ontario superior court of justice (commercial list) · court file no. cv-14-10695-00cl ontario...

Court File No. CV-14-10695-00CL

ONTARIOSUPERIOR COURT OF JUSTICE

(COMMERCIAL LIST)

IN THE MATTER OF THE COMPANIES’ CREDITORSARRANGEMENT ACT, R.S.C. 1985, c. C-36, AS AMENDED

AND IN THE MATTER OF A PROPOSED PLAN OFCOMPROMISE OR ARRANGEMENT WITH RESPECT TO

U. S. STEEL CANADA INC. (the “Applicant”)

MOTION RECORD OF THE APPLICANT(Stay Extension and Amended and Restated CRO Engagement Letter,

returnable January 12, 2016)

December 22, 2015 McCarthy Tétrault LLPToronto Dominion Bank TowerSuite 5300Toronto, ON M5K 1E6Fax: (416) 868-0673

James D. Gage LSUC#: 34676ITel: (416) 601-7539Fax: (416) 868-0673Email: [email protected]

Paul Steep LSUC#: 21869LTel: (416) 601-7998Email: [email protected]

Kelly Peters LSUC#: 59914WTel: (416) 601-8281Email: [email protected]

Lawyers for the Applicant,U. S. Steel Canada Inc.

mailto:[email protected]

TO: SERVICE LIST



(COMMERCIAL LIST)




MOTION RECORD OF THE APPLICANT

(Stay Extension and Amended and Restated CRO Engagement Letter,returnable January 12, 2016)

INDEX

Tab Document

1 Notice of Motion (Stay Extension and Amended and Restated CROEngagement Letter, returnable January 12, 2016)

2 Affidavit of Michael A. McQuade (re: CRO Engagement LetterMotion) sworn December 22, 2015

3 Affidavit of William E. Aziz (re: Stay Extension Motion) swornDecember 21, 2015

3 Draft Order (re: Stay Extension and CRO Engagement LetterAmendment)



(COMMERCIAL LIST)




NOTICE OF MOTION(Stay Extension and Amended and Restated CRO Engagement Letter)

returnable January 12, 2016)

The Applicant will make a motion before a judge presiding over the Commercial

List on January 12, 2015, or as soon after that time as the motion can be heard, at

Toronto, Ontario.

PROPOSED METHOD OF HEARING: The motion is to be heard orally.

THE MOTION IS FOR:

(a) An order, substantially in the form attached to the Applicant’s Motion

Record at Tab 4, extending the Stay Period (defined below) up to and

including April 29, 2015 and approving the Amended and Restated CRO

Engagement Letter (defined below); and

(b) Such further and other relief as this Court deems just.

1

- 2 -

THE GROUNDS FOR THE MOTION ARE:

Background

1. USSC is an integrated steel manufacturer and conducts most of its business from

its facilities in Hamilton, Ontario and Nanticoke, Ontario.

2. USSC obtained an initial order on September 16, 2014 (as amended or restated

from time to time, the “Initial Order”) pursuant to the Companies’ Creditors

Arrangement Act (“CCAA”), among other things, granting a stay of proceedings for a

period of time (the “Stay Period”), appointing Ernst & Young Inc. to act as monitor (the

“Monitor”), and approving the agreement dated September 16, 2014 engaging BlueTree

Advisors II Inc. to provide the services of Mr. William E. Aziz to USSC as Chief

Restructuring Officer (“CRO”) of USSC (the “CRO Engagement Letter”).

3. On December 7, 2015 this Court made a further order extending the Stay Period,

which will expire on January 29, 2016.

Stay Extension

4. USSC has been acting and continues to act in good faith and with due diligence

in its efforts to complete a restructuring under the CCAA.

5. Since the previous extension of the Stay Period, USSC has taken various steps to

advance its restructuring goals, as described in more detail in the affidavit William E.

Aziz, sworn December 21, 2015. These steps include, but are not limited to the

development of a sale and investment solicitation process (“SISP”), actions directed

towards implementing the cash conservation measures and business plan (as approved

by the Court on October 9, 2015), continuing implementation of the transition

2

- 3 -

arrangements as agreed between USSC and United States Steel Corporation (“USS”) (as

approved by the Court on October 9, 2015) and assisting the Province of Ontario to

develop a an OPEB transition fund to assist OPEB beneficiaries transition to available

programs.

6. USSC seeks a further extension of the Stay Period to April 29, 2015 to, among

other things, provide USSC with additional time required to implement the SISP and

continue to prepare for its de-integration from USS by implementing the aforementioned

transition arrangements.

7. USSC has continued to operate in accordance with the Initial Order and will have

sufficient liquidity to continue operations throughout the requested Stay Period.

Accordingly, granting the extension of the Stay Period is appropriate in the

circumstances.

Amended and Restated CRO Engagement Letter

8. The CRO Engagement Letter set out the fees and disbursements payable to the

CRO for his services, including a fee payable to the CRO if the conditions set out in the

CRO Engagement Letter are met.

9. During these CCAA proceedings a number of significant events have occurred

which were not contemplated by USSC or the CRO at the time the CRO Engagement

Letter was entered into, including:

(a) USS is no longer providing DIP financing to USSC;

(b) USS has advised that it will not be submitting a credit bid in USSC’s

proposed SISP;

3

- 4 -

(c) USSC and USS are currently working towards the eventual de-integration

of their operations following the Court’s approval of certain transition

arrangements on October 9, 2015; and

(d) CCAA proceedings will continue past December 31, 2015 as USSC seeks

to implement its proposed SISP during 2016.

10. In light of these developments, USSC now seeks the Court’s approval of an

amended and restated CRO Engagement Letter dated December 21, 2015 (the

“Amended and Restated CRO Engagement Letter”). Among other things, the

Amended and Restated CRO Engagement Letter (i) updates the CRO’s reporting duties

to reflect the change in DIP lender, (ii) no longer contains certain USS approvals, (iii)

does not reference a potential USS credit bid, and (iv) includes revised CRO success fee

eligibility criteria in light of USSC’s intention to implement the SISP in 2016.

11. The terms of the Amended and Restated CRO Engagement Letter are fair and

reasonable in the circumstances. The CRO’s experience in restructuring proceedings

and knowledge of USSC’s ongoing CCAA activities will continue to be beneficial to

USSC and its stakeholders during these proceedings and in the proposed SISP. The

amendments to the CRO Engagement Letter appropriately reflect the changes in USSC’s

relationship with USS and take into consideration the extended duration of these CCAA

proceedings in light of the proposed SISP.

12. The Applicant also relies on:

(a) the provisions of the CCAA and the inherent and equitable jurisdiction of

this Court; and

4

- 5 -

(b) such further and other grounds as counsel may advise and this Court

permit.

THE FOLLOWING DOCUMENTARY EVIDENCE will be used at the hearing of

the motion:

(a) Affidavit of William E. Aziz, sworn December 21, 2015;

(b) Affidavit of Michael A. McQuade, sworn December 22, 2015;

(c) The Nineteenth Report of the Monitor (to be filed); and

(d) Such further and other materials as counsel may advise and this Court

may permit.

December 22, 2015 McCarthy Tétrault LLPSuite 5300, Toronto Dominion Bank TowerToronto ON M5K 1E6

James D. Gage LSUC#: 34676ITel: (416) 601-7539Fax: 416-868-0673

Paul Steep LSUC#: 21869LTel: (416) 601-7998Email: [email protected]

Lawyers for the Applicant

TO: SERVICE LIST

5

INT

HE

MA

TT

ER

OF

TH

EC

OM

PA

NIE

S’

CR

ED

ITO

RS

AR

RA

NG

EM

EN

TA

CT

,R

.S.C

.1

98

5,

c.C

-36

,A

SA

ME

ND

ED

AN

DIN

TH

EM

AT

TE

RO

FA

PR

OP

OS

ED

PL

AN

OF

CO

MP

RO

MIS

EO

RA

RR

AN

GE

ME

NT

WIT

HR

ES

PE

CT

TO

U.

S.

ST

EE

LC

AN

AD

AIN

C.

Cou

rtF

ile

No.

CV

-14-

106

95-0

0CL

ON

TA

RIO

SU

PE

RIO

RC

OU

RT

OF

JUS

TIC

E-

CO

MM

ER

CIA

LL

IST

Pro

ceed

ing

com

men

ced

atT

oro

nto

NO

TIC

EO

FM

OT

ION

(ST

AY

EX

TE

NS

ION

AN

DA

ME

ND

ED

AN

DR

ES

TA

TE

DC

RO

EN

GA

GE

ME

NT

LE

TT

ER

)

(Ret

urn

able

Jan

uar

y12

,201

6)

McC

arth

yT

étra

ult

LL

PS

uite

5300

,Tor

onto

Dom

inio

nB

ank

Tow

erT

oron

toO

NM

5K1E

6

Jam

esD

.Gag

eL

SU

C#:

3467

6I

Tel

:(4

16)

601-

7539

Em

ail:

jgag

e@m

ccar

thy.

ca

Pau

lS

teep

LS

UC

#:21

869

LT

el:

(416

)60

1-79

98E

mai

l:ps

teep

@m

ccar

thy.

ca

Law

yers

for

the

App

lica

nt15

1159

02

6




(COMMERCIAL LIST)

IN THE MATTER OF THE COMPANIES' CREDITORSARRANGEMENT ACT, R.S.C. 1985, c. C-36, AS AMENDED


U. S. STEEL CANADA INC.

AFFIDAVIT OF WILLIAM E. AZIZSWORN DECEMBER 21, 2015(re: Stay Extension Motion)

I, William E. Aziz, of the Town of Oakville, in the Province of Ontario, MAKE OATH

AND SAY:

1. I am the President of BlueTree Advisors II Inc. ("BlueTree"), which has been retained by

u. S. Steel Canada Inc. ("USSC" or the "Applicant") to provide my services as Chief

Restructuring Officer ("CRO") of USSC in accordance with our agreement dated September 16,

2014. I report to the board of directors ofUSSC.

2. In my role as CRO, I have sworn a series of affidavits in these Companies' Creditors

Arrangement Act ("CCAA") proceedings. I swear this affidavit in support of a motion by USSC

for an order substantially in the form of the draft order included at Tab 4 of the Applicant's

Motion Record to extend the Stay Period (defined below) up to and including April 29, 2015 (the

"Stay Extension Period").

36

EXTENSION OF STAY PERIOD

3. On September 16,2014, USSC obtained an initial order (as amended and restated from

time to time, the "Initial Order") pursuant to the CCAA, among other things, granting a stay of

proceedings for a period of time (the "Stay Period") and appointing Ernst & Young Inc. as

monitor (the "Monitor").

4. During these CCAA proceedings, the Stay Period has been extended from time to time as

USSC advances its restructuring goals. Most recently, by order of this Court on December 7,

2015, the Stay Period was extended up to and including January 29, 2015.

5. In this motion, USSC now seeks an extension of the Stay Period up to and including

April 29, 2016.

6. In the brief period since the previous Stay Period extension, USSC has proceeded in good

faith and with due diligence to advance its restructuring goals. In particular, USSC:

(a) has, in consultation with the Monitor, developed a sale and investment solicitation

process ("SISP") which it intends to seek Court approval of in January, 2016;

(b) took steps to begin implementation of the cash conservation measures and

business plan, directed at the continued operation ofUSSC through 2016 (as

approved by the Court on October 9,2015);

(c) continued to implement the transition arrangements as agreed between USSC and

United States Steel Corporation (as approved by the Court on October 9, 2015);

(d) assisted the Province of Ontario to develop a fund to assist OPEB beneficiaries in

addressing critical heath needs and helping OPEB beneficiaries transition to

available programs (the "OPEB Transition Fund");

Page 2

37

(e) continued to operate in accordance with the Initial Order; and

(f) worked closely with the Monitor with respect to all aspects of the Applicant's

restructuring under the CCAA.

STAY EXTENSION IS NECESSARY AND APPROPRIATE

7. The requested Stay Extension Period will provide USSC with additional time required to

implement the SISP. If approved by the Court, the first phase of the SISP will begin as soon as

reasonably practicable, but in any event by no later than February 1,2016 with a deadline for the

delivery of non-binding letters of interest occurring on or around February 29,2016. The

requested Stay Period Extension is also intended to accommodate for flexible nature of the

second phase of the proposed SISP, which includes a due diligence period, the submission and

review of formal binding offers and a sale approval motion if a successful bid is selected, among

other things. The duration of the second phase of the SISP will vary depending on the variety,

structure and complexity of the letters of interest received, but USSC is expected to have

completed the second phase of the SISP by the end of the proposed Stay Extension Period.

8. In addition to providing the time required for USSC to implement its SISP, extending the

Stay Period will permit USSC to continue preparing for its de-integration from its parent by

implementing the transition arrangements which were approved by the Court on October 9,

2015. The requested extension and continuation of CCAA protection will provide continued

stability to USSC's operations and reassurance to USSC's customers, suppliers, employees and

other stakeholders while the SISP and transition arrangements are being implemented.

9. In light of the foregoing, I am of the view that USSC's request to extend the stay period

is both appropriate and necessary.

Page 3

38

CASH FLOW

10. The cash flow projection that I understand will be attached in the Monitor's next report to

the Court shows that USSC will have sufficient liquidity available to continue operations

throughout the requested Stay Extension Period. As a result of the cash conservation measures

recently implemented by USSC, the receipt of a settlement payment from USS in connection

with the Transition Arrangements and better than forecast sales volumes, income and cash flows,

USSC does not currently anticipate having to draw on its interim financing facility with

Brookfield Capital Partners Ltd. (the "Replacement DIP Lender") during the proposed Stay

Extension Period. Further, for incremental liquidity, USSC has discussed its intention to request

an extension with the Replacement DIP Lender and intends to submit a formal request to it to

exercise the first extension option, which, if granted, would extend the term to July 28, 2016.

The Monitor will provide further information in relation to the requested extension of the Stay

Period in its forthcoming report.

11. I am advised by counsel to the Replacement DIP Lender that the Replacement DIP

Lender does not object to the requested Stay Extension Period.

12. This affidavit is sworn in support of the USSC motion for the relief described above, and

for no other or improper purpose.

))))S·~-----='--'----'---------)

SWORN BEFORE ME at the City ofToronto, in the Province of Ontario,this 21st day of December, 2015.

Commissioner for Taking Affidavits

Page 4

39

INTH

EMATT

EROFA

PROPO

SED

PLAN

OFCOMPR

OMISE

OR

ARRANGEM

ENT

WITH

RES

PECT

TOU.S.

STEE

LCANADA

INe.

Court

File

No.

CV-14-10695-00C

L

ONTARIO

SUPE

RIO

RCOURT

OFJU

STIC

E(C

OMMERCIA

LLIST)

Proceeding

Com

menced

atTo

ronto

AFF

IDAVIT

OFWIL

LIA

ME.A

ZIZ

(Sworn

Decem

ber

21,2

015)

McC

arthy

TetraultLLP

Toronto

Dom

inion

BankTo

wer

Toronto,

ON

M5K

lE6

Fax:

(416)868-0673

James

GageLS

UC#:

346761

Tel:

(416)601-7539

Email:

jgage@

mccalihy.ca

Paul

Steep

LSUC#:

21869L

Tel:

(416)601-7998

Email:

[email protected]

Lawyers

forU.S

.Steel

CanadaInc.

15143924

40




ONTARIO

SUPERIOR COURT OF JUSTICE

(COMMERCIAL LIST)

THE HONOURABLE MR. ) TUESDAY, THE 12th

)JUSTICE WILTON-SIEGEL ) DAY OF JANUARY, 2015



U. S. STEEL CANADA INC.

(the “Applicant”)

ORDER

(re: Stay Extension and CRO Engagement Letter Amendment)

THIS MOTION, made by U. S. Steel Canada Inc. (“USSC” or the “Applicant”),

pursuant to the Companies' Creditors Arrangement Act, R.S.C. 1985, c. C-36, as amended (the

"CCAA"), for an Order extending the stay of proceedings up to and including April 29, 2016

and an Order approving an amended and restated CRO Engagement Letter dated December 21,

2016 (the “Amended and Restated CRO Engagement Letter”) appended as Exhibit “A” to

the affidavit of Michael A. McQuade sworn December 22, 2016 (the “McQuade Affidavit”)

was heard this day in Toronto, Ontario.

ON READING the McQuade Affidavit, the affidavit of William E. Aziz sworn

December 21, 2015, the eighteenth report of Ernst & Young Inc. in its capacity as monitor (the

“Monitor”) dated December 18, 2015 and nineteenth report of the Monitor dated [●], and on

being advised that all parties on the service list maintained in these proceedings were served

with the motion record of the Applicant:

41

- 2 -

EXTENSION OF STAY PERIOD

1. THIS COURT ORDERS that the Stay Period, as defined in the Initial Order dated

September 16, 2014, is hereby extended from January 29, 2015 up to and including April 29,

2016.

AMENDED AND RESTATED CRO ENGAGEMENT LETTER

2. THIS COURT ORDERS AND DECLARES that the Amended and Restated CRO

Engagement Letter is hereby approved and the Applicant and the CRO are hereby authorized

to carry out the terms of the Amended and Restated CRO Engagement Letter with such minor

amendments as the Applicant may deem necessary with the consent of the Monitor. The

Applicant and CRO are hereby authorized and directed to take such additional steps and

execute such additional documents as may be necessary or desirable to give effect to the

Amended and Restated CRO Engagement Letter.

____________________________________

42

INT

HE

MA

TT

ER

OF

AP

RO

PO

SE

DP

LA

NO

FC

OM

PR

OM

ISE

OR

AR

RA

NG

EM

EN

TW

ITH

RE

SP

EC

TT

OU

.S.S

TE

EL

CA

NA

DA

INC

.C

ourt

Fil

eN

o.C

V-1

4-1

069

5-0

0C

L

ON

TA

RIO

SU

PE

RIO

RC

OU

RT

OF

JU

ST

ICE

(CO

MM

ER

CIA

LL

IST

)

Pro

ceed

ing

Com

men

ced

atT

oronto

OR

DE

R

(re:

Sta

yE

xten

sion

and

CR

OE

nga

gem

ent

Let

ter

Am

end

men

t)

McC

art

hy

Tét

rau

ltL

LP

Tor

onto

Dom

inio

nB

ank

Tow

erT

oronto

,O

NM

5K1E

6F

ax:

(416)

868-0

673

Jam

esG

age

LS

UC

#:

34676

IT

el:

(416)

601

-7539

Em

ail:

jgag

e@m

ccar

thy.

ca

Pau

lS

teep

LS

UC

#:

21869L

Tel

:(4

16)

601

-7998

Em

ail:

pst

eep@

mcc

arth

y.ca

Law

yers

for

U.S

.S

teel

Can

ada

Inc.

151

466

37

43

INT

HE

MA

TT

ER

OF

AP

RO

PO

SE

DP

LA

NO

FC

OM

PR

OM

ISE

OR

AR

RA

NG

EM

EN

TW

ITH

RE

SP

EC

TT

OU

.S.S

TE

EL

CA

NA

DA

INC

.C

ourt

Fil

eN

o.C

V-1

4-1

0695

-00C

L

ON

TA

RIO

SU

PE

RIO

RC

OU

RT

OF

JUS

TIC

E(C

OM

ME

RC

IAL

LIS

T)

Pro

ceed

ing

com

men

ced

atT

oron

to

MO

TIO

NR

EC

OR

D(S

tay

Ext

ensi

onan

dA

men

ded

and

Res

tate

dC

RO

En

gage

men

tL

ette

r,re

turn

able

Jan

uar

y12

,201

6)

McC

arth

yT

étra

ult

LL

PS

uite

5300

,Tor

onto

Dom

inio

nB

ank

Tow

erT

oron

toO

NM

5K1E

6F

ax:

(416

)86

8-06

73

Jam

esD

.G

age

LS

UC

#:34

676

IT

el:

(416

)60

1-75

39E

mai

l:jg

age@

mcc

arth

y.ca

Pau

lS

teep

LS

UC

#:21

869

LT

el:

(416

)60

1-79

98E

mai

l:ps

teep

@m

ccar

thy.

ca

Kel

lyP

eter

sL

SU

C#:

5991

4WT

el:

(416

)60

1-82

81E

mai

l:kp

eter

s@m

ccar

thy.

ca

Law

yers

for

the

App

lica

nt,

U.S

.Ste

elC

anad

aIn

c.

DO

CS

151

529

70


ontario superior court of justice (commercial list) · court file no. cv-14-10695-00cl ontario...

Documents