Re Stelco, I was never involved in my Dad's trading. My brother manages that, and my brother also has a small position himself I believe. I do not.

I trade prices of securities where the relevant and material information available to shareholders is publicly available on a timely and fully disclosed basis. With Stelco (TSE: STE.A), given it is in a bankruptcy re-organization, that is not the case, which forces a trader to make presumptions of information that is known to many others (e.g., management, the court, the court-appointed monitor, the company bankers, the corporate bidders and their legal and financial advisors and the hundreds of spouses and friends of these people.

That is not an equity market situation that appeals to most traders, including me. It would appeal to some merger & acquisition specialists, and perhaps to speculators.

With respect to Stelco's current situation, since there are a reported six potential acquisitors to buy the company, I will presume (based strictly on the principle that numerous bidders ought to create a fair negotiation) that the shareholders will not get screwed.

I believe the bankruptcy judge has extended management's review period until February 15 before having to report to the court as to the proposal that is in the best interests of the stakeholders.

However, based on my interpretation of the actions of management to date, where they failed to disclose the cost base of the debt held by Deutsche Bank, but inferred this debt was purchased at par rather than as I suspect at a few pennies on the dollar (thereby making Deutsche Bank a speculator and not a creditor in the normal course), I have my doubts that management or the board of directors of Stelco is truly working for the shareholders.

In fact, Stelco management has never provided a rights offering to shareholders, nor have they attempted to dispose of certain assets that would not be disputed by the unionized workers, in order to pay down those debts, which the company itself could have purchased in the open market at a fraction of par. In addition, Stelco management petitioned the company into bankruptcy in spite of the fact there was no default to debt holders, nor had the company received any notice of default from any party according to papers I have read.

This action, or lack thereof, by Stelco management speaks to the possibility of a separate hidden agenda, which in my mind, based on my past general experience in business, makes it a probability, and thereby removes my interest in trading the stock.

Securities trading should be all about trading in an environment where the trader is comfortable and generally trusting of the situation. In my case, Stelco does not come close to measuring up in that regard.

As this is a personal blog, I write and opine on matters that are close to me personally, including the health of my parents. For my Dad's sake, I'd like to see Stelco shares trade at C$5.00, but that's it.

Do I think the shares will trade there? Not really.

Might it? Yes, based on technical analysis, and a near price break-out at this level, plus the fact it was trading this morning up to C$2.33, for reasons unknown to me, after trading last week mostly just under, or about, C$2.00.

Do I think the shares ought to trade at $5.00? Absolutely.

Why? I think the going concern value of Stelco (intact or in operating unit pieces) is worth something in the range of C$2 billion, less liabilities, or just shy of that, based on (1) replacement cost of the productive assets, and (2) the company's earnings capacity in a normalized business cycle.

Given that liabilities are a rounded C$1 billion, that leaves an equity for shareholders of say $1 billion.

Given further that certain capital expenditures of say $400 million are required to modernize the production capacity, I would discount the value of Stelco's assets. And, in addition, knowing that the debt must be reduced, there is a required capital raise up that will result in dilution.

And so, with barely more than 100 million shares outstanding, I feel that a capitalization of C$500 million or C$5.00 per share is reasonable.

At the end of the day, if management and the board of directors are working for the shareholders, as is required by law, then a reasonable value will result from the purchase and sale process that is underway.

Again, do I think that will happen? Not really. And that's because the owners of the share capital behind Stelco are likely to be abused, and the lawyers at the Ontario Securities Commission will likely prove once again that they are not doing their job to protect the public, but instead will serve their friends.

In closing, I wish my family had no involvement whatsoever in Stelco, because I would then feel totally comfortable in making the statements I am. I just hope that readers believe that I put my personal values and motivations in serving society ahead of those of promoting any interests my family (not me) have.

Pretty soon, an acquisitor will acquire Stelco. Management and the board will be turfed. The story will be over.

I just hope that some author decides some day to spend the time to write a book on this sad situation in Canadian capital markets. In doing so, I hope that the judge, the re-organization specialist and the management and board are held to account, publicly.

I think what happened to the country's dominant steelmaker is simply a case where a management plan to screw over a union went awry. I think the perpetrators, mostly lawyers, never thought that the situation would unfold as it did.

But, I have made presumptions in the past that proved incorrect, and I will again. Although I don't think so, I may have in this case too.

BCara@BillCara.com