Stelco says finance minister to recommend company finance C$1.3 billion pension deficit

By Caroline Salls

Pittsburgh, Aug. 8 - Stelco Inc. received a letter from Ontario's minister of finance, Greg Sorbara, saying he will recommend the company be forced to fund its C$1.3 billion pension benefit, according to a company news release.

Sorbara said he will seek the approval of the lieutenant governor-in-council to amend the regulation under the Pension Benefits Act so that Stelco will no longer have the benefit of section 5.1 of the regulation. If the benefit is revoked under section 5.1, the company will have to amortize the C$1.3 billion it owes under the pension plan over five years.

The letter also said the company's proposed restructuring plan outline is not acceptable to the province.

"We remain willing to be flexible and intend to continue a constructive dialogue with all affected parties to see if an acceptable restructuring plan can be developed that meets both the province's objectives and legitimate concerns of other stakeholders," Sorbara said in the letter.

Courtney Pratt, Stelco's president and chief executive officer, said in the release, "Our goal remains to find a middle ground that everyone can support and that is compatible with the long-term viability of Stelco."

To date, no stakeholder group has endorsed the plan outline.

Stelco, a Hamilton, Ont.-based steel company, filed for bankruptcy under the Companies, Creditors Arrangement Act on Jan. 29, 2004. Its case number is 04-54306.

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