"We like them.
They've been very honest and straightforward with us
and have shown an interest in creating positive labour relations."
~ Canadian steel union describing future Russian boss


Lenin, Russia's Communist hero (he's encased in glass in Moscow's Red Square) and Stalin's role model for terror said:

"The Capitalists will sell us the rope with which we will hang them."

I am reminded of Lenin's braggadocio when reading how 4,000 union members of the largest steel making company in Canada - which made record breaking profits last year on the back of record high steel prices - is backing the sale of their employer to a company from the USSR. Talk about lambs to the slaughter! Or to paraphrase Lenin:

"The Canadians will sell us the steel with which we'll make bombs to destroy them". ~ Jackie Jura

Stelco union likes Russian firm's bid
OAO Severstal: Offer worth $1-billion best suits goals of union
Peter Brieger, National Post, Feb 15, 2005

The union representing more than 4,000 workers at Stelco Inc. is backing an acquisition offer from Russian steel giant OAO Severstal, a crucial vote of confidence as the steelmaker gets set to choose a buyer. After discussions between Severstal and the United Steelworkers on the weekend, union officials said an offer from the Russian steelmaker, worth more than $1-billion, best suits the union's goals. Those include keeping Hamilton-based Stelco in one piece and retiree pension payments intact. Bill Ferguson, president of the union local representing workers at Stelco's Lake Erie mill, said the decision to back Severstal does not mean union officials won't talk with another buyer. "But we like them," Mr. Ferguson said. "They have a good solution to the pension [deficit] issue, they want to keep the chain together. Overall, they came closest to the position the union has taken. "They've been very honest and straightforward with us and have shown an interest in creating positive labour relations." Mr. Ferguson's comments come as final bids were submitted yesterday for control of Stelco, which has been in bankruptcy protection for over a year.

Stelco's board of directors and creditors will ultimately determine which bid prevails, but suitors may face labour unrest if they clash with the union, which has said it prefers a steelmaker, not financial institution, acquires Stelco. The company won't reveal details of the bids until Stelco's board reviews them, which could take several days. Those offers range from financing deals in exchange for an equity stake in the company to outright takeover bids. Stelco's suitors are competing against a $900-million financing offer from Deutsche Bank AG, giving the Stelco bondholder 48% of the steelmaker. Stelco will not confirm who the other bidders are, but the pool is believed to include: U.S. Steel Corp. ; a joint bid from the Ontario Teachers' Pension Plan and miner Sherritt International Corp.; a bid from Toronto-Dominion Bank partnered with an unnamed U.S. buyout firm; and Mittal Steel Co., the world's largest steelmaker. Last week, Algoma Steel Inc. pulled out of the race, citing risks including the steelmaker's $1.3-billion pension deficit. The Ontario government warned last week it will remove a break Stelco has on its pension funding and force the steelmaker to make up the shortfall. No timeline was given, although provincial law requires pension deficits be made up in five years. Analysts and pension experts said it would be nearly impossible for Stelco to pay back the deficit in that time. The future of Stelco's common shares are another key issue. Usually, shares in companies under creditor protection are worthless -- new equity is distributed to a firm's debtholders when it emerges from restructuring while common shareholders get nothing.

But Stelco posted a $100-million profit in the first three quarters of 2004 on the back of record high steel prices, pushing the value of its shares to a two-year high last week. The stock closed at $2.98 on the Toronto Stock Exchange yesterday. Meanwhile, some investors are pushing to vote on bids for the company: two hedge funds, which own about 18% of Stelco's common shares, want shareholders to cast a ballot on the offer chosen by Stelco's board.


Jackie Jura
~ an independent researcher monitoring local, national and international events ~

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