U.S. Steel Canada sale behind-the-scenes maneuvers have workers worried
Steelworkers call for government intervention in sale process
Unionized steelworkers are nervously eyeing the bidders that remain in a months-long process to buy U.S. Steel Canada and take over its Hamilton and Nanticoke operations.
One bidder has reportedly been knocked out of the running to buy U.S. Steel Canada, which has been operating under bankruptcy protection through the Companies' Creditors Arrangement Act since 2014.
We don't need a hedge fund that intends to make huge profits at the expense of workers and pensioners.- Gary Howe, USW Local 1005
A spokesman for U.S. Steel Canada said the company "won't discuss the identity or number of participants currently involved in the process" in order to abide by a non-disclosure agreement.
But spokesman Trevor Harris said the process had winnowed out at least one party due to concerns about sufficient financial strength.
"I can confirm that certain parties previously involved are no longer involved in the Sales and Investor Solicitation Process, following a conclusion that they would not be able to complete a qualified bid that could result in a going concern solution," Harris said.
Indian-based Essar reportedly kicked out
The Hamilton Spectator reported that the party knocked out was Essar Global, a company based in India that took over Algoma Steel Inc. in Sault Ste. Marie in 2007. Essar Algoma entered bankruptcy protection under the CCAA last fall.
Union leaders issued a quick response condemning the decision.
"Essar Global has indicated it is more committed than other bidders to protect jobs, pensions and retiree benefits," said United Steelworkers Ontario Director Marty Warren in a press release.
"We're calling on the provincial government to intervene immediately and to use every means at its disposal to stand up for the best interests of our working families, pensioners and communities."
Offensive and defensive
One of the bidders left in the U.S. Steel running is KPS Capital Partners Inc., which has recently been nominated as the winning bid to buy Algoma.
That bid is subject to court and provincial approval and is also contingent on the investor meeting certain conditions, such as agreements about employees, benefits, and environmental regulations.
The Globe and Mail reported last week that that company, KPS, is interested in merging Algoma with U.S. Steel Canada.
Mike Psaros, that company's co-founder, told the Globe that the company is not planning to shut down any mills at the companies.
"There are offensive mergers and defensive mergers," Psaros said. "In defensive mergers, you put two companies together and you shut stuff down. This is an offensive merger."
'We don't need a hedge fund'
It has been widely reported that the other remaining bidder is another New York City firm, Bedrock Industries.
The head of the Hamilton steelworkers Local 1005, Gary Howe, is skeptical.
"We don't need a hedge fund that intends to make huge profits at the expense of workers and pensioners," Howe said. "We have to ensure this restructuring benefits the long-term interests of workers, pensioners and our communities."
Former mayor Larry Di Ianni has also publicly advocated for the sale process to take into account broader needs.
"USSC needs a long-term, strategic buyer, not a financial wizard from Wall Street looking to turn a quick profit," Di Ianni said in a commentary sent to CBC. "Hamilton has seen that movie before."