Ivaco Inc. announced that the company and its Canadian subsidiaries, excluding IMT Corporation, have obtained an order from the Ontario Superior Court of Justice under the Companies’ Creditors Arrangement Act that will facilitate the implementation by Ivaco and its Canadian subsidiaries of a restructuring plan.
Simultaneously, the Ivaco entities that received CCAA protection have also applied to the Court in the Eastern District of Michigan for similar protection of their U.S. assets. The company has also announced that its U.S. manufacturing operations are being discontinued.
"These restructuring measures are required to address the recent and dramatic adverse impact on our company of problems that have affected the North American steel industry as a whole", said Paul Ivanier, president and CEO of Ivaco. "Working with our lenders and stakeholders, we have begun to develop a plan of restructuring which, we believe, will maximize our enterprise value and see our core businesses emerge as financially healthy operations", stated Ivanier.
Ivaco's restructuring plan consists of the following key components:
• the consolidation of the Canadian operations in order to create a more efficient corporate structure;
• continuing the program for the sale of non-core assets;
• the renegotiation of various operating and labor agreements;
• the settlement of debts, including trade liabilities and legal obligations;
• continuing sales and distribution operations in the United States; and
• the discontinuance and sale or liquidation of all of the company's U.S. manufacturing operations.
The company cited the higher prices for ferrous scrap as one of the reasons for the company’s fiscal problems. The company noted that the price of scrap metal, one of the most significant inputs to the production of steel, increased substantially in 2003. Energy and transportation costs also increased significantly during the same period.