EN /FR
U.S. Steel Canada Inc. (formerly Stelco)
Latest developments available here
On September 16, 2014 U.S. Steel Canada Inc. (“USSC”, formerly Stelco) was granted protection from its creditors under the Companies’ Creditors Arrangement Act (“CCAA”) pursuant to an Order of the Regional Senior Justice Morawetz of the Ontario Superior Court of Justice (Commercial List). The firm of Ernst & Young Inc. was appointed as Monitor in the CCAA proceedings and William E. Aziz of BlueTree Advisors II Inc. was appointed as the Chief Restructuring Officer.
On October 8, 2014, by Order of Mr. Justice Wilton-Siegel, Gary Dallin, George Hanson, Paul Wendling, Pat Mousseau, Ronald McClure, Frank Dalimonte were appointed as Representatives of all Non-USW Active Employees and Retiree Beneficiaries in USSC’s CCAA Proceedings and Koskie Minsky was appointed as Representative Counsel with respect to all matters pertaining to any recovery, compromise of rights or entitlements of said individuals under the pension plans and other benefit plans.
In accordance with the Representation Order, a Notice was sent by USSC to all Salaried Active Employees and Retirees who are affected by these appointments. To view a copy of the Notice, please click here.
As required by the Representation Order, the Notice was sent out within 14 days to all Salaried Active Employees and Retirees and the deadline to submit an opt-out was therefore set by the Company to November 14, 2014. Any person not wishing to be represented by the Representatives and our firm may opt-out by sending a letter to the Monitor by November 14, 2014.
To view the Representation Order together with the Notice, please click here.
To view court documents, orders and other publicly available information with respect to the CCAA proceedings, please visit the website of the Monitor by clicking here
If you have any questions please call us on our toll-free hotline for USSC Salaried Active Employees and Retirees at 1-866-777-6341 or email us at usscrepcounsel@kmlaw.ca.
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Latest Developments
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October 4, 2023
Members of the surplus sharing group for the Non-Core Plans (the Stelpipe Hourly Plan, the Stelpipe Salaried Plan, and the Welland Salaried Plan) should have received a letter from Stelco (sent jointly on behalf of Stelco and Koskie Minsky LLP) appending a Full and Final Release, and forms by which members of the surplus sharing group can elect to receive their surplus entitlement either as a lump sum less statutory deductions, or transferred directly into their RRSP, if eligible. The Full and Final Release and RRSP Transfer Form and/or Direct Deposit Form must be returned to Stelco Inc. c/o Mercer Pension Admnistration by October 6, 2023. Please note that the RRSP Transfer option is only available to a Plan member or the surviving spouse of a Plan member where eligible, and is not available to the estate of any individual, including that of a Plan member or that of the surviving spouse of a Plan member.
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February 22, 2023
The Financial Services Regulatory Authority of Ontario (“FSRA”) has approved the Surplus Applications filed for each of the Non-Core Plans (the Stelpipe Hourly Plan, the Stelpipe Salaried Plan, and the Welland Salaried Plan) in respect of the Surplus Sharing Agreements. The parties are now working on a notice and distribution process. We have also retained CIBC Mellon to make the distributions and they are working on setting up the infrastructure to do this. We expect to have more news to share on that process in the coming months.
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November 22, 2021
On November 22, 2021, Stelco filed Surplus Applications for each of the Non-Core Plans (the Stelpipe Hourly Plan, the Stelpipe Salaried Plan, and the Welland Salaried Plan) with Ontario’s pension regulator, the Financial Services Regulatory Authority of Ontario (“FSRA”). These Surplus Applications included Surplus Sharing Agreements signed by Koskie Minsky LLP (“KM”) on behalf of the surplus sharing group members of each of the Non-Core Plans who sent in Authorization and Membership forms.
Before the surplus can be distributed, the Surplus Applications must be approved by FSRA. FSRA is currently in the process of reviewing the Surplus Applications.
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August 10, 2021
We are pleased to announce that we have crossed the necessary member support threshold for the sharing of surplus in the Stelpipe Salaried Plan, Stelpipe Hourly Plan and Welland Salaried Plan. Now that the necessary votes have been obtained, the next step is to apply for approval from Ontario’s Financial Services Regulatory Authority. We are currently working on this application in conjunction with Stelco’s lawyers, and provided that approval is obtained, distributions to plan members should occur shortly after that.
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March 12, 2021
As of today, the Proposal has been supported by 51% of the Stelpipe Hourly Group, 60% of the Stelpipe Salaried Group, and 72% of the Welland Salaried group. Please note that in order for the Proposal to proceed, there must be two-thirds (66.7%) support from each of these groups.
While this result is promising, it is insufficient under the terms of the Proposal to proceed. Members who have not yet submitted their Authorization and Membership forms are encouraged to do so, as we will continue to accept forms beyond the February 28, 2021 deadline.
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January 21, 2021
Archived versions of the online information sessions held on January 15, 2021 are available below:
Welland Salaried Information Session
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January 13, 2021
On-line information sessions have been scheduled to discuss a proposed agreement (the “Proposal”) to share the surplus in the three registered pension plans listed below. Attendance at the information session is optional.
1.Welland Salaried Information Session – Friday January 15th, 2021 (3:00 PM to 4:00 PM (EST))
Visit: https://global.gotomeeting.com/join/879186309You can also dial in using your phone. (For supported devices, tap a one-touch number below to join instantly.)
Canada (Toll Free): 1 888 455 1389
One-touch: tel:+18884551389,,879186309#Canada: +1 (647) 497-9391
One-touch: tel:+16474979391,,879186309#Access Code: 879-186-309
2. Stelpipe Hourly Plan Information Session – Friday January 15th, 2021 (11:00 AM – 12:00 PM (EST))
Visit: https://global.gotomeeting.com/join/902068549You can also dial in using your phone. (For supported devices, tap a one-touch number below to join instantly.)
Canada (Toll Free): 1 888 455 1389
One-touch: tel:+18884551389,,902068549#Canada: +1 (647) 497-9391
One-touch: tel:+16474979391,,902068549#Access Code: 902-068-549
3. Stelpipe Salaried Plan Information Session – Friday January 15th, 2021 (1:00 PM – 2:00 PM (EST))
Visit: https://global.gotomeeting.com/join/403525461.You can also dial in using your phone. (For supported devices, tap a one-touch number below to join instantly.)
Canada (Toll Free): 1 888 455 1389
One-touch: tel:+18884551389,,403525461#Canada: +1 (647) 497-9391
One-touch: tel:+16474979391,,403525461#Access Code: 403-525-461
Archived versions will be posted here within one week of the date of the information session.
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September 2, 2020
We are pleased to report that on September 2, 2020 the Monitor commenced the third and final distribution from the Non-USW Settlement Fund (described below). We have been advised by the Monitor that distributions should be received by eligible retirees in the coming days.
As previously reported, in our capacity as Representative Counsel to all non-USW employees and retirees of USSC, we reached a settlement on April 19, 2017 (the “Non-USW Settlement Agreement“) that resulted in the creation of a separate $9 million fund (the “Non-USW Settlement Fund“) for the following claims:
a) certain claims for unfunded supplemental pension losses; and
b) certain claims arising from cessation of employment.
Under the Non-USW Settlement Agreement, claims exceeding $7,500 were removed from the class of General Unsecured Creditors and were instead granted a pro rata share of the $9 million Non-USW Settlement Fund, thereby increasing the recovery on these claims from approximately 10% to 30%. (Claims not exceeding $7,500 were paid the lesser of $7,500 and the actual amount of their claim.)
The September 2, 2020 distribution also represents the interest that accrued on the Non-USW Settlement Fund between the first and second distributions that were previously paid out by the Monitor in December, 2018 and on July 23, 2019, respectively. As the terms of the Non-USW Settlement Agreement provide that claimants with claims exceeding $7,500 are to share on a pro rata basis in the amount in the Fund, such claimants are accordingly entitled to a distribution of the accrued interest as well.
The September 2, 2020 distribution to the eligible retirees represents the final distribution from the Non-USW Settlement Fund.
To view the Notice that was sent out by the Monitor to accompany the distribution, please click here.
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July 23, 2020
Pursuant to the agreements in the 2017 Stelco CCAA Plan of Compromise reached between Stelco and its creditors, including salaried retirees, on April 2, 2020, the Financial Services Regulatory Authority (FSRA) issued a Wind Up Order for the Hamilton Salaried Pension Plan as of March 31, 2020. Morneau Shepell, the administrator of the Hamilton Salaried Pension Plan must file a wind up report within 6 months of the Wind Up Order and is currently finalizing the report. Once FSRA has reviewed and approved the wind up report, Morneau Shepell will send active and deferred members an election form within 90 days to those individuals who have not yet retired.
Members of the Hamilton Salaried Pension Plan should have received a notice from the administrator in April advising them of the Wind Up Order.
The Lake Erie Salaried Pension Plan continues to be administered by Morneau Shepell as it continues to receive proceeds from the sale of lands for the benefit of the Stelco pension plans and as a result benefits continue to be paid in full. Once the Lake Erie Salaried Pension Plan reaches full funding, it will also be wound up.
If you have any questions regarding the wind up process please do not hesitate to contact us or Morneau Shepell.
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August 22, 2019
On July 9th, 2019, Morneau Shepell Ltd., in its capacity as Plan Administrator, purchased buy-in annuity contracts for the Stelco Inc. Retirement Plan for Salaried Employees at Hamilton Works (the “Plan”) in order to secure 100% of the pension benefit entitlements of all Plan participants (i.e., retirees, beneficiaries, deferred vested members and the accrued benefits for active/transferred participants up until 12.31.2018). The buy-in annuity contracts also protect the benefits of beneficiaries and surviving spouses in the event of the death of the original pensioner where a death benefit is payable based on the form of benefit elected at retirement.
The buy-in annuity contracts* were purchased with 4 reputable, highly rated, Canadian insurers:
- The Canada Life Assurance Company,
- Sun Life Assurance Company of Canada,
- BMO Life Assurance Company, and
- Co-operators Life Insurance Company.
The buy-in annuity contracts are purely a de-risking investment decision of the Plan and the Plan is not being wound up at this time. The decision to wind up the Plan rests with the Financial Services Regulatory Authority of Ontario (known prior to June 8, 2019 as the Financial Services Commission of Ontario). Morneau Shepell will advise all Plan participants when the Plan is being wound up.
The administration of the Plan and its payroll will not change until such time as the Plan is wound-up. As such, for the time being, Morneau Shepell remains the single point of contact and all payments, communication, and any other day-to-day functions related to the administration of the Plan.
What this change means for participants:
- There will be no change to the amount of pension that participants receive or are entitled to receive — Morneau Shepell will continue to administer the Plan and pension payments
- Participants do not need to do anything – Morneau Shepell is taking care of this transition
- The transition will be seamless – there will be no break or interruption in participants’ monthly pension, if they are currently receiving one
- The Plan is not wound up — if the Financial Services Regulatory Authority of Ontario decides to wind up the Plan, Morneau Shepell will be in contact with Plan participants
For questions that are not covered in the Q&A, and in particular member specific questions, you can contact the Stelco Pension Service Centre at Morneau Shepell as follows:
Telephone: 1-844-650-2820
In writing: Morneau Shepell Ltd.
895 Don Mills Road
Tower One, Suite 700
Toronto, ON M3C 1W3
Attn: Stelco Pension Service Centre* A buy‑in annuity contract is an investment vehicle. Specifically, it’s when an insurance company agrees to cover the pension benefits for a group of participants for the rest of their life in exchange for a premium paid from the Plan’s assets.
To view the Morneau Shepell press release regarding the transaction please click here.
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March 29, 2019
Individuals who received a distribution from the Monitor under the CCAA Plan of Compromise for one of the following claims will also be sent a Qualifying Retroactive Lump-Sum Payment (“QRLSP“) Form from the Monitor:
- non-registered unfunded retirement benefit contracts (“RBC“) from USSC; or,
- special retiring allowance payments (“SRA“) from USSC; or,
- special retiring allowance arrangements for former Stelpipe union members from USSC,
(together the “qualifying distributions”).
A letter from our firm was enclosed with the QRLSP form sent by the Monitor explaining the purpose of a QRLSP Form.
If you receive a QRLSP Form and have any questions please speak to your accountant or financial advisor. Representative Counsel and the Monitor will not be able to provide you with tax advice.
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November 21, 2018
Interim Payment for Employee and Unfunded Supplemental Pension Claims
The Monitor (EY) has recently advised that they are working towards having the interim payment cheques in respect of employee and unfunded supplemental pension claims printed and mailed by the end of November or by the first week of December at the latest. The amount of the interim payment represents 15% of your claim, less any tax and EI withholdings, as applicable.
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June 12, 2018
On June 5, 2018, the salaried and unionized retirees of Stelco, through their respective benefit and pension plans, sold to Stelco all of Stelco’s current leased premises in Lake Erie and Hamilton, as well as an additional approximately 480 acres of lands in Hamilton (the “Land Transaction”). As a separate but concurrent transaction, the retirees also obtained from Stelco significant enhancements to the current funding of retiree health benefits (known as OPEBs) (the “OPEB Transaction”). As a result of both transactions, Stelco retirees achieved the following:
- The retirees land vehicle (“Landco”) received a vendor take-back mortgage from Stelco for the purchase price of the land, which requires Stelco to make quarterly payments of blended principal and interest in the aggregate annual amount of approximately $10.6 million (totaling $265 million over 25 years), which benefits OPEBs and pensions (the net present value of these mortgage payments is $114 million).
- Pursuant to the OPEB Transaction, Stelco is now required to make a further $187 million of Additional Fixed Annual Payments (“AFAP”) for OPEBs over the next 25 years and is also required to establish a reserve fund of up to $50 million, funded from certain excess OPEB funding sources, which will provide additional funding for OPEBs in future years where the annual funding from all sources, excluding tax saving payments, is less than $33 million. The mortgage will also serve as security for the AFAPs.
- The total value of the mortgage and AFAP payments to be made by Stelco is approximately $452 million. These secured sources of funding with predictable payment schedules represent new funding sources for OPEBs and pensions that replaces other current uncertain funding sources, thereby providing a greater level of funding stability and certainty over the next 25 years. The practical implication of this is that retirees can expect to have a stable and predictable OPEB coverage for 25 years.
- The Land Transaction and OPEB Transaction provided a solution to monetize the non-leased lands in Hamilton that may otherwise be difficult to market. In addition, Stelco took responsibility for environmental cleanup costs, the cost of which could be significant and would make the monetization of the lands difficult for the foreseeable future.
- The lands not purchased by Stelco, consisting of approximately 4,300 acres and all buildings and fixtures thereon other than equipment and trade fixtures belonging to Stelco, will remain with the Landco and any proceeds generated by the sale of such lands will be for the benefit of the pension plans.
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April 25, 2018
Please be advised that Morneau Shepell Ltd., as the Pension Plan Administrator of the five Stelco defined benefit pension plans, including the Hamilton Salaried Plan and the Lake Erie Salaried Plan, will take over the payment of monthly pensions starting May 1, 2018. Morneau Shepell has contracted with the Royal Bank of Canada to make these payments.
There will be no change to the amount of monthly pension that is due to you. However, there is a very small group of individuals who will notice a difference in their after tax monthly pension amount due to outdated individual tax exemption information. If you notice a change in your after tax monthly pension, please submit a new TD1 Personal Tax Credits form (both federal and provincial) or contact the Stelco Pension Service Center at 1-844-650-2820 for further instructions. Morneau Shepell has prepared a Q&A for Pensions in Pay, which can be found here.
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January 3, 2018
As part of the restructuring, an Employee Life and Health Trust (ELHT) has been established providing a newly designed benefit plan. Information, including a welcome letter and plan summary, has been mailed by Greenshield Canada on behalf of the Trustees to all plan members. Claims have commenced being paid directly from the new ELHT as of January 1, 2018.
The welcome letter and plan summary describe the benefits provided and contain guidance as to how to submit a claim incurred on or after January 1, 2018. If you are a member who has not received a copy of the welcome package, please email the Trust directly at Stelcobenefitstrust@gmail.com, or call Greenshield at 1-888-711-1119.
For outstanding emergency health and dental benefits claims from the Retiree Fund incurred prior to January 1, 2018, please continue to follow the process for submitting claims described at the following link under the September 29, 2017 update: https://kmlaw.ca/cases/usscrepcounsel/#developments. Claims that are submitted with complete information no later than February 28, 2018 will be forwarded to GreenShield for adjudication and processing. Any claims submitted for services that were rendered prior to January 1st 2018, that are submitted after February 28th, or are submitted with incomplete information, can no longer be considered for payment.
Should you have any further questions, please contact us at 1-866-777-6341 or usscrepcounsel@kmlaw.ca.
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January 2, 2018
On November 15, 2017, the Ontario Superintendent of Financial Services announced that as of January 1, 2018, Morneau Shepell Ltd. would take over the continuing administration of five Stelco defined benefit pension plans, including the Hamilton Salaried Plan and the Lake Erie Salaried Plan. Morneau Shepell has provided an introductory information sheet, which can be found here.
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November 16, 2017
On November 15, 2017, the Ontario Superintendent of Financial Services announced that it has appointed Morneau Shepell Ltd. to take over the continuing administration of Stelco’s five ongoing defined benefit pension plans, effective January 1, 2018. This includes the two USW Plans and the following registered pension plans for Non-USW members:
- Hamilton Salaried Pension Plan;
- Lake Erie Works Salaried Pension Plan; and
- Lake Erie Works Pickle Line Pension Plan
The appointment of an administrator was one of the requirements under the Plan of Compromise, Arrangement and Restructuring in the Stelco CCAA. The five pension plans are continuing, and monthly pension payments to retirees will continue without interruption.
If you have any questions regarding your pension, until December 31, 2017 please continue to contact Stelco’s Benefit Service Centre at 905-577-4488 or toll free at 1-877-935-9499.
Morneau Shepell will be in contact with all plan members in the new year. As of January 1, 2018, members and retirees should direct their inquiries to:
Morneau Shepell Ltd.
895 Don Mills Road, Tower 1
Toronto, Ontario, M3C 1W3
Toll-free at 1-844-650-2820
Email: stelcopensions@morneaushepell.com
To view a copy of the announcement on FSCO’s website please click here.
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September 29, 2017
Changes to Emergency Retiree Fund Claim Process
The Representative Committee is pleased to report that significant progress continues to be on the design and implementation of a new Benefit Plan under the newly formed Employee Life and Health Trust (the “ELHT”) for non-USW retirees and their dependents.
In the interim, until such time as the new Benefit Plan can be implemented, the ELHT will be taking over responsibility for paying emergency health and dental benefits. The coverage for emergency health and dental will remain the same as previously provided under the Transition Fund since July 1, 2017. Specifically, eligibility for benefits will continue to be limited to those who have no other options, and for whom paying for the service would cause a significant hardship for themselves and/or their family.
However, effective October 1, 2017 claimants will now have to submit the Retiree Fund Application Form directly to the ELHT, through Representative Counsel (with the applicable Green Shield Benefits Claim Form attached). Application forms should no longer be sent to the Monitor. A revised Application Form indicating this change can be found here.
Please note that you will still be required to complete the Green Shield forms available here:
If you have any questions regarding the above please contact Representative Counsel at 1-866-777-6341 or email us at usscrepcounsel@kmlaw.ca.
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September 25, 2017
The annual general meeting (AGM) of the Stel Salaried Pensioners Organization (SSPO) has been scheduled for October 5, 2017 at 7 pm at the Hamilton Convention Centre. Representative Counsel will be in attendance to answer questions.
To view a copy of the notice of the SSPO AGM, please click here.
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August 25, 2017
IMPORTANT NOTICE – TERMINATION OF LIFE INSURANCE AND REPORTING DEATHS
As we advised you a few months ago, the group life insurance policy with Desjardins will be terminating on August 31, 2017. How this affects you will depend on the group you are part of:
A. Members who do not have the Conversion Option
Life insurance benefits will be payable until August 31, 2017. If you have a death to report, you must do so within 30 days of the death and the written proof of claim must be submitted within 90 days of the death.
To advise of a death under the group life insurance policy with Desjardins, please contact the USSC Benefits Service Center number is 905-577-4488 or 1-877-935-9499.
B . Members with a Conversion Option (i.e. under the age of 65)
Those who are entitled to convert to an individual policy under the Desjardins policy (i.e. they are under the age of 65 and received a conversion package from Desjardins) will have an additional 31 days after August 31, 2017 to:
- Report a death – this means if the member passes away within 31 days of August 31, 2017, the group life insurance policy with Desjardins will pay the life insurance benefit; and,
- Convert to an Individual Policy – please refer to the pamphlet you received from Desjardins.
Please note that if you have a death to report for someone under the age of 65, you must do so within 30 days of the death and the written proof of claim must be submitted within 90 days of the death.
To advise of a death under the group life insurance policy with Desjardins, please contact the USSC Benefits Service Center number is 905-577-4488 or 1-877-935-9499.
If you have any questions about the above please contact:
- Koskie Minsky LLP at 1-866-777-6341 or email us at usscrepcounsel@kmlaw.ca
Or
- USSC Benefits Service Center number at 905-577-4488 or 1-877-935-9499
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July 13, 2017
A meeting was held on July 12, 2017 at the Hamilton Convention Centre to provide Non-USW active and retired members with an update on the status of the Stelco CCAA Plan of Compromise and transaction with Bedrock.
A copy of the PowerPoint that was presented is available here.
Representative Counsel will be preparing a mailing providing a summary of the transaction with Bedrock shortly for all those who could not be in attendance.
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June 30, 2017
UPDATE: Bedrock Transaction closes June 30, 2017
The transaction with Bedrock Industries LLC (“Bedrock) closed today, June 30, 2017. As of today, Stelco will be owned and operated by Bedrock.
While there are a number of post-closing items to finalize, the non-USW Retirees will:
(a) see no change to the registered pension plans, which will continue to be paid at this time without reduction; and
(b) OPEBs which have been suspended will resume at a reduced level (with the exception of group life insurance which will be terminated August 31, 2017).
Further details of the transaction will be provided to you in the coming weeks in a mailing to members as well as at a meeting being held at the Hamilton Convention Centre on July 12, 2017 at 7 pm. Further information regarding the meeting is available in the Notice we sent to members which can be viewed here.
Active salaried employees will also not see any changes to their benefits at closing. Further information for actives is contained in an FAQ we prepared which can be accessed here.
Please continue to check our latest developments as we post new information.
URGENT ATTENTION REQUIRED – YOUR LIFE INSURANCE WITH DESJARDINS WILL BE TERMINATED AUGUST 31, 2017
A letter has been mailed out to all affected non-USW members who were members of the group life insurance policy that U.S. Steel Canada Inc. maintained. The letter can be viewed here.
The termination of the group life insurance policy is as a result of cost of premiums increasing significantly because the retiree group would no longer include all of U.S. Steel’s employees and retirees in the United States, and the average age of the non-USW group would be significantly higher when considered in isolation.
The Representative Committee has negotiated an agreement with Bedrock to allow the current life insurance policy to continue until August 31, 2017 to provide you with enough notice to make alternative arrangements. The Representative Committee is actively exploring alternatives. However, the Committee has determined it will be in the best interest of the group as a whole to terminate the Desjardins policy on August 31, 2017.
For those 65 years an under as of August 31, 2017, you will have the right to convert your individual coverage. A pamphlet has been prepared by Desjardins including a summary of options and included in the mailing sent to members. Please contact Desjardins for further details.
Emergency Retiree Fund Extended
The Representative Committee is pleased to report that significant progress has been made in establishing a new Trust Fund with salaried representatives and an independent professional trustee who are working diligently to develop a new plan with the limited funding that is available in order to provide meaningful health benefits for retirees and their families.
In the interim, the Monitor and Green Shield have agreed to continue to administer a fund to provide emergency health and dental benefits to those who have no other coverage, similar to the Retiree Fund that has been in place since April 1, 2017. As the cost of these benefits will ultimately be borne by the trust we are establishing for the new OPEB Plan, we believe it is appropriate to limit eligibility for benefits under the Transition Fund to those who have no other options, and for whom paying for the service would cause a significant hardship for themselves and/or their family.
If you have any questions regarding the above please contact Representative Counsel at 1-866-777-6341 or email us at usscrepcounsel@kmlaw.ca.
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June 28, 2017
NOTICE OF MEETING – JULY 12, 2017 at 7 pm
Representative Counsel and the Court Appointed Representatives have organized a meeting in order to provide you with an update on the status of the Stelco CCAA Plan of Compromise and transaction with Bedrock.
The meeting will be held on July 12, 2017 at 7 pm at the Hamilton Convention Centre. The doors will open at 6 pm.
If you are not able to attend the meeting, we will be providing further information regarding the status of various matters through a mailing in the very near future.
A notice is being mailed to all members to advise them of this meeting. A copy of the Notice can be viewed here.
If you have any questions please contact Representative Counsel on our Toll Free Hotline at 1-866-777-6341 or by email at usscrepcounsel@kmlaw.ca.
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June 23, 2017
On May 23, 2017, Representative Counsel attended a meeting with active employees. A number of questions were asked and we committed to prepare a summary of the questions and answers. To view the FAQ responding to questions raised by active employees, please click here.
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June 14, 2017
On June 9, 2017, the Second Amended and Restated Plan of Compromise and Arrangement (the “Plan“) was approved by the Superior Court of Justice (Commercial List) (the “CCAA Court“) as being fair and reasonable in the circumstances. The sanction hearing followed the Creditors Meetings in April, which resulted in a majority of the creditors in number and in value voting in favour of the Plan. A copy of the Sanction Order is available here. Reasons for the decision will follow and we will post a copy of the reasons as soon as it is released.
Certain key amendments to the original and First Amended Plan of Compromise
Further amendments to the Plan were necessary to implement the agreements that were reached between USSC and USW Local 8782, USW Local 8782(b), and USW Local 1005. The key commitment that was made in those agreements is a minimum contribution of $33 million per year to fund OPEBs for all eligible retirees (both salaried and unionized) for the first ten years following the completion of the Bedrock Transaction. As a result of the Settlement Agreement reached between Representative Counsel to the non-USW employees and retirees, Bedrock, and USSC in April, all eligible non-USW retirees, including eligible employees who retire in the future, will also receive a share of the enhanced OPEB funding, which is an improvement from the arrangement in the original and First Amended Plan of Compromise.
The Plan was also amended to assist with the transition of OPEB arrangements and with the administration of OPEBs by the OPEB Entities (also referred to as the “Employee Life and Health Trusts” or “ELHTs“) after June 30, 2017 (the “Plan Implementation Date“). During the transition period, a temporary fund will be established by USSC and overseen by the Monitor to continue to provide emergency health and dental benefits on a similar basis as the Retiree Fund that is currently in place. The temporary fund will need to be implemented by a Court Order. The Court hearing is tentatively scheduled for June 19, 2017.
The amendments to the Plan were approved by the CCAA Court. A copy of the Second Amended Plan Order is available here.
Plan Implementation
Before the Plan can be implemented, a number of conditions need to be fulfilled, including the execution of various stakeholder agreements. We have been engaged in extensive negotiations over the past several months regarding the terms of the various Stakeholder Agreements. Negotiations are continuing as all of the Stakeholders proceed towards the Plan Implementation Date. We will continue to update you as information becomes available.
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May 9, 2017
On May 8, 2017, the Ontario Superior Court of Justice (Commercial List) granted an order deferring the sanction hearing for the USSC Plan of Compromise to June 9, 2017. The request was made by the Company as a result of continued negotiations of various documents and labour negotiations that are required to be completed as a condition of Plan Implementation.
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May 2, 2017
The Creditors’ Meetings were held in Toronto on April 27, 2017. As a result of the votes cast in each of the Meetings of the class of the General Unsecured Creditors and the class of the Non-USW Main Pension and OPEB Claim holders, the Amended Plan was voted in favour by a majority of the creditors at the Meetings. To view a copy of the Thirty-Ninth Report of the Monitor, which describes the results of the Meetings in detail, please click here.
The Amended Plan must now be approved by the CCAA court as being fair and reasonable in the circumstances. There are also a number of key conditions to the implementation of the Amended Plan, including that revised USW collective bargaining agreements be entered into by each of Local 1005, Local 8782, and Local 8782B. We will continue to update you as information becomes available.
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April 26, 2017
We are pleased to report that on April 26, 2017 the Superior Court of Justice (Commercial List) approved the Settlement Agreement reached between Representative Counsel to the non-USW employees and retirees, Bedrock and USSC. To view a copy of the Order approving the Settlement Agreement please click here.
As a result of the Settlement Agreement and a few other changes made to the Plan, the Court also approved an amended Plan of Compromise on April 26, 2017. To view a copy of the order approving the amended Plan of Compromise, please click here.
To view a copy of the Non-USW Support Agreement and Non-USW Settlement Agreement (being Exhibits C and D to the Affidavit of William E. Aziz sworn April 19, 2017) please click here.
To view a copy of the Non-USW Settlement Approval Order please click here.
To view a copy of the Supplemental Information Circular and Amended Plan reflecting changes made to the Plan of Compromise, including as a result of the Settlement Agreement, please click here.
As detailed in our April 20, 2017 letter to members, the next step is for a vote on the Plan on April 27, 2017. We will continue to update you as information becomes available.
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April 21, 2017
A letter has been mailed to all Non-USW Active Employees and Retirees providing further details of the USSC Plan of Compromise, the voting procedures, and the Settlement that we recently reached with USSC and Bedrock, which may affect certain Non-USW Active Employees and Retirees. To view a copy of the letter, please click here.
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April 19, 2017
We are pleased to report that we reached a favourable settlement with Bedrock and USSC (the “Settlement”). A majority of the Representatives have confirmed their support for the Settlement. The Settlement provides for the following:
a) Improved treatment of claims of:
i) certain retirees for their loss of unfunded supplemental pension claims; and,
ii) employee claims that arise from the cessation of their employment.These claims were previously included in the class of General Unsecured Creditors (“GUC”) under the CCAA Plan and it was estimated that affected individuals would recover approximately 10% of their claim amounts. However, in accordance with the Settlement, USSC will increase its contribution and pay an aggregate amount of $9 million to the holders of these claims. We estimate that this amount will increase the recovery rate from 10% to approximately 30% for these individuals.
Those individuals who will recover a higher percentage of their Claim as a Convenience Creditor will still be entitled to receive the lesser of $7,500 or the actual amount of their claim.
b) The Settlement also provides for equivalent or “parity” treatment for OPEBs for the Salaried retirees to be the same as the treatment of OPEBs that may be negotiated between Bedrock and USW Local 1005. In other words, if Bedrock agrees with USW Local 1005 to provide more favourable contributions in respect of OPEBs for the negotiation of its current collective agreement, then those OPEB improvements will also be passed on to the Salaried retirees.
c) Active salaried employees accruing defined benefits would have their credited service in the defined benefit plans “frozen” as of December 31, 2017. As of January 1, 2018, they would commence enrollment in the USSC Opportunity Plan (a group RRSP). On retirement from Stelco, they would have their years of service and top 5 years of salary taken into account for the purpose of calculating their DB benefits payable to them, in addition to their account balance in the Opportunity Plan.
In exchange for the above, we and the majority of Representatives agreed to support the CCAA Plan and vote in its favour at the creditors meeting.
A press release announcing the Settlement Agreement can be viewed here.
We are preparing a mailing to all non-USW members providing further details of the Plan and the Settlement Agreement. We will provide further details as they become available.
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April 12, 2017
We expect to mail a letter to all non-USW employees and retirees next week with details on a number of items, including the various notices you should have received from the Ernst & Young (the “Monitor“) and the voting procedures for the CCAA Plan.
We have also been involved in confidential negotiations with Bedrock and USSC in respect of the treatment of unfunded supplemental pension claims and termination and severance claims under the CCAA Plan, among other issues. We will provide an update as soon as more information is available. We anticipate that these negotiations may impact your position with respect to voting on the Plan of Arrangement, and we encourage you to check back here for further updates.
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March 20, 2017
On March 15, 2017, the Superior Court of Justice (Commercial List) (the “CCAA Court“) approved the filing of a Plan of Compromise and Arrangement (the “Plan“) made under the CCAA between USSC and its creditors. The Plan sets out USSC’s proposal to deal with its debts and restructure its business and operations. Under the Plan, Bedrock will acquire substantially all of USSC’s operating assets and business on a going concern basis.
The filing of the Plan does not mean that the Plan has been approved. In order for the Plan to be brought into force, two major steps must still occur:
a) the Plan must be voted in favour by a majority of the creditors at a creditors meeting convened by the company and the monitor. The date of the creditors meeting has been set for April 27, 2017, and
b) if the Plan passes the vote, the Plan must be approved by the CCAA court as being fair and reasonable in the circumstances. The date of the approval hearing (also known as the “sanction” hearing) is May 9, 2017 at 10 am at the Superior Court of Justice (Commercial List) in Toronto.
Negotiations continue to take place between all stakeholders, and the Plan is subject to change. We will continue to update you as information becomes available.
Meetings of the affected creditors of USSC (the “Creditors’ Meetings“) to vote on the Plan are scheduled to be held on April 27, 2017.
To view a copy of the Plan of Compromise and Arrangement please click here.
To view a copy the Information Circular please click here.
To view a copy of other material relating to the Plan and the Creditors’ Meetings please visit the Monitor’s website by clicking here. [Link no longer available]
On March 15, 2017, the CCAA Court also approved the Supplementary Claims Process Order with written reasons to follow. To view a copy of the Order please click here.
The Supplementary Claims Process is a process through which to identify and resolve the claims of all non-USW employees and retirees of USSC in advance of the Creditors’ Meeting. USSC will be sending a notice to all of its non-USW employees and retirees about this process.
The Monitor has estimated that General Unsecured Creditors with Proven Claims will recover approximately 10% of the principal amount of their Proven Claims.
There will be many developments in the coming weeks. Please check the KM website frequently in order to keep informed about progress and important dates.
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March 9, 2017
A Retiree Transition Fund has been set up as a result of a motion by Representative Counsel and the USW to reinstate health and dental benefits. The Superior Court of Justice (Commercial List) dismissed the motion on the condition that a fund be established with the company making a $2.7 million contribution.
The Retiree Fund extends the benefits currently available under the Transition Fund (established by the Province) to USSC retirees and their eligible beneficiaries who are resident in Canada but who reside outside of Ontario. The Retiree Fund also provides a one-time reimbursement of up to $100.00 to USSC retirees and their eligible beneficiaries for health services or supplies which were purchased after September 12, 2016 and which were not covered by the Transition Fund but would have been covered under the suspended USSC OPEB plan.
To apply for a reimbursement of dental and other health expense claims under the Retiree Fund, please complete the form available here. Transition Fund, established by the Province, will be winding down effective March 31, 2017. As a result, starting April 1, 2017, the same prescription drugs, emergency dental and other benefits currently available through the Transition Fund will be available through the Retiree Fund.
More information regarding the Retiree Fund and the wind up of the Transition Fund here.
If you have any questions please contact us at usscrepcounsel@kmlaw.ca or call us at 1-866-777-6341.
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January 30, 2017
We have recently been notified that the company has terminated approximately 30 salaried employees. If you are one of these terminated employees, please call us on our toll-free hotline for USSC Salaried Active Employees and Retirees at 1-866-777-6341 or email us at usscrepcounsel@kmlaw.ca.
We are in discussions with the company regarding next steps, and will provide further information as it becomes available.
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October 6, 2016
A letter will be mailed shortly to all Non-USW Active Employees and Retirees providing an update on the CCAA proceedings. To view a copy of the letter dated October 4th please click here.
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September 21, 2016
The Ontario government announced today that a Memorandum of Understanding has been signed with Bedrock Industries Group. The terms of the MOU are confidential as further details of the framework are being negotiated.
The court-appointed Representatives of the non-USW active employees and retirees welcome this development, are supportive of this step forward and look forward to working with all the other stakeholders for a positive result for the employees and retirees of USSC.
To view a copy of the News Release please click here.
We will provide further information as it becomes available.
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April 19, 2016
An update has been mailed to eligible members regarding the status of the Transition Fund, including with respect to amounts being available after March 31, 2016. To view a copy of the update please click here.
As a result of the extension of the Transition Fund past March 31, 2016, we have been advised by Green Shield Canada that affected members will be able to sign up to a private plan with no medical exam until June 30, 2016. For more information regarding private plans please call Green Shield directly at 1-888-711-1119.
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March 11, 2016
As of March 14, 2016, the Transition Fund will cover repeats of 30-days supplies of prescription drugs until March 31, 2017, or until the fund runs out.
This means that once you have claimed 30 days’ worth of prescriptions you will have to wait a period of time before processing the next prescription. The next claim will be allowed when a plan member is 80 per cent of the way through their current claim (e.g., day 24 of a 30-day claim) and this will continue until March 31, 2017 or until the funds runs out.
Claims for more than a 30-day supply will be rejected. (E.g., if you claim for 90 days of prescriptions, the claim will be rejected. The pharmacy will have to resubmit for a 30-day supply and you will have to return once the wait period is done.)
The other provisions of the Transition Fund remain the same.
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March 4, 2016
On February 29, 2016, Justice Wilton-Siegel released his decision following an eight day trial regarding claims submitted by U.S. Steel Corporation (USS). The trial follows a motion by USS for approval of a secured claim of approximately $122,471,525 and a unsecured claim of $1,975,745,038 in the claims process of USSC.
The claims were objected to by various stakeholders including the province of Ontario, the USW and Representative Counsel on behalf of non-USW retired and active employees. The main objection from the stakeholders was that the USS claims were equity claims rather than debt and should be treated with the lowest priority.
In its February 29th decision, the Court found that all the amounts were in fact debt. To view a copy of the decision please click here.
We are reviewing the court’s decision with our client committee and will be discussing next steps with the USW and the Province of Ontario.
We note that the decision is limited to the determination of whether the USS amounts at issue should be classified as either “debt” or “equity”. The issue of priorities and future distributions among creditors of USSC was not before the court. We have already asserted a first priority claim based on the statutory deemed trust on behalf of the USSC pension plan beneficiaries for all amounts that are owing, or will be owing, by USSC to the pension plans, and which is be paid to the pension plans ahead of any secured claims of USS.
We will provide updates as information becomes available.
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January 26, 2016
We are pleased to report that the Ontario Court of Appeal has allowed the appeal we filed in respect of the decision of the CCAA Judge refusing to allow access to the Settlement Agreement entered into between US Steel, US Steel Canada and the federal government in 2011.
By way of background, US Steel in the United States purchased Stelco in 2007 and at the time gave the Canadian federal government undertakings (i.e., commitments) in order to obtain the federal government’s approval for the acquisition under the Investment Canada Act (“ICA”). Those undertaking included production commitments and pension contribution and employment promises. USS breached the Undertakings almost immediately after acquiring Stelco.
The federal government sued USS (the first time the federal government has done so under the ICA) and after a few years of litigation, USS, USSC and the federal government agreed to a settlement in 2011.
When US Steel Canada (as Stelco was renamed) filed for CCAA protection in September 2014 we as Representative Counsel to all non-USW employees and retirees and the USW requested production of the “Secret Settlement Agreement” from USS, USSC and the federal government, who refused to produce the Agreement and took the position that the Agreement was confidential under the provisions of the ICA.
We and the USW brought a motion before the CCAA Judge for an order requiring USS, USSC and the federal government to produce the Agreement. The CCAA Judge dismissed the motion on his interpretation of the provisions of the ICA which he held operated to keep the Agreement confidential. The CCAA Judge noted our additional argument that the Agreement should also be released to us under the law of “settlement privilege” but His Honour did not rule on that argument extensively since he found the Agreement was confidential under the ICA. We filed and obtained leave to appeal to the Ontario Court of Appeal.
The Ontario Court of Appeal allowed our appeal holding that the Settlement Agreement was not confidential under provisions of the ICA. The Court of Appeal directed that the Agreement be released to the CCAA Judge by the Monitor for the judge to review, and also ordered that the CCAA Judge determine whether to release the Agreement to us only under the law of settlement privilege. We are following up with USS, USSC and the federal government about next steps and will report further with new developments.
To view a copy of the decision of the Court of Appeal dated January 26, 2016 please click here.
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December 24, 2015
On December 22, 2015 U.S. Steel Canada Inc. (“USSC”) served and filed a motion seeking approval from the court to commence a sales and investment solicitation process (“SISP”). The SISP seeks to solicit interest in and opportunities for a sale or investment in all or part of the assets and business operations of USSC including, Hamilton Works and Lake Erie Works.
The motion is expected to be heard on January 12, 2016 and the motion material can be viewed by clicking here.
In addition, on December 22, 2015, USSC served and filed a motion seeking an extension of the CCAA stay until April 29, 2016 and certain amendments to the Engagement Letter of the Chief Restructuring Officer William Aziz. This motion is also expected to be heard on January 12, 2016 and the motion material can be viewed by clicking here.
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December 23, 2015
On December 17, 2015, the Ontario government announced further details regarding the Ontario $3 million Transition Fund established by the province to assist former salaried and unionized employees of USSC. The Transition Fund is expected to be available as of January 1, 2016 and will consist of two parts:
- Drug Benefit Coverage (Tranche 1) – up to $2.5 million will be available to pay for prescription medication costs, limited to a maximum 30 day supply of each prescription drug; Applicants will be able to submit claims for prescriptions directly to Green Shield following the same process used under the Suspended USSC OPEB Plan.
- Emergency Coverage (Tranche 2) – up to $500,000 for urgently required dental and other health services. To apply for these funds please complete the following application forms:
Applicants for Emergency Coverage (Tranche 2) must complete both the Tranche 2 Application Form and one of the Green Shield Claim Forms (depending on what type of benefit coverage is being sought).
Please send the forms to the Monitor, Ernst & Young Inc., at the address provided on the Tranche 2 Application Form or Koskie Minsky LLP and we will forward it for you.
Please note that drug benefit coverage and emergency coverage will only be available until the amounts allocated to each portion are available. As a result, if you have an urgent medical need please ensure you apply for funds, even if your appointment hasn’t occurred yet.
Further details regarding the Transition Fund are available in the Transition Fund Memo by clicking here and the Transition Fund Letter by clicking here.
The court approved the Transition Fund on December 23, 2015. A copy of the court order is available here..
Information regarding the Transition Fund will also be sent to affected members by mail shortly.
To view a copy of the Statement by Finance Minister Charles Sousa please click here.
If you require any help in filling out the forms or have any other questions please contact us at 1-866-777-6341 or usscrepcounsel@kmlaw.ca.
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December 15, 2015
We are actively working with the Ontario government and the USW to finalize the process and eligibility for the Ontario $3 million Transition Fund established by the province to assist former salaried and unionized employees of USSC. We anticipate the Transition Fund will be available as of January 1, 2016, subject to court approval.
Further details will be available to former salaried and unionized employees affected by the suspension shortly.
If you have an urgent medical expense please contact us at 1-866-777-6341 or usscrepcounsel@kmlaw.ca.
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October 28, 2015
If you have an urgent medical need please contact us at 1-866-777-6341 or usscrepcounsel@kmlaw.ca
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October 21, 2015
Status of the Transition Fund and Emergency Access to Assistance Due to the Suspension of Post-Retirement Benefit Coverage
The Province announced that it will provide a total of $3 million to establish a Transition Fund available over the next six months to assist USSC retirees and eligible beneficiaries to transition from the post-retirement health benefit coverage formerly available from US Steel Canada.
In addition, representatives of the Ontario Ministry of Health and Long-term Care (MOHLTC) are working with representatives of the union and salaried pensioners to hold information sessions that are intended to assist pensioners under age 65 to apply for the Trillium Drug Program. MOHLTC representatives will also be able to answer questions about the Ontario Drug Benefit Program for those over age 65 and any special applications that may be required for coverage by either provincial drug program for certain medications. Several sessions have already been organized with the USW. For the time and location of further sessions, please check the websites of your USW Local or of Koskie Minsky LLP at https://kmlaw.ca/cases/usscrepcounsel/.
The criteria for eligibility for funding from the Transition Fund, and the process to access the Transition Fund have not yet been determined. Further information about the Transition Fund and the process to access it will be provided as it becomes available.
In the interim, while the eligibility criteria and process are being determined, if you have an urgent and serious need for a benefit formerly provided through the post-retirement benefit program of USSC that you cannot otherwise obtain:
For pensioners who were members of the USW, call your Union Local at:
- Local 1005:
Tony McLaughlin
(905)547-1417 ext. 4
mclaughlin@uswa1005.caRon Wells
(905)547-1417 ext. 3
ron.wells@uswa1005.ca - Local 8782:
Terry Barnard
519-587-2000 ext. 225
wsib@uswa8782.com - Mark Talbot
519-587-2000 ext. 301
vp@uswa8782.com
For pensioners who were not members of the USW, call Koskie Minsky your court appointed Representative Counsel at 1-866-777-6341 or email: usscrepcounsel@kmlaw.ca.
- Local 1005:
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October 19, 2015
On October 14, 2015, the CCAA Judge released his Reasons for Decision granting the relief sought by USSC in its Cash Preservation Motion and Transition Services Agreement Motion. To view a copy of the decision, please click here.
In addition, the SSPO has posted information regarding opportunities with Green Shield for replacement health benefits coverage which can be accessed on their website by clicking here.
You should also look into benefits from the following sources:
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October 9, 2015
On October 9, 2015, the CCAA Judge released a short decision granting the relief sought by USSC in its Cash Preservation Motion and Transition Services Agreement Motion, which we described below. The CCAA Judge indicated in court on October 8, 2015 that he planned to issue a short decision quickly due to USSC’s urgent financial situation and that he would release more detailed reasons for his decision thereafter. To view the short decision, please click here. (note that our firm had attended in court at the hearings and are listed as counsel, but were not listed on the court’s fax sheet due to error).
As discussed below, part of the relief that USSC requested in its motions was the suspension of retiree health benefits (but not life insurance benefits).
Also on October 9, 2015, following the release of the CCAA Judge’s decision, the Government of Ontario announced financial assistance for USSC retirees due to the suspension of their health benefits by USSC. To view the Government’s announcement, please click here. We will report further on the Government’s assistance program shortly.
We are also in discussions with our client committee and SSPO about the availability of alternate health benefit coverage for retirees during the suspension period. One option that may be available is provided through the Canadian Association of Retired Persons (“CARP”). To view their medical benefit options for retirees, please click this link.
We will report further on retiree medical benefit options for USSC retirees following our discussions with our client committee and SSPO.
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October 8, 2015
On October 8, 2015, our firm attended the annual general meeting of the Stel Salaried Pensioners Organization (“SSPO”) held at the Hamilton Convention Centre. Approximately 1,000 retirees and employees attended the meeting. There were presentations by SSPO Executive members and former Stelco Executive Vice-President William Missen. Andrew Hatnay and Adrian Scotchmer of our firm attended to give an overview of the CCAA proceeding and to answer questions from the audience. A copy of the summary sheet that we handed out at the meeting is attached here.
On October 8 and 9, 2015, the motions referred to below proceeded before Mr. Justice Wilton-Seigel (the “CCAA Judge”) along with another motion served by USSC on an urgent basis for approval of a “Transition Services” Agreement, which sets out the protocol for USS to disengage from USSC in an orderly manner. As of this writing, the CCAA Judge has not released his decision on the motions.
The USSC Cash Conservation and Business Preservation Motion
The motion before the court on October 8th and 9th, 2015 that most directly affects retirees at this time is USSC’s “Cash Conservation and Business Preservation” Motion. The motion was made necessary due to USSC’s immediate liquidity problem. As the Monitor reports in its 13th Report dated October 2, 2015:
[T]he unfortunate (but inevitable) fact is that USSC does not have access to liquidity or financing to honour these obligations in the present circumstances and that, if the [Cash Conservation and Business Preservation Motion] Order sought by USSC is not made, it will not have the financial resources to continue to carry on in business for the period of time necessary to develop a long term restructuring solution, and that a near term cessation of operation will be necessary.
The USSC Cash Conservation and Business Preservation Motion seeks to discontinue the sales and restructuring/recapitalization process (“SARP”) and implement cash conservation and business preservation plan which includes:
1. the suspension of contributions or payments to USSC’s nine registered non-contributory defined benefit pension plan, other than normal cost contributions, and to the RCA Trust;
2. the suspension of supplementary pension payments to beneficiaries pursuant to unfunded individual retirement benefit contracts and individual retiring allowances;
3. the near-term suspension of other post-employment benefit payments (including health and dental benefits but not life insurance – see below) to beneficiaries effective October 9, 2015 (the “OPEBs”);
4. the suspension of salary-continuance payments to those USSC employees that are not actively employed or providing services to USSC;
5. the suspension of payment to the Pension Benefits Guarantee Fund in respect of assessments; and
6. the suspension of payments on account of municipal taxes.
Representative Counsel negotiated with USSC for two concessions to the Cash Conservation and Business Preservation Plan:
1. that USSC continue to pay life insurance premiums so that life insurance remains in place, since these benefits could not be reinstated if the group life insurance policy lapses; and
2. that the suspension of all other benefits is a temporary suspension, subject to further order of the Court and is not to be understood as a termination.
The Cash Conservation and Business Preservation Motion will not affect payment of your monthly pension payment from the registered pension plans at this time.
As reported above, as of this writing, the CCAA Judge has not released his decision on the Cash Conservation and Business Preservation Motion and whether to grant the measures listed above.
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September 29, 2015
On September 29, 2015, the CCAA Judge directed that the motions scheduled to be originally heard on September 29th be adjourned to a hearing on October 7th and 8th, 2015. These motions are:
- Representative Counsel’s and the USW’s motions for an order directing USS to cease moving the automotive steel orders from USSC, and sending it to USS;
- USSC’s motion for (among other relief) approval to terminate the Sales and Restructuring Process (“SARP”) for approval of the “Cash Conservation and Business Preservation” motion (described further below); and
- USS’s motion for various court orders relating to its intention to terminate contracts that USS has with USSC.
On September 29, 2015, the Court granted interim relief to USSC with respect to the certain payments that were immediately due for payment by USSC, without prejudice to the parties’ positions with respect to the financial determination on the appropriateness of the payment suspensions:
- amounts owing to the registered pension plans (other than normal cost contributions);
- amounts owing to the Ontario Pension Benefits Guarantee Fund (“PBGF”) in respect of assessments; and
- amounts owing in respect of municipal taxes.
A copy of the CCAA Judge’s Endorsement dated September 29, 2015 is available here.
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September 28, 2015
We are pleased to report that following a contested hearing, the CCAA Judge ordered the payment of retention bonuses owing under severance agreements to three USSC employees.
We had brought a motion on behalf of the three USSC employees after USSC and the Monitor stated that USSC would not be making certain severance payments that are required under termination agreements for the three individuals. USSC relied on the provisions in the Initial CCAA Order to deny making the payments. The Court found that the payments owing were for compensation for post-CCAA filing services provided by the employees to USSC and were not subject to the Initial CCAA Order provisions that prevented the company from making such payments.
A copy of the Endorsement of the CCAA Judge dated September 29, 2015 can be viewed here.
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September 21, 2015
On September 21, 2015, we filed an urgent motion for an interim “stand still” order against USS requiring it to immediately cease and desist from moving the automotive production out of USSC pending the final disposition of the main motions that we and USW filed, which are scheduled for a hearing on September 29,2015. As of this writing, we are awaiting a response from the Court office for the time for a hearing on September 21, 2015. To view our motion materials, please click here.
Update on recent actions by USS and the response of USSC
On August 31, 2015, the Monitor announced that USS would be transferring high revenue automotive steel production from USSC to USS facilities. USS did not obtain court approval for its intention to transfer this production out of USSC, nor did it agree to the Monitor’s request to wait before transferring the production so that the Monitor can better assess the impact of such a transfer on USSC. The relevant portions of the Monitor’s 12th Report are set out below:
- Since the commencement of the CCAA, the Monitor has been monitoring activities performed by USS on behalf of USSC. Such monitoring procedures were detailed in the Pre-Filing Report at paragraphs 39, 42, 51, 55 and 61.
- As noted in paragraph 40 of the Pre-Filing Report, although it is not formalized in a written agreement, USS centrally plans the loading of its North American steel mills, including USSC’s Hamilton Works and Lake Erie Works. The production generated at USSC’s mills is ultimately one of the key drivers generating revenue and cash flow, as semi-finished or finished mill products are ultimately sold to Canadian and U.S.-based customers, or to other USS mills for further processing. The current mill loading and production allocation process has been followed for a number of years. Although there is no written agreement between USS and USSC with respect to USS’s allocation of production, there is a structured process that is understood among the parties and followed. This process is referred to herein as “plant loading”.
- As part of the monitoring of plant loading, the Monitor has participated in weekly calls with USS’ Enterprise Planning department. This department is responsible for allocating production to each of the mills in the USS group.
Plant loading processes
- Paragraph 41 of the Pre-Filing Report summarized the plant loading process in greater detail and is reproduced in Appendix “A” to this Twelfth Report.
- Pursuant to the plant loading process, USS has been loading USSC’s plants with particular products to be produced at Lake Erie Works and Hamilton Works during the course of the CCAA proceedings. Any significant changes in production since the Filing Date have been largely due to market conditions and generally challenging steel demand in the North American steel market and not as a result of reallocation to U. S. mills of automotive steel currently being manufactured by USSC.
- As set out in the Pre-Filing Report, a large proportion of Hamilton Works’ production is ultimately sold to North American automotive customers. Such steel is produced at Lake Erie Works and then further processed at Hamilton Works’ cold mill and Z-line (which is a zinc coating line). As set out in the Monitor’s Second Supplemental Report to the Seventh Report dated May 4, 2015, automotive contracts represented a significant proportion of steel processed at the Hamilton Works plant in fiscal 2014.
Recent plant loading developments
- USSC and the Monitor have recently received notification from USS that approximately 15,000 tons of monthly production scheduled for customer delivery in early October will be redirected to USS mills in the United States rather than being allocated to and produced at Lake Erie Works and finished at Hamilton Works. On an annualized basis this represents 180,000 tons, which compares to total tonnage produced at Hamilton Works in fiscal 2014 of approximately 735,000 tons (and a total of approximately 381,000 tons for the seven month year-to-date period in fiscal 2015). The parts being diverted to the U.S.-based mills represent relatively higher gross margin production for Hamilton, so the impact on Hamilton’s revenue, earnings and cash flow will be significant.
- As a result of the proposed reduction of production in Canada, it will be necessary for USSC to layoff approximately 17 employees and re-deploy a further 10 employees into other work, assuming the production is not replaced from other sources. Given the lesser impact to Lake Erie Works’ operations (on a proportionate basis), USSC is not contemplating layoffs at that facility as a result of the shift in production.
- USSC has advised the Monitor that it expects it will not, on a timely basis and at the same pricing, be able to find alternate customers to make up for all the business expected to be lost in 2015 and 2016 due to the proposed change in plant loading. As stated previously, USS is USSC’s primary sales agent for automotive steel, and USSC does not have its own automotive sales staff. USSC has a smaller sales group that services certain non-automotive customers in the Canadian marketplace. USSC has advised the Monitor that it may be able to replace some of the lost tonnage referred to in the previous paragraph, but it is not certain and finding new customers could take up to a year.
- As a result of the proposed mill loading reallocation, USSC has forecast that production at each of Lake Erie Works and Hamilton Works will be reduced by approximately 45,000 tons for the remainder of 2015 and approximately 180,000 tons for 2016. Without the replacement of this tonnage through new customer orders, USSC estimates that the move of production will result in a reduction of approximately $40 million of revenue for the last three months of 2015 and approximately $162 million of revenue for 2016. Further, USSC estimates that the impact on its forecast EBITDA will be a reduction of approximately $8.8 million for the remainder of 2015 and approximately $35.1 million for 2016.
- Although this does not represent all of Hamilton Works’ automotive production the above tonnage loss represents approximately 27% of total Hamilton Works total production, based on current production levels.
- USS has informed the Monitor that the decision to reallocate production to plants in the United States was made on a basis that it believe is consistent with past practice, and that USS took into consideration:
(a) Lower shipping costs – due to proximity between the new proposed production location in the U.S. and the customer, there will be lower shipping costs on an enterprise-wide basis;
(b) Concentration of production – USS has historically concentrated production at facilities with open production capacity, to enable fully booked facilities to seek out potential additional volumes. Hamilton Works is currently fully booked on its galvanizing lines, whereas at least one of USS’ U.S.-based plants is not;
(c) Historical production of the part in the U.S. – USS has informed the Monitor that over 85% of the volumes subject to the proposed change were previously produced at a U.S. facility in 2013. USSC has informed the Monitor that certain of these parts were originally produced in Canada and were moved to U.S.-based plants during a labour dispute at Lake Erie Works in 2013; and
(d) Higher opportunity for replacement business at Hamilton Works – the Hamilton Works Z-line produces a wide range of products for non-automotive customers compared to the U.S.-based plant where production is being moved; therefore, Hamilton Works has a greater opportunity to replace tons moved versus the U.S.- based plant.
- After learning of the plant loading reallocation decision from USS, the Monitor requested further details and information from USS. USS advised the Monitor that the information requested was confidential business information of USS and that it would not be provided to the Monitor unless the Monitor executed a non-disclosure agreement. A form of non-disclosure agreement has been agreed to (which, among other things, precludes the Monitor from providing any information received from USS to USSC or its stakeholders). USS has provided the Monitor with certain details and is in the process of providing the Monitor with further requested information. The Monitor is currently reviewing the plant loading decision and the information provided by USS to assess the consistency with past practice and the rationale for the plant loading decision in light of current exchange rates, customer requirements and trends in the steel industry and will further update the Court upon completing its review of that information and any follow-up information requested by the Monitor.
- While the Monitor will update the Court on its views regarding whether the plant loading reallocation decision is consistent with past practices in due course, USS has informed the Monitor that it has initiated the plant loading changes for customer deliveries in early October and does not intend to await any conclusions of the Monitor in that regard.
- The CRO has advised the Monitor that he has spoken with counsel to USS and asked that the decision to transfer production be delayed until January 1, 2016 so that it will not negatively impact the cash flow forecast of USSC during the pendency of these proceedings. USS has advised the CRO that such a shift cannot be accommodated. The Monitor notes that the process to shift production to the U.S.-based mills has begun in the last week for certain of the parts.
On September 15, 2015, the CCAA Judge ordered the main stakeholders to participate in a mediation of all the issues with a view to reaching a “comprehensive agreement”. The mediator is retired Associate Chief Justice Douglas Cunningham and the mediation will commence on September 24, 2015. To view the Judge’s mediation order, please click here.
On September 17, 2015, following further case conferences with the CCAA Judge, we filed a motion for a court order to stop USS from moving the automotive steel from USSC. To view our motion record, click here. The USW filed a similar motion. The motions are scheduled to be heard on September 29, 2015.
Also on September 17, 2015, USSC responded to the USS action by filing its “Cash Conservation Business Preservation” motion. To view the USSC motion, please click here.
USS also filed a motion on September 17, 2015 for various other court orders relating to its intention to transfer the steel production. To view the USS motion record, please click here.
We are very concerned with the above-noted actions of USS and the response of USSC. Throughout the CCAA proceeding we have asserted that the pension plan members have a statutory priority over all other creditors for amounts owing to the pension plans by operation of the deemed trust provisions in the Ontario Pension Benefits Act, which was confirmed by the Supreme Court of Canada in the Indalex case. The exchange of correspondence we have sent to USS regarding the pension plan members’ statutory priority can be viewed below.
- Letter from Koskie Minsky LLP to Thornton Grout Finnigan LLP and Blake, Cassels & Graydon LLP
- Letter from Thornton Grout Finnigan LLP to Koskie Minsky LLP
- Response Letter from Koskie Minsky LLP to Thornton Grout Finnigan LLP
We will continue to post new developments as they occur.
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March 24, 2015
We are pleased to report that on March 19, 2015, the Ontario Court of Appeal granted our motion for leave to intervene in the Grant Forest Products case. The Court found that given the nature of the case and the issues in it that impact USSC pension plan members, the intervention by USSC Representative Counsel would make a useful contribution by bringing the perspective of pension plan members affected by such issues before the Court.
To view a copy of the decision, please click here.
We are in the process of preparing our factum for filing with the Court of Appeal and will keep you informed of the proceedings before the Ontario Court of Appeal.
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February 23, 2015
On February 20, 2015, we filed a motion before the Ontario Court of Appeal to intervene in an ongoing CCAA case called Grant Forest Products. The objective of our motion is to protect thePension Benefits Act (“PBA”) deemed trust remedy for the non-union USSC pension plan members of the underfunded USSC pension plans in the USSC CCAA proceedings. The decision of the Court of Appeal is under reserve, meaning that the Court is preparing its written decision.
The PBA deemed trust and the priority given to the deemed trust in the Ontario Personal Property Security Act (“PPSA”) is an important remedy for pension plan members and was confirmed by the Supreme Court of Canada in the 2013 Indalex case to apply in CCAA proceedings (subject only to the doctrine of paramountcy, which in practice means it is subject only to a CCAA-ordered priority necessary for the CCAA proceedings such as, for example, a DIP lender priority).
As a result of Indalex, the PBA deemed trust and the PPSA priority operate to give priority recovery for amounts owing by an employer to an underfunded pension plan on its wind up to the pension plan beneficiaries which is to be paid ahead of the claims of all other creditors (except for a CCAA-ordered priority, as noted above). In particular, in our view, the amount subject to the deemed trust is to be paid ahead of the claims of other secured creditors over certain assets, as well as ahead of unsecured creditors. The deemed trust is therefore important for the USSC pension plan members, both in the current USSC restructuring negotiations and, if that does not succeed, in any liquidation of USSC, where the pension plan members have to make claims against the sale proceeds of USSC asset sales.
In the Grant Forest case under appeal before the Court of Appeal, we argue that the lower court CCAA judge erred where he held (among other things) that if a pension plan is not wound up “as of the CCAA filing date”, then the PBA deemed trust does not apply in the CCAA proceeding. The Ontario Superintendent of Financial Services filed an appeal of the decision. Other than our intervention, there is no employee or retiree representation before the Court of Appeal in Grant Forest. The appeal and our intervention seek to overturn the lower court decision.
To review our motion record, please click here. To view a copy of our Factum we filed for this motion please click here.
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December 29, 2014
On December 23, 2014, we mailed a letter to all Non-USW Active Employees and Retirees providing an update on the CCAA proceedings. To view a copy of the letter dated December 23, 2014 please click here.
There have been a number of developments over the past few months, however, it is our view that the major restructuring of USSC is still in its early stages. The company has, however, done the following with the involvement of major stakeholders, including our firm:
a) obtained additional financing from U.S. Steel in Pittsburgh called “Debtor-in-Possession” Financing (“DIP”). The latest Monitor’s Report (the 5thReport) dated December 12, 2014 states that USSC has not yet drawn any funds on the DIP loan;
b) established a Claims Process to solicit the claims of creditors who claim to be owed amounts from USSC, with the exception of any claims based on the USSC pension plans or Other Post-Employment Benefits (“OPEBs”), which may be subject to a future claims process:
c) established a protocol for quantifying with greater precision the liabilities of USSC with respect to the pension plans and OPEBs. This process has recently started and will continue into 2015;
d) obtained approval from the court for a Key Employee Retention Plan (“KERP”) in the maximum amount of $2,570,378. The KERP operates as a stay bonus to incentivize certain key USSC employees to continue employment with the company during the CCAA proceeding, as those employees are considered critical to the restructuring process;
e) restarted the coke ovens at Hamilton Works and entered into a coke supply contract with U.S. Steel; and
f) began to formulate a sales process for the company to solicit bids from potential purchasers of all or parts of USSC.
Next Steps
As noted above, the company has indicated that it will be proceeding with a sales process to market itself for sale in early 2015. We have been provided with draft documents relating to the proposed sales process protocol and have sent comments on the draft protocol back to USSC. USSC has advised that they plan to have meetings with certain stakeholders, including us, prior to returning to court in 2015 to request an order for approval of the sales process protocol. We will keep you apprised of developments.
We will continue to provide regular updates to you as the CCAA proceeding moves forward, as well as posting updates on our firm website for USSC non-union retirees and active employees.
In addition to this website you can call our toll-free hotline at 1-866-777-6341, or e-mail us at usscrepcounsel@kmlaw.ca if you have any questions.
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October 9, 2014
On October 8, 2014, by Order of Mr. Justice Wilton-Siegel, Gary Dallin, George Hanson, Paul Wendling, Pat Mousseau, Ronald McClure, Frank Dalimonte were appointed as Representatives of all Non-USW Active Employees and Retiree Beneficiaries in USSC’s CCAA Proceedings and Koskie Minsky was appointed as Representative Counsel with respect to all matters pertaining to any recovery, compromise of rights or entitlements of said individuals under the pension plans and other benefit plans.
In accordance with the Representation Order, a Notice will be sent by USSC to all Salaried Active Employees and Retirees who are affected by these appointments. Any person not wishing to be represented by the Representatives and our firm may opt-out by sending a letter to the Monitor by November 5, 2014.
To view the Representation Order together with the Notice, please click here.
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October 4, 2023
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Documents
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Contacts
Toll Free Hotline: 1-866-777-6341
Email: usscrepcounsel@kmlaw.ca
Please click here to view the USSC CCAA Client Committee Chart
