U.S. Steel argues it kept former Stelco afloat, only to be maligned
Closing arguments begin on claim U.S. Steel is owed $2.2 billion from former Canadian operations
On day seven of a hearing about $2 billion that U.S. Steel invested in the former Stelco plants in Hamilton and Lake Erie, attorney Michael Barrack kicked off closing arguments on behalf of U.S. Steel.
He argued that much of the cash that went from Pittsburgh to Ontario was always intended by everyone involved to be considered debt – loans to be repaid. If the company had wanted to designate the batches of hundreds of millions of dollars to the struggling Canadian plants as equity, it would have.
"We are in a simple case, not a complex case" Barrack said, to a few smiles in the courtroom from people who've attended seven days of examining and re-examining technical financial conditions and contractual law.
No good deed goes unpunished.- Attorney Michael Barrack, arguing U.S. Steel's investment in Canadian steelmaker Stelco kept it alive during the downturn
If Ontario Superior Court Justice Herman Wilton-Siegel decides the $2.2 billion was debt, U.S. Steel could take first place in line for the divvying of U.S. Steel Canada under the Canada Creditors' Arrangement Act. Paying U.S. Steel back could use up money for pensions and other obligations, opponents fear.
What appeared to be taking shape in arguments during the hearing were various options for the judge to break down that $2.2 billion, characterizing some debt and some equity.
What about money sent in 2013?
As he began closing arguments for the province, attorney Alan Mark zeroed in on what terms accompanied U.S. Steel money in 2013. The company added conditions of security to its loan agreements, changing up the way it was sending money to Canada.
Both sides agree that without U.S. Steel parent money flowing after the acquisition of the former Stelco in 2007, the Canadian operations wouldn't have survived the economic downturn on their own. But as the parent sending money to a subsidiary, U.S. Steel had considerable control over the terms offered.
The province and steelworkers opposing the claim say that's an indication that the money was not the same as an arms-length loan.
Barrack said the Canadian president, Michael McQuade, testified he'd reviewed each infusion of money and decided it was in the best interest of the Canadian plants to accept the terms.
But on Tuesday, Wilton-Siegel pushed back on that, questioning how free McQuade could've possibly have felt to try to find another option, with his operations bleeding millions of dollars.
And Mark, for the province, said McQuade was clearly "a cog in the integrated wheel" – the parent gave no direct word to McQuade that it was considering sending the Canadian plants into bankruptcy protection.
"U.S. Steel controls production in Canada (at the time)," Mark said. "If it was unhappy about the amount of money going into Canada it has lots of tools to manage the obligations."
Barrack said U.S. Steel now sees the opponents' objections as ungrateful for their support during an almost unprecedented downturn in the steel industry: "No good deed goes unpunished," he said.
After closing arguments from the province and representatives of unionized and salaried steelworkers continuing Wednesday morning, the hearing is expected to wrap up mid-day.