The legal shield protecting U.S. Steel Canada from its creditors has been extended to May 15.
Superior Court Justice Herman Wilton-Siegel granted the unopposed order Wednesday after a five-minute hearing.
Company lawyer Kelly Peters argued extending the protection was the right thing to do because "the company has met the requirements for the stay extension including acting in good faith and with due diligence in carrying out its restructuring."
That good faith and due diligence, court-appointed monitor Alex Morrison wrote in his latest report, includes processes to add up how much it owes creditors, exactly how much is needed to top up its pension plans and to restart its Hamilton coke oven battery in March, bringing about 77 employees back from temporary layoff.
At the same time, the company is formalizing a process to sell its Hamilton and Lake Erie plants and its surplus Burlington Bay land.
Morrison also said the company is in a good cash position — it has $188 million on hand, enough to finance its operations through the extension period without having to draw on a special line of credit extended by its American corporate parent.
The company, while under protection from September to December of last year, posted a profit on operations of $35.9 million — compared to a loss of $71.7 million for the January-to-August period.
While it was profitable on its operations, however, the bottom line for the year was an overall loss of almost $432 million. About half of that was attributable to the costs of changing to a new accounting standard.
In a letter to employees last week, Canadian president Mike McQuade praised workers for making the restructuring process work so far.
"The positive operating performance and cash position that U.S. Steel Canada finds itself in can largely be attributed to the hard work and dedication of our employees managing our business through these challenging times," he wrote.
"Your efforts to continue the production of high quality steel products in a safe and cost effective manner for delivery to our customers in a timely manner have contributed greatly to the improvements we have seen in recent months."
The future, he added, remains troubled.
"As we are all aware and as is noted in the Monitor's report, there are challenges that face the North American steel market in the coming months. However, with the continued resolve and commitment of our workforce, I am confident that our Company will respond to these challenges and that we will continue to compete in a challenging marketplace."
The former Stelco has been sheltering under the Companies Creditors Arrangements Act since September after pleading it was being crushed by poor business conditions, the cost of pension obligations and years of accumulated losses in Canada.
With its protection order extended, the company can now focus on negotiating down its outstanding liabilities to trade creditors, renegotiating pension obligations and pursuing a possible sale of its Hamilton and Nanticoke plants and well as its 328 hectares of Hamilton bayfront industrial land.
Source: thespec.com
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