Stelco gets word on pension plans

STELCO NEWS RELEASE

************************ Stelco receives letter from Ontario special advisor on the steel industry

HAMILTON, ON, Feb 10, 2005 - Stelco Inc. (TSX:STE) today announced that it has received a letter from Mr. James Arnett, Special Advisor on the Steel Industry to the Government of Ontario, regarding the funding of the Company's pension plans.

In the letter, received yesterday afternoon, Mr. Arnett states that "I have been instructed to advise you that upon emergence from CCAA, Stelco will not be entitled to the benefit of Section 5.1 (of the Regulations under The Pension Benefits Act (Ontario))."

The letter also states that "...the Government supports your auction process and, to that end, is prepared to be flexible in discussing a fair and reasonable plan for the consequent need to fund the pension deficiencies on a solvency basis". Mr. Arnett also offers his commitment "on behalf of the Government, to working constructively with the company, its employees, stakeholders and bidders to address this issue."

Stelco has stated that it will actively negotiate with the Ontario Government to develop a fair and reasonable plan to address this potential change in regulation under the Pension Benefits Act.

If the Government passes a regulation to simply revoke the 5.1 election, the solvency deficiency of $1.3 billion, as at December 31, 2004, will have to be amortized over a five- year period.

For example, if the election had been rescinded as of January 1, 2004, the total 2004 cash contributions to Stelco's four main plans would have increased from $64 million to $353 million.

Hap Stephen, Stelco's Chief Restructuring Officer, said: "Our goal is a reasonable and responsible solution that will serve the best interests of the Company and all its stakeholders, including the Government of Ontario, and also reflect the Company's ability to make payments to reduce the solvency deficiency."

Mr. Stephen added that, "Stelco has consistently stated that the pension funding issue is front-and-centre for the Company and for the bidders. The bidders are well aware of the issue, of our view, and of the Court's stated assumption that they will keep the issue in mind in making their bids."

The Ontario Government amended Regulation 909 under the Pension Benefits Act in 1992 to allow a pension plan with over $500 million in assets to elect to cease funding the plan on a solvency basis.

Pension Plans that have taken the 5.1 election are exempt under the Regulation from making special payments to fund a solvency deficiency.

These plans, however, must continue to be funded on a going concern basis, and pay higher Pension Benefit Guarantee Fund premiums in accordance with the Pension Benefits Act.

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