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Stelco pitches plan for growth in its proposed initial public offering

HAMILTON — Stelco Holdings Inc. is pitching itself as a leaner and more disciplined steelmaker with prospects for growth as it hopes to entice investors to its initial public offering.

HAMILTON — Stelco Holdings Inc. is pitching itself as a leaner and more disciplined steelmaker with prospects for growth as it hopes to entice investors to its initial public offering.

“Stelco has undergone a transformational change that has directly addressed several of the challenges the business faced in its history,” the company said in its preliminary prospectus filed with securities regulators.

“We are now well positioned to continue our operational and financial turnaround and sustain this performance over the long-term.”

The company has not determined the number of shares to be sold or the price per share, but it says it wants to spend the money raised to fund capital expenditures and pension obligations.

The IPO plans come after two restructurings under court protection from creditors, the most recent completed this past summer.

The company said its most recent restructuring enabled it to eliminate $3 billion in debt. It also extinguished $1.4 billion in pension and benefit obligations in exchange for fixed payments and formula-based contributions based on the business’s cash flow.

At June 30, Stelco said the only debt on its balance sheet was $68 million drawn on a $375 million credit facility.

Steel industry analyst Charles Bradford said Stelco faces several challenges including U.S. President Donald Trump and what he might propose regarding U.S. steel imports.

“We don’t know yet for example what’s going to happen,” said Bradford, who had been expecting the IPO.

He said it will be up to the new management to show that they can deliver, noting that the former Dofasco operations in Hamilton that are owned by ArcelorMittal have been consistently profitable.

In its plan to grow its business, Stelco said it has significant excess capacity and as a result its assets are being underutilized.

“We are actively pursuing initiatives, including purchases of external slab and toll-rolling for third-parties, that can be implemented with limited investment to improve asset utilization.

“In addition to utilizing excess capacity, we plan to optimize our assets by continuing to pursue initiatives such as capturing, recycling, and selling the by-products generated in our production process.”

Stelco filed for creditor protection under the Companies’ Creditors Arrangement Act in 2004 and completed a restructuring in 2006.

It was acquired in 2007 by United States Steel Corp. which dropped the Stelco name in favour of U.S. Steel Canada. It ended up back under court protection from creditors in 2014.

Bedrock Industries acquired the company’s operations earlier this year and restored the Stelco name.