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.
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.