Ontario Superior Court Justice Herman Wilton-Siegel said Tuesday night he was satisfied that “considerable progress” has been made in U.S. Steel’s bankruptcy protection application and he’s hopeful an agreement will be finalized tomorrow afternoon.
Wilton-Siegel adjourned a brief court session at 6:50 p.m., almost three hours after the proceeding was set to begin and after reporters had been told it was unlikely court would open at all Tuesday. The next hearing is set for 3:15 p.m. ET Wednesday, in Toronto.
Around 6 p.m., Bill Aziz, the court-appointed chief restructuring officer for U.S. Steel Canada, said the lawyers from U.S. Steel and those opposed to its proposed restructuring, including a Hamilton steelworkers’ union and the province, were engaged in “constructive” talks and that he was “optimistic something will get done.”
The negotiations are set to continue into Tuesday night. Some discussions on legal language began as soon as Wilton-Siegel left the courtroom. Aziz said it’s his expectation an agreement would be presented to open court, possibly on Wednesday, though no time was set.
U.S. Steel’s bid to have a bankruptcy protection plan that includes a $185 million debtor-in-possession (DIP) loan from its American parent company, U.S. Steel Corp., was set to resume at 2 p.m., but was pushed back to 4 p.m. After over two hours in court, reporters were told the negotiations, which are part of the Companies’ Creditors Arrangement Act (CCAA) process, would be continuing into the night and it was unlikely anything would be presented in open court until at least Wednesday.
Because the negotiations are happening behind closed doors, it’s unclear what issues are being debated, something that has rankled steelworkers — including the dozens who attended court on Monday before Wilton-Siegel granted a swift adjournment so lawyers could keep working toward an agreement.
One of the key issues is likely U.S. Steel Canada’s DIP plan, which the steelworkers’ union, province and City of Hamilton have all filed objections against.
Local 1005 President Rolf Gerstenberger said the union is “very concerned” with U.S. Steel Corp. being the lender in the proposed DIP arrangement, but did not call it a non-starter.
Gerstenberger said the DIP term sheet, as it stands now, lays out a series of events that could determine a default, which he says is U.S. Steel looking out for its own best interest.
“It’s designed to make sure U.S. Steel gets what they want,” he said, by phone.
In its objection filed with the court, the union raised several other complaints with U.S. Steel’s restructuring plans including the way the Hamilton and Nanticoke, Ont. will be sold separately in the process — Gerstenberger says the two plants need each other to operate effectively.
The union also wants disclosure of U.S. Steel’s 2011 settlement with the federal government under the Investment Canada Act.
Gerstenberger said it’s “hard to tell” if the lawyers involved will be able to work toward a consensus, and said any agreement made needs to satisfy the union’s objections.
In its objection, the province of Ontario cited seven problems with the DIP application, from the lack of “meaningful consultation” with stakeholders, to list of events that would trigger a default.
“The DIP Facility restricts key USSC stakeholders, including the Ontario Ministry of Environment, from exercising their legal rights by making the exercise of such rights an Event of Default,” the objection states.
A spokeswoman for Finance Minister Charles Sousa wouldn’t say if the DIP arrangement was a deal-breaker for the government, saying only: “We objected to their proposal as filed for the reasons outlined in the Notice of Objection.”
“We are continuing to work with the other parties through the legal process to ensure that any DIP financing provided is provided under terms that are fair to employees, pensioners and serves the best interest of Ontario,” said Susie Heath.
Trevor Harris, U.S. Steel Canada’s Director of Government and Public Affairs, said he couldn’t comment on the ongoing negotiations.
Source – cbc
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