The Ontario government has anointed Bedrock Industries Group as its choice to take over U.S. Steel Canada Inc., which has been operating under creditor protection for two years.
Bedrock Industries LP, a private equity fund that specializes in metals and mining investments, has signed a memorandum of understanding with the province to “facilitate the restructuring” of the company. The deal requires approval from other stakeholders and the Ontario Superior Court before Bedrock will be permitted to win the bidding.
The terms of the agreement are confidential, the government and the company said in a statement Wednesday, but the restructuring is intended to protect jobs, pensions and post-employment benefits as well as keep operations in Hamilton and Nanticoke, Ont., operating.
The province is a key stakeholder because of loans it made to U.S. Steel Canada’s former parent, United States Steel Corp., to finance pensions and because of a pension deficit of more than $800-million, some or all of which could be dumped on the province’s Pension Benefits Guarantee Fund.
A news release announcing the agreement noted that the province seeks “to facilitate economic progress while minimizing financial risk for the public treasury.”
The statement also noted that the restructuring of U.S. Steel Canada is subject to several conditions, including acceptance of the agreement by the company, new collective agreements with union locals in Hamilton and Nanticoke, agreements with other stakeholders and approval by the court, which is supervising U.S. Steel Canada’s restructuring under the Companies’ Creditors Arrangement Act.
The union local representing workers in Hamilton said it does not have an agreement with Bedrock.
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