U.S. Steel sought wide ranging relief from Ontario government: source

Thu Sep 18, 2014 6:10pm EDT
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By Euan Rocha and Allison Martell

TORONTO (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.   Continued...