Canadian mills may split from US Steel

The Ontario Superior Court of Justice has approved what Pittsburgh-based United States Steel Corp. (U.S. Steel) calls a “mutually agreed upon transition plan with U. S. Steel Canada (USSC) as part of USSC’s restructuring under Canada's Companies’ Creditors Arrangement Act (CCAA) process.”

The agreement essentially entails a split between U.S. Steel’s American and Canadian operations, including the following steps: 

• U. S. Steel will no longer generate any sales on behalf of USSC;
• going forward U. S. Steel will “load its production” onto its U.S.-based mills;
• U. S. Steel will transition away from providing technical and engineering services to USSC or in supporting any quality claims made against USSC;
• U. S. Steel will continue to provide other shared services that USSC relies upon for up to 24 months (with the exception of sales); and
• should USSC enter into a new sale and restructuring process in the future, U. S. Steel has agreed not to be a bidder.

On Sept. 16, 2014, USSC’s board of directors decided to apply for relief from its creditors pursuant to Canada’s Companies' Creditors Arrangement Act.  As a result of the 2014 CCAA filing, USSC and its subsidiaries were deconsolidated from U.S. Steel’s financial statements on a prospective basis. In the months following the CCAA filing, no negotiated or other settlement was achieved.

Prior to the September 2014 CCAA filing, USSC recorded a loss from operations in each year for five years, with an aggregate operating loss of approximately $2.4 billion, or in excess of $16 per share, since December 2009, according to U.S. Steel.

USCC’s assets include steelmaking complexes in Hamilton and Nanticoke, Ontario, that had formerly operated under the name Stelco.

In addition to the likely loss of its Canadian operations, U.S. Steel also has scaled back its output in Alabama and has announced it is considering idling a large steelmaking complex in Granite City, Illinois.