Stelco acquires more land in Hamilton, Ontario
Stelco Inc. has completed the acquisition of lands beneficially owned by Legacy Lands Limited Partnership on which Stelco conducts its operations in Hamilton (approximately 760 acres) and Nanticoke, Ontario (approximately 2,300 acres), including lands in Hamilton that contain the Hamilton Works blast furnace and cast houses, as well as developable lands and port facilities. The purchase price is approximately C$114 million and will be financed with a 25-year, 8 percent per annum mortgage note issued to Legacy Lands Limited Partnership. The quarterly note payments will be distributed by Legacy Lands Limited Partnership to fund various pension and other post-employment benefit commitments (OPEBs) for Stelco retirees.
The land acquisition provides Stelco with the flexibility to utilize the space for its existing operations and to develop the lands in a manner that both complements current and future operations and to pursue other uses. In addition to providing for more fixed annual funding of OPEBs, the amended OPEB agreement and mortgage note payments could save Stelco up to C$87 million compared to the original agreement and lease payments and eliminates Stelco’s variable funding obligations tied to excess free cash flow that could have resulted in significant additional OPEB funding contributions.
“This acquisition provides Stelco with significantly greater strategic operational flexibility and allows Stelco the ability to grow its core business,” said Alan Kestenbaum, Executive Chairman and Chief Executive Officer. “Our retirees and employees will also directly benefit as this new arrangement will provide more certainty in terms of the funding to be provided by Stelco to the employee life and health trusts to support OPEBs. Additionally, we look forward to engaging with various other parties including the City of Hamilton on further development opportunities of the land and port area.”