Hamilton, CANADA, April 13, 2005 – The United Steelworkers of America announced today that it has signed a letter of intent with Tricap Management Limited (Tricap), Brascan Corporation's (NYSE/TSX: BNN) restructuring fund to work together on a C$1.35 billion plan to recapitalize Stelco Inc., and remove the Company from protection under the Companies' Creditors Arrangement Act (CCAA).
Tricap will provide advisory services and, as required, financial assistance to the union in the development, negotiation and implementation of a plan of arrangement that is acceptable to the Steelworkers and removes Stelco from CCAA protection.
The Letter of Intent, subject to various conditions, envisions a plan that includes:
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Tricap's commitment to arrange or provide a total of $1.35 billion in new capital comprised of: |
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A C$600 million revolving line of credit; |
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A C$350 million term loan; and |
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An underwriting commitment to backstop C$400 million of equity-linked securities, to be offered to existing stakeholders |
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The Proceeds would be applied as follows: |
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C$500 million will be immediately contributed to Stelco's pension plans; |
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Approximately C$100 million will be used to repay existing Stelco secured indebtedness; and |
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C$750 million will be retained within Stelco to fund its capital expenditure process and for general corporate purposes. |
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Claims by current unsecured creditors to be satisfied through the issuance of new equity in a recapitalized Stelco. |
Bill Ferguson, President of the Steelworkers' Local 8782 said, “The time to recapitalize Stelco is now. The union recognizes the urgency of the situation and we believe that working together with Tricap we have now a strong financial partner and a viable plan to recapitalize Stelco. We call upon Stelco and the court to immediately provide Tricap with full access to the information necessary for Tricap to finalize its commitment.”
“A joint Steelworker/Tricap Plan would incorporate the union's seven principles and deal decisively with Steelworker concerns about the pension plan deficit”, commented United Steelworkers' National Director Ken Neumann. “A Steelworker/Tricap Plan would look to the future and fully fund necessary capital expenditure requirements and provide a significant liquidity cushion to Stelco.”
Cyrus Madon, Managing Partner, Tricap Restructuring Fund commented: “We believe the Steelworker's Plan is fair to all stakeholders and appropriately addresses the employee pension fund shortfall, which we consider to be critical to the success of any plan and the long-term viability of the restructured company. Stelco has the potential to once again lead the industry, backed by a committed and experienced workforce, strong management team and positive business fundamentals and industry dynamics. We look forward to the opportunity to work with Stelco management and its other stakeholders to bring the CCAA process to a certain and successful close”, concluded Madon.
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The United Steelworkers of America represents over 255,000 men and women working in every sector of Canada's economy. As a result of Wednesday's vote by delegates to a Paper Allied Industrial, Chemical and Energy Workers International Union (PACE) convention in Las Vegas, the new, merged union represents 850,000 workers continent wide, the largest industrial union in North America.
Tricap Restructuring Fund, established by Brascan Corporation in 2001 with institutional partners, including the Canada Pension Plan Investment Board, provides a source of patient, long term capital and strategic assistance to companies experiencing financial or operational difficulty. Within the steel industry, the Fund was recently the lead investor in steel fabricator VicWest Inc., facilitating that company's successful turnaround. For more information on the Tricap Restructuring Fund, please visit our website at: www.brascanam.com/Alternative/tricap.htm.
Brascan Corporation is an asset management company. With a focus on property, power and infrastructure assets, the company has direct investments of $20 billion and a further $7 billion of assets under management. This includes 70 premier office properties and over 120 power generating plants. The company is listed on the New York and Toronto stock exchanges under the symbol BNN. For more information, please visit our web site at www.brascancorp.com.
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Contacts:
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United Steelworkers Of America
Bill Ferguson
Tel: 905-537-8782
Ken Neumann
Tel: 416-802-0607 |
Tricap Restructuring Fund
Brascan Corporation:
Katherine C. Vyse
SVP, Investor Relations and Communications
Tel: 416-369-8246
Email: kvyse@brascancorp.com |
Note: This press release may contain “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. The words “believe”, “expect”, “anticipate”, “intend”, “estimate” and other expressions which are predictions of or indicate future events and trends and which do not relate to historical matters identify forward looking statements. Reliance should not be placed on forward-looking statements because they involve known and unknown risks, uncertainties and other factors, which may cause the actual results, performance or achievements of the company to differ materially from anticipated future results, performance or achievement expressed or implied by such forward-looking statements. Factors that could cause actual results to differ materially from those set forward in the forward looking statements include general economic conditions, interest rates, availability of equity and debt financing and other risks detailed from time to time in the company's 40-F filed with the Securities and Exchange Commission. The company undertakes no obligation to publicly update or revise any forward looking statements, whether as a result of new information, future events or otherwise.
