By Steve Arnold
An American hedge fund that planned to merge Stelco and Algoma into a new Canadian steel firm has pulled out of the bidding.
A source familiar with the situation said KPS Capital Partners, of New York, dropped its bids for both companies over its “inability to come to an agreement with the province.”
Ontario has been closely monitoring the restructuring of both Algoma and Stelco because of concerns over the state of their underfunded pension plans.
KPS had been chosen as the top bidder in the Algoma sales process and was said to be a leading bidder for Stelco as well.
The action came as unionized workers and retirees of the former Stelco met in Hamilton to call for a federal public inquiry into the corporate restructuring law they say fails to protect workers and pensioners.
The inquiry call is being led by the United Steelworkers locals that speak for workers at the Hamilton and Nanticoke plants of U.S. Steel Canada, the former Stelco.
Gary Howe, president of Hamilton’s Local 1005, said a law that allows health benefits to be taken from retirees while the corporation sits on a huge cash reserve has to be changed.
“Right now it’s all about greed. Greed drives this process. It’s all about money,” he said.
Bill Ferguson, president of the Lake Erie Works local, said the basic flaw in the Companies’ Creditors Arrangements Act is shown by a court decision making U.S. Steel, of Pittsburgh, the largest secured creditor in Stelco’s restructuring while pensioners are left at the back of the line to be paid.
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