The Ontario judge overseeing the restructuring of insolvent Slater Steel agreed on Friday to extend court-protection from creditors until March 1, and urged all parties to continue negotiating to try and save the business.
The Mississauga, Ont.-based company sought the one-month extension on Thursday in order to have more time to implement a plan to shut down operations in Hamilton and Tracy, Que., that employ 830 people.
Justice James Farley agreed to grant the extension, but appeared to disagree with statements expressed by a Slater lawyer that there's no time left to keep talking about a potential restructuring the business.
Lawyer Edmond Lamek said a “perfect storm” of factors have made it unlikely that Slater could be restructured, including skyrocketing costs for input materials, such as nickel and scrap metal, difficulty in securing exit financing to run the business, and an inability to get cost concessions from its unions.
“After seven very difficult months, time has run out,” Mr. Lamek told the court.
But Judge Farley suggested all parties involved, including Slater, its banker and its unions, should be working “around the clock” to find solutions to the company's crisis.
“If people put their minds to matters, they accomplish a great deal in a very short period of time,” Judge Farley said.
A union representing some of Slater's employees in Quebec has said it hopes to use the time for last-ditch talks to save a mill in Tracy, Que., mill. The United Steelworkers union representing Hamilton workers also said it is willing to talk to the company but only if Slater presents a plan on how it hopes to return to profitability after a restructuring.
Otherwise, the Steelworkers say they'd prefer to discuss labour demands with a new prospective buyer - though no there are no current discussions being held with potential purchasers, according to Slater.
The specialty steel maker has six divisions. It had hoped to keep two of them operating but said Wednesday it had abandoned a plan to keep operating Hamilton Specialty Bar in Hamilton and the Atlas Stainless Steels mill in Tracy.
Slater is one of many North American steel makers hurt by slack U.S. demand and a flood of cheap imports which have squeezed prices. It has also blamed the rising Canadian dollar for weakening its export competitiveness.
Like other so-called mini-mill producers, Slater has also been affected by rising prices for the scrap steel which is their raw material, caused in part by soaring scrap demand in China.
Mini-mill producers such as Slater, Ivaco and Ipsco melt scrap steel in furnaces to make new products instead of producing raw steel from iron ore, limestone and other materials in traditional blast furnaces.
Slater stock traded at 18.5 cents Friday, up three cents, on the Toronto Stock Exchange.
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