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Member, Beacon International Group, Ltd.
HAMILTON, OntarioStelco Inc. will fund its $1.3 billion Canadian ($1.13 billion) pension deficit over a 10-year period rather than across the normal five-year period under a reorganization plan approved by an Ontario court.
The Hamilton, Ontario-based steel company entered court-supervised restructuring more than two years ago, primarily due to its enormous pension obligations. The company on Tuesday received approval from the Ontario Superior Court of Justice to implement its reorganization plan.
Under an agreement reached with the province of Ontario, the company will be allowed to fund its pension deficit over the next decade rather than the five-year period normally allotted by government regulations.
Montreal-based Air Canada Inc. reached a similar agreement with the federal government when it was in court-supervised restructuring, but these agreements are extremely rare and only granted in certain specific circumstances, pension experts say.
In 2005, Canada's federal government began a review of pension legislation and regulations that would examine a number of proposals, including whether to apply this type of funding flexibility to other companies in creditor protection. But the review has stalled due to Canada's recent federal elections.