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.
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.