What happened in the intervening years — and what is expected to be ruled upon soon by Ontario Superior Court Justice Herman Wilton-Siegel — is a singular case of secrecy involving the previous federal government, the current federal government and the U.S. corporate parent. On the losing end: the public interest.

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