Pensioners hurt as US Steel’s restructuring plan gets approval

United States Steel Corp. has received approval from a Canadian court to separate its failing Canadian division, U.S. Steel Canada, and cut-off health-care benefits to retired workers.

When it filed for bankruptcy protection under the Companies' Creditors Arrangement Act last year, the Canadian branch had an operating loss of $2.4 billion on aggregate, or over $16 a share, the company said, and added that the unit represented about $1 billion of its consolidated employee-benefits liability as of June 30, 2014, the Wall Street Journal reported.

U.S. Steel will keep on providing services to the Canadian unit for two years, under the court-approved transition plan, but it will not be a bidder if there is another effort to sell the Canadian branch. An attempt to sell the company earlier this year was not successful.

In an online post, the steelworkers’ union said that it was working on alternatives to help the affected pensioners (more than 20,000). The Hamilton Spectator lists the ramifications of the rulings:

• Over 20,600 people are cut off from filing claims for prescriptions, dental work, vision care and other health benefits as of Oct. 9. The company will accept receipts dated up to then — until the end of the month.
• No change in regular pension payments. Retirees will continue to receive those cheques as they have in the past.
• Next year, USSC will be able to take a pass on millions of dollars in payment obligations to the fund from which pension payments are drawn. This will not immediately affect pension cheques to retirees, as there is adequate money to cover those costs for the near future; but the union says the drain is worrying for the longer term.
• USSC has been waived from paying municipal realty taxes to the city. It currently owes its final 2015 instalment of $1,447, 277.24. Next year, it will be spared $6 million in taxes.
• It has been also freed from paying taxes to Haldimand County, meaning that it can take a pass on more than $800,000 for its final payment of the year.