Boston, MA 09/25/2014 (wallstreetpr) – An integrated steel producer, United States Steel Corporation (NYSE:X) is gearing itself to divest its Hamilton assets in Canada. The company is also expecting the process of running an auction for its Lake Erie Operations.
Protection From Creditors
The Canadian subsidiary of the U.S. company has filed for protection last week from its creditors, Reuters reported quoting courting filings. The company also indicated that the planned auction does not necessarily lead to a sale of assets, or the process would be completed.
Michael McQuade, President of the U.S. Steel Canada unit, said in an affidavit that initiating the sale process of its Hamilton assets was a sensible and important step since it would provide the company, as well as, its stakeholders a better knowledge of the available prospective options.
Most of the company’s worth was in Lake Erie where a number of issues were haunting the operations of the unit. This included environmental liabilities, years of job cutbacks, and the big retiree base. These issues weigh heavily on the value of the assets in Hamilton.
Restructuring Process
The biggest issue that the company faces in Canada if it plans to restructure was the retirees. There is also an estimation that the restructuring move would affect over 14,000 retirees as they depend on the company’s pension. As if this was not enough, the unit in Canada already has a pension fund deficit of over $750 million.
The company’s filings with the Court were posted online indicating the agreed timetable between the U.S. parent company and the Canadian subsidiary since the parent company was responsible for providing interim finance during the restructuring process.
The timetable provides 60 days of time for the company to start the process of sale and investment solicitation for the Hamilton Works from the date of the unit filing for protection from its creditors.
For the Lake Erie Works too, a similar process would become due in March next year and any sale or refinancing or investments must be done before October next year.
