US Steel Canada files for bankruptcy protection

Spanish Market: Metals
17/09/14

US Steel Canada filed for protection from its creditors in an Ontario court as it seeks to restructure its business following five years of losses totaling about $2.4bn.

The Canadian unit of Pittsburgh-based US Steel said late yesterday it obtained a court order from the Ontario Superior Court of Justice for creditor protection under the Companies' Creditors Arrangement Act (CCAA). The order provides a stay of some creditor claims against US Steel Canada during the CCAA process while appointing accounting firm Ernst and Young as monitor of the unit.

"It is clear that restructuring US Steel Canada is critical to improving our long-term business outlook," general manager Michael McQuade said. "Entering CCAA was the only responsible course of action under the circumstance and it was taken only after all other options were thoroughly explored."

US Steel said that as a result of its Canadian unit's filing, US Steel Canada and its subsidiaries "will be deconsolidated from US Steel's financial statements" immediately. US Steel has agreed to provide its Canadian unit with C$185mn ($165mn) of secured debtor-in-possession financing to support operations through 2015.

"A planned restructuring will allow US Steel Canada to operate and compete more effectively," US Steel chief executive Mario Longhi said.

US Steel said its Canadian affiliate represented about $1bn of US Steel's consolidated employee benefits liability as of June 30.

The filing could trigger a default on C$150mn in Ontario province notes, potentially triggering the call of $316mn of US Steel's 2019 senior convertible notes. US Steel said it would use cash to pay off the senior notes in that event.

US Steel Canada's main operation is the Lake Erie Works, an integrated steelmaking facility in Ontario. The business has production capacity of 2.6mn short tons/yr (2.9mn metric tonnes)/yr and employs about 2,000 people. The company halted iron and steelmaking at its Hamilton Works in Ontario in December 2013.

US Steel also said it would not proceed with an expansion of its iron ore pellet facility at Keetac in Minnesota that would have expanded production by 2.3mn st/yr to a total of 9.6mn st/yr. Permits for the expansion expire this month and will not be renewed.

The decision to halt the expansion follows US Steel's decision to convert its Fairfield, Alabama, blast furnace into an electric arc furnace, which would lower iron ore consumption.

US Steel will also back off from investments in its carbon alloy facilities at Gary Works, Indiana, that would have cost more than $800mn. The two strategic actions will results in a charge of about $250mn in the third quarter.

Longhi said the decision to stop investments in the two projects would allow the company to redirect funding to develop advanced high-strength steels for automotive customers, premium connections for its energy markets customers and capital expenditures to update and modernize operations.

Altogether, the strategic actions, including the bankruptcy filing, will result in third quarter pretax charges of $550-600mn.

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29/04/26

Japan’s ferrous scrap exports dip in March

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Indonesia’s Huafei to cut MHP output on sulphur costs

29/04/26

Indonesia’s Huafei to cut MHP output on sulphur costs

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General Motors pencils in $500mn tariff refund

28/04/26

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Mexico trade balance swings to $6bn surplus in March

27/04/26

Mexico trade balance swings to $6bn surplus in March

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North Japan earthquake spares energy facilities

27/04/26

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US Steel Canada files for bankruptcy protection

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