USW Local 2251
In response to the Essar Steel Algoma press release, Local 2251 would like to respond with the following;
A robust SISP (Sales and Investment Solicitation Process) process has a number of interested entities bidding to acquire the assets of Essar Steel Algoma. There are a number of stakeholders entitled to consultation with respect to proposed bidders. A robust SISP process does not take place if only one person or entity is allowed to make a bid.
Senior Justice Morowetz in his February 10, 2016 Order re: SISP approval, stated that the Union was a “core stakeholder” and a “critical constituent”.
In his January 13, 2016 endorsement, Honourable Mr. Justice Newbould stated that Local 2251 would have an “important seat” at the table during the SISP negotiations.
In the February 10, 2016 SISP Order, Consultation Parties is defined as;
(o) "Consultation Parties" means counsel and financial advisors to (a) the DIP Agent and/or the DIP Lenders; (b) the Prepetition Agents and/or the Prepetition Lenders; (c) the Ad Hoc Committee of Essar Algoma Noteholders; (d) the Ad Hoc Committee of Junior Noteholders; (e) the USW; and (f) the retirees;
The SISP Order also states;
Assessment of Phase I Bids
19. Following the Phase I Bid Deadline, the Applicants, in consultation with the CRA, the Financial Advisor, the Consultation Parties and the Monitor, will assess the Phase I Bids received by the Phase I Bid Deadline and determine whether such bids constitute Qualified Phase I Bids. The Applicants, in consultation with the CRA and the Financial Advisor, with the approval of the Monitor, may waive compliance with any one or more of the requirements specified above and deem such non-compliant bid to be a Qualified Phase I Bid.
None of the Unions were consulted or involved in the elimination of prospective bidders. The Union was presented with one successful bidder who subsequently left and now is presented with another successful bidder.
Algoma’s news release states that they have a committed bidder. Local Union 2251 still believes that there are interested parties interested in purchasing the assets, which may provide a preferred solution.
The Applicants and the Monitor decided who the successful bidder would be without adhering to the process contained in the SISP Order. The Union raised a complaint to Justice Newbould regarding the disqualification of a perspective bidder. The Judge’s response which appears in part at paragraphs 23 and 24 of his Endorsement dated May 13, 2016.
“  Having said that, I recognize that this entire SISP process is being driven by very tight timelines and that there have been other important matters taking the time of all concerned, not the least of which has been the Cliffs contract issue. There is many a slip between the cup and the lip and I do not at all ascribe any bad faith to the actors in this drama. It is far too easy in hindsight to pick things apart and a CCAA case with all of its hurly-burly complexity is a situation in which one should not engage in hindsight nitpicking of well-intentioned actions of the parties.
 The main complaint of the USW is that it was not consulted and given an opportunity to provide input into the decision to disqualify the Subject Bidder at the Phase 1 state. Technically the USW might be right but as a practical matter it made no difference.”
Regarding the criticality of the negotiations, it should be noted that it was the bidders that walked away from the negotiating table on or about December 8, 2016.
Further, it should also be noted that the 24th Report of the Monitor dated January 26, 2017, at paragraph 32 states:
“The DIP Extension Amendment contains a milestone that the operating expenses of Algoma have to be reduced by $22,200,000 on an annualized basis by March 15, 2017. The Monitor understands that, unless a global resolution is reached between the Term Lenders and Unions, the only practical way Algoma can achieve this milestone is by imposing remuneration terms in its employees pursuant to a conciliation process after the issuance and expiry of the “no board” report by the Minister of Labour.”
It is clear that the Monitor was under the impression that this was the intended path that the DIP Lenders were using.
In closing, we remain committed to negotiating a fair agreement which will stabilize the Company and provide snap back provisions going forward.