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Stelco Holdings Inc. is listed on the TSX under the symbol "STLC"

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Stelco reports third quarter results

    HAMILTON, ON, Oct. 24 /CNW/ - Stelco Inc. ("Stelco" or the "Corporation")
(TSX:STE) today reported net income for the quarter ended September 30, 2007
of $38 million ($1.26 per fully diluted share), compared to a net loss of
$41 million (loss of $1.51 per share) for the second quarter of 2007 and a
loss of $25 million (loss of $0.93 per share) in the third quarter of 2006.
Net income for the third quarter of 2007 included workforce reduction costs of
$5 million and foreign exchange gains of $36 million.

    EBITDA(*) increased to $67 million for the third quarter ended
September 30, 2007, an improvement of $14 million over the second quarter of
2007. The improvement in EBITDA(*) was largely driven by a significant
improvement in the cost structure resulting from the strategic and operational
restructuring initiatives over the past 18 months plus lower input costs,
offset by lower selling prices.

    Proposed Acquisition of Stelco by US Steel Corporation

    On August 26, 2007, Stelco and US Steel Corporation ("US Steel") entered
into an arrangement agreement providing for a subsidiary of US Steel to
acquire all of the outstanding common shares of Stelco for $38.50 in cash per
common share and Stelco will become an indirect wholly-owned subsidiary of
US Steel under a plan of arrangement pursuant to the provisions of applicable
corporate legislation. As part of the acquisition, holders of warrants to
purchase common shares will receive, for each warrant held, a cash payment
from Stelco equal to $27.50 (being the difference between $38.50 and the
exercise price of the warrants) and holders of options to purchase common
shares will receive, for each option held, a cash payment from Stelco equal to
the difference between $38.50 and the exercise price of such option.
    In connection with the acquisition, it is anticipated that the floating
rate notes will be redeemed and Stelco's secured term and asset based loans,
as well as a term loan made by a subsidiary of Stelco will be retired.
    Completion of the acquisition is subject to customary conditions,
including Stelco shareholder approval, court approval and receipt of certain
regulatory approvals. Subject to the satisfaction of such conditions, it is
anticipated that the acquisition will be completed on or about October 31,
2007. A special meeting of the shareholders of Stelco has been scheduled to be
held on October 26, 2007 for the purpose of considering a special resolution
approving the acquisition. The resolution is required to be approved by at
least two-thirds of the votes cast by shareholders represented in person or by
proxy at the Meeting. Shareholders owning more than 76 percent of Stelco's
outstanding common shares have entered into agreements with US Steel whereby
they have irrevocably agreed to vote in favour of the acquisition at the

    Financial and Operational Summary

    Stelco's financial and operational summary, consolidated statements of
financial position and a cash flow summary are attached. These materials
should be reviewed in conjunction with the Corporation's unaudited interim
financial statements, including the notes thereto, and the related
management's discussion and analysis, a copy of which can be viewed on the
Corporation's website at or on SEDAR at

    (*) EBITDA is a non-Canadian GAAP measure which may not be comparable to
    measures used by other companies. Please refer to the note regarding
    Non-GAAP Financial measures in the accompanying financial and operational
    summary of the Corporation.

    Conference Call

    The Corporation will not be having a conference call on third quarter

    About Stelco

    Stelco is one of Canada's largest steel companies. It is focused on its
two Ontario-based integrated steel businesses located in Hamilton and in
Nanticoke. These operations produce high quality value-added hot rolled, cold
rolled, coated sheet and bar products. To learn more about Stelco and its
businesses, please refer to our Web site at


    This press release contains "forward-looking information" that is based
on Stelco's expectations, estimates and projections as of the date of this
press release or as of the date on which such information is identified to be
given. This forward-looking information includes, among other things, factors
relating to the business, financial position, operations and prospects of
Stelco, including: Stelco's proposed transaction with US Steel; Stelco's
strategies and plans to reduce costs and the anticipated outcome of such
strategies and plans; anticipated productivity levels and profitability;
labour matters related to Stelco's predominantly unionized workforce; pension
matters; consolidation in the steel industry; Stelco's energy and raw material
costs and the availability of such materials; the volatility of selling prices
for steel; international trade matters, including increases in steel imports
into Canada; employee matters, including staffing levels, the retention of the
skills and knowledge of Stelco's employees and the ability to attract and
retain new employees; changes to environmental laws and regulations concerned
with, among other things, emissions into the air, discharges to water or land,
noise control and the generation, handling, storage, transportation and
disposal of toxic substances; new technological developments and Stelco's
ability to make capital expenditures to maintain and enhance its technological
ability; development of new products; planned capital expenditures; and
currency fluctuations in the US dollar and their impact on the Corporation's
US dollar denominated long-term debt, steel pricing, and costs. Often, but not
always, forward-looking information can be identified by the use of words and
phrases such as "plans", "expects" or "does not expect", "is expected",
"budget", "scheduled", "estimates", "forecasts", "intends", "anticipates" or
"does not anticipate", or "believes", or variations of such words and phrases
or states that certain actions, events or results "may", "could", "would",
"might" or "will" be taken, occur or be achieved.
    Forward-looking information involves known and unknown risks,
uncertainties and other factors which may cause the actual results,
performance or achievements of Stelco to be materially different from any
future results, performance or achievements expressed or implied by the
forward-looking information. Actual results, performance and achievements are
likely to differ, and may differ materially, from those expressed or implied
by the forward-looking information contained herein. Such forward-looking
information is based on a number of assumptions which may prove to be
incorrect, including, but not limited to: assumptions relating to the
satisfaction of the conditions to the completion (including conditions
relating to the receipt of regulatory and other approvals) and the
consummation of Stelco's proposed transaction with US Steel; exchange rates,
energy and other anticipated and unanticipated costs; pension contributions
and expenses; the supply and demand for, deliveries of, and the level and
volatility of prices of, steel and raw materials; the continued availability
of financing on appropriate terms; market competition; the impact on Stelco of
various environmental regulations and initiatives; and Stelco's ongoing
relations with its employees and staffing levels. While Stelco anticipates
that subsequent events and developments may cause Stelco's views to change,
Stelco specifically disclaims any obligation to update this forward-looking
information. This forward-looking information should not be relied upon as
representing Stelco's views as of any date subsequent to the date of this
press release.Stelco Inc.
    Financial and Operational Summary

    ($ in millions, except    Three months ended         Nine months ended
     as indicated (*))       Sept. 30     June 30      Sept. 30     Sept. 30
     (unaudited)               2007         2007         2006         2007
    Net sales                 $   634     $    717     $    660     $  1,960
    Costs                         567          664          596        1,827

    EBITDA(1)                      67           53           64          133
    Amortization of property,
     plant, and equipment          29           28           25           88
    Amortization of
     intangible assets              -            -            -            1
    Operating earnings
     (loss) before the
     following:                    38           25           39           44
    Asset impairment charges        -           38            -           38
    Employee future benefits
     - workforce reduction
     costs                          5            9            6           14
    Foreign exchange (gain)
     loss on long-term debt       (36)         (30)           1          (69)
    Interest on long-term
     debt and revolving
     term loans                    19           20           19           58
    Write off of financing fees     -            7            -            7
    Income (loss) before
     income tax                    50          (19)          13           (4)
    Income tax expense
      Current                       6            7            5           13
      Future                        6           15           33           25
    Net income (loss)         $    38     $    (41)    $    (25)    $    (42)

      Average revenue
       per ton             (*)$   606  (*)$    658  (*)$    719  (*)$    641
      Average cost per ton (*)$   542  (*)$    610  (*)$    649  (*)$    597
    Semi-finished steel
     production (thousands
     of net tons)               1,095        1,084          912        3,279
    Shipments (thousands
     of net tons)               1,047        1,089          918        3,058

    (1) Non-GAAP Financial Measures

    The financial information contained in this MD&A is presented in
    accordance with Canadian GAAP. Reference is also made to "EBITDA", which
    is a non-Canadian GAAP measure. "EBITDA" refers to operating earnings
    (losses) before interest, income taxes, amortization and other non-
    operating income and expenses such as asset impairment charges, workforce
    reduction costs, foreign exchange gains and losses on long-term debt and
    the write off of financing fees. Information concerning EBITDA has been
    included in this MD&A because management considers it to be, and uses it
    as, a meaningful indicator for assessing the operating performance of the
    Corporation. EBITDA does not represent cash generated from operations as
    defined by Canadian GAAP and it is not necessarily indicative of cash
    available to fund cash needs. Non-Canadian GAAP earnings measures (such
    as EBITDA) do not have any standardized meaning and therefore the
    Corporation's use of EBITDA measures may not be comparable to measures
    used by other companies. A reconciliation to net income (loss), which is
    a Canadian GAAP measure, is presented above in the Financial and
    Operational Summary.

    Stelco Inc.
    Consolidated Statements of Financial Position
                                                         At           At
                                                   September 30  December 31
     (in millions) (unaudited)                          2007         2006
    Current assets
    Cash and cash equivalents                          $     21     $      -
    Accounts receivable                                     329          214
    Inventories                                             564          693
    Prepaid expenses                                         29           28
    Future income taxes                                      18           27
    Assets held for sale                                    127            -
                                                          1,088          962
    Other assets

    Property, plant and equipment                         1,552        1,743
    Intangible assets                                         5            1
    Other                                                    12           32
                                                          1,569        1,776
    Total Assets                                       $  2,657     $  2,738
    Liabilities and Shareholders' Deficit

    Current liabilities
    Accounts payable and accrued                       $    176     $    220
    Income and other taxes                                   11            1
    Employee future benefits                                 57           58
    Pension liability                                        58           65
    Long-term debt due within one year                        7           13
    Liabilities held for sale                                86            -
                                                            395          357
    Other liabilities
    Employee future benefits                              1,235        1,254
    Pension liability                                       271          338
    Long-term debt                                          562          342
    Revolving term loans                                    186          383
    Future income taxes                                      71           88
    Asset retirement obligation                               1           24
                                                          2,326        2,429
    Total Liabilities                                     2,721        2,786
    Shareholders' Deficit
    Capital stock                                           151          149
    Contributed surplus                                      25            1
    Warrants                                                  3            3
    Retained deficit                                       (243)        (201)
    Total Shareholders' Deficit                             (64)         (48)
    Total Liabilities and Shareholders' Deficit        $  2,657     $  2,738

    Stelco Inc.
    Cash Flow Summary
                                                                  Nine months
                                            Three months ended       ended
                                          Sept. 30,    Sept. 30,    Sept. 30,
    (in millions) (unaudited)                 2007         2006         2007
    Cash provided by (used for):
    Operations adjusted for items
     not affecting cash                   $      8     $     36     $    (30)
    Changes in operating elements
     of working capital                         27          (10)          (6)
    Operating activities                        35           26          (36)
    Investment activities                       (5)          (8)         (22)
    Financing activities                       (40)         (23)          79
    Net change in cash position           $    (10)    $     (5)    $     21
    -------------------------------------------------------------------------%SEDAR: 00001549E

For further information:
For further information: Rodney B. Mott, President and Chief Executive
Officer, (905) 528-2511, Extension 2020