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September 2, 2005
Where are the securities regulators in the Stelco fiasco? Fri., Sept. 2, 2005, 11:53 AM
Here is text taken from today's PR bulletin relating to the departure of Stelco (TSX: STE.A) board members:
Stelco announced that it will form a special committee to review complaints lodged with the Company by two directors who retired from the Board on August 31, 2005. The essence of the complaints made to the Board reflect concerns about effective board oversight of recently prepared forecasts that will be important in shaping the final plan introduced by the Company.
Richard Drouin, Chairman of Stelco's Board of Directors, said, "We believe that the complaints we've received are without foundation. We will, however, review the complaints carefully, a process that will take some time. It's in the best interests of the Company, though, that the restructuring process move ahead as quickly as possible."
The Company added that it intends to seek leave of the Court to appoint a Special Officer to oversee the review of the complaints and to report to the Court on the processes followed by the Board in its consideration of recently prepared forecasts.
Mr. Drouin said, "The Board has met more than 40 times in 2005 to oversee the restructuring process and has been advised by separate Board counsel and two leading investment banks. It is important that the integrity of our processes and Board overview of the restructuring not be open to question.""
It appears to some that the Stelco board is trying to do damage control" by having a Special Officer approved by CCAA bankruptcy judge James Farley in order to mitigate damage done by allegations of wrong-doing by the board in dealing with preparation of information and forecasts for public and court consumption.
It is possible that the two newly resigned directors, Roland Keiper and Michael Woollcombe, who were named to the board in February, who control about 20 pct of the Stelco equity, saw that the board may have been grossly manipulating data and understating valuations in order to perpetuate their hopeless case scenario so that Farley would accept their restructuring plan, and that there is a fraud being done to replace old shares with new ones, effectively giving the company to debt-holders and insiders.
It will be interesting to see if Keiper and Woollcombe make OSC presentations or take court action before the Special Officer is appointed, where they would find themselves muzzled by the CCAA process.
For the life of me, I cannot understand why the OSC stands by. They ought to at least call a hearing to investigate the knowledge of Keiper and Woollcombe, to see if the interest of the public shareholder is being managed appropriately by the board of directors they elected, and by the management team this board is responsible for.
It seems to me that the regulators have been standing by for 18 months while johnny-come-latelies are raping a consistently profitable company. Meanwhile the share price continues to fall.
Posted by Posted by Bill Cara on September 2, 2005 11:54:58 AM | Category: Canada