Ontario Court Holds Off Investor from Stelco
An Ontario Court dismissed the bid of Sherritt that was seeking management over Canadian steelmaker Stelco. Sherritt went to the law after Stelco picked out Briscan as its investor, having gone against its own statements and with no tender held to the effect. Sherritt’s failure in court means the break-down of Severstal plans, as the latter has been also eyeing bankrupt Stelco.
Stelco’s indebtedness reached $1.98 million. The company has been under bankruptcy proceedings since January 2004. Under the restructuring scenario offered by Russian Severstal, the creditors were to receive $400 million, and long-term production investments were planned at $600 million. Other companies, including Sherritt, launched investing bids as well.
Stelco rejected investors’ proposals in March, pledging to independently cope with financial crisis.
Late April, however, Stelco picked out a financial consultant from the companies that had never bid in the tender. It was Tricap, division of Canadian Briscan. Stelco’s spokeswoman Helen Reeves officially assured Kommersant Tricap would be operating exclusively as a financial advisor, not as an investor. But before the tender, Briscan had voiced its intention to have interest in Stelco. Once Briscan appeared in Stelco, Sherritt went to the law, seeking to get access to restructuring. Severstal representatives told Kommersant the company was ready to bring in a similar suit.
Sherritt was renounced May 19. The Ontario Court dismissed its joint venture bid, having established a negative precedent for Severstal.
Severstal declined to comment on its plants related to Stelco yesterday, but the award has apparently ruled out the company’s hopes for the take-over.
The last resort is Canadian lawyer George Adams, whom the Ontario Court appointed as an intermediary in talks between the creditors and holders. Any party concerned may consult with the specially established committee that, in its turn, would recommend Adams either to take or reject the bid of potential investors, the court specified in its recent award.
www.kommersant.com
All the Article in Russian as of May 31, 2005
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