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By Euan Rocha and Allison Martell
TORONTO, Sept 18 (Reuters) - United States Steel Corp's Canadian unit had sought a wide range of relief measures from the Ontario government before it filed for creditor protection in Canada earlier this week, according to a source familiar with the matter.
The source, who was not authorized to discuss the matter publicly, said the steelmaker had sought environmental liability waivers, an extension on the deadline to fully fund its pension plans in Canada and forgiveness of a C$150 million ($137 million) loan granted by the provincial government nearly a decade ago.
That loan helped fund a pension plan deficit that existed when U.S. Steel's Canadian assets were still owned by Stelco Inc. Stelco was bought by U.S. Steel in 2007.
In a bid to save jobs and help Stelco restructure, Ontario about a decade ago gave Stelco a 10-year period to fully fund its pensions. It also gave Stelco the loan, the vast majority of which was to be forgiven if the pension plans were fully funded by the end of 2015.
U.S. Steel agreed to honor that deal when it bought Stelco, but so far it has only been making the minimum required payments to the pension plans. Now, barely a year ahead of the 2015 deadline, its four main Canadian pension plans have a total solvency deficit of over $750 million.
The source said that U.S. Steel had asked the government for a roughly 15-year extension on the deadline and also asked for leeway to sharply cut its pension plan funding obligations that currently stand at about C$70 million annually.
Earlier on Thursday, a company spokesman confirmed that it had held talks with the Ontario government, looking at ways in which the government could help with its restructuring efforts.
"We have been investigating ways in which it might be possible for the senior levels of government to assist in our restructuring efforts," Trevor Harris, the company's spokesman, said in an email, without providing further details.
Separately, an Ontario government spokeswoman said the government had been working with U.S. Steel for about eight months to help find a "workable solution" for its Canadian assets. She did not say what the talks focused on.
The company had also sought to restructure under the Canada Business Corporations Act before seeking bankruptcy protection, the source said.
One part of that plan involved splitting the company into different parts, with the parent company in the United States acquiring its Lake Erie assets, the source said. That operation is among the youngest traditional mills in North America even though it began production in 1980.
Industry insiders see the Lake Erie assets as more viable than the much older assets in Hamilton, Ontario. Additionally, the environmental liabilities around its Hamilton operations are seen as significant and the size of its retiree base in Hamilton is also much larger.
However, the source said a big hitch in the discussions with the government was the fact that the company was unable to clarify the extent of potential environmental liabilities.
In legal filings, U.S. Steel said there have been a number of spills at Hamilton in the past century and discharges into the environment during the normal course of operations.
"The nature and extent of these legacy environmental impacts are not fully known," the company said.
1 US dollar = 1.0949 Canadian dollar Editing by Jeffrey Hodgson, Chris Reese and Ken Wills