The city is joining U.S. Steel Canada workers and retirees to demand the release of the secret agreement that ended a lawsuit over the company's broken employment and production promises.
In a motion to be heard in Superior Court on Monday, the group argues they have a stake in USSC's restructuring but are handicapped without information about all the company's promises and obligations.
At the same time, the union, a retired couple and the provincial government have filed objections to U.S. Steel's claim it is owed more than $2.2 billion by its Canadian arm.
"It is very important to USW and our members that we be fully involved in the (restructuring) process. We are the largest arm's-length creditor in the proceeding," said Tony DePaulo, assistant to the union's Ontario-Atlantic director in an affidavit.
"Millions of dollars of Canadian public funds are at stake in this insolvency proceeding. USW members, as taxpayers and members of the public, have an interest in an open and transparent court process, which includes having access to relevant documents, including the Settlement Agreement."
U.S. Steel was granted federal approval to buy Stelco in 2007 with a package of 31 promises. Those included employing an average of 3,105 workers and producing 14 million tons of steel in three years.
Barely a year after making that commitment, however, the company had idled most of its operations in Hamilton and Nanticoke, laying off 1,500 workers and shipping vital steelmaking ingredients like coke to its U.S. plants to continue serving Canadian customers.
Ottawa sued in 2009, but after winning all the preliminary rounds, it suddenly dropped the case in 2011 in exchange for promises of capital investment in the Canadian plants and some small community grants.
The full details of that deal have never been made public despite repeated requests from the city, the province, workers and retirees.
The union, representing 1,600 active workers and 10,000 retirees in Hamilton and Nanticoke, says it has $1.5 billion at stake in the process while the city's stake includes $8 million in property taxes and water revenue, the future of 329 hectares of industrial land on the bayfront, and the health and other needs of 7,000 local pensioners.
Mayor Fred Eisenberger said the city is backing the effort because "we need full disclosure on the commitments the company has made. We all want full accountability so we can advocate for the retirees going forward."
Coun. Scott Duvall, chair of the city's steel issues subcommittee, praised the city "for not just being bystanders, but for working right with the union to get these answers."
Coun. Sam Merulla, vice-chair of the subcommittee, has been calling for the release of the settlement agreement since last year.
"That settlement is the crux of the problem we're facing right now," he said in an interview. "Because of that agreement, we're facing the loss of hundreds of jobs and millions in taxes."
In a news release announcing its objection to U.S. Steel's debt claims, the union called on the court to reject the company's "outrageous demand to give itself creditor preference over thousands of pensioners" of the Canadian arm.
"Basically U.S. Steel says it owes itself and will take care of itself before fulfilling its legal obligations to its retirees," said USW Ontario director Marty Warren. "We will do everything we can to defend the interests of our members and pensioners and ensure that U.S. Steel is held to its obligations."
Gary Howe, incoming president of USW Local 1005, added "it's shameful that U.S. Steel, which created this situation in the first place, wants to trample over seniors and see these pensioners worry about losing part of their incomes."
The union's fear is that if the American parent company is allowed to buy the Canadian assets for what it claims it is owed, there will be no cash from the sale to top up the company's heavily underfunded pension plans.
The pension plans, which support more than 14,000 Stelco and USSC retirees, were underfunded by $830 million at the end of 2013. A new valuation report is being prepared.
The union's position is supported by a separate action by retirees Robert and Sharon Milbourne. They say allowing the American company's claim would be a "fundamental distortion" of the creditor protection law under which the company is sheltering.
In its objection, the province questions the "validity and enforceability" of some of the company's claims.
The company has defended its actions as a response to the collapse in steel demand during the 2008-9 recession. In an emailed statement, company spokesperson Trevor Harris said any comment "would be inappropriate" because the matter is currently before the court.
Source: the spec
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