I wrote:

TD Newcrest has reviewed the steel industry and Canada's Stelco this week. I have a lot of readers (Stelco steelworkers union local 1005, for a few), so I'll reproduce the reports here. TD Newcrest report on Stelco.

A financial analyst who is quite knowledgeable of this situation sent the following mail. I just removed his name.

From: (name withheld)

Sent: Friday, June 30, 2006 10:39 AM

To: Bill Cara

Subject: Newcrest Report - Stelco

"Bill, I started to read this report and quickly realized that I was reading a 36 page fiction novel.

Right on page one, under the heading of Investment Summary, the second sentence said it all...."Stelco's zig zag performance eventually culminated in CCAA filing early in 2004."

The storyline gets even better, on Page 3, titled "Improvements Likely". Everything under this section is not brain surgery. This is how companies operate when there is an effective Board of Directors and when the shareholders can replace the board and management if performance is not acceptable.

The author goes on to say that it was not Pratt's job to return the company to profitability but rather to navigate the company through the CCAA process. What a nice polite way to say that Pratt was not capable and that the Board of Directors was incompetent.

Continuing to page 4, the author writes that it is imperative to improve the balance sheet position quickly. The author questions the amount of debt and states that Stelco needs to generate sufficient financial flexibility to avoid a repeat CCAA.

What the author somewhat understands is that the level of debt is ridiculous. What the author does not understand is that Tricap will benefit if steel markets falter and the company does another filing.

Finally we get to the numbers: 2006 expected cash flow is $101 million after spending $171 million on new capex and after $22 million in disclosed CCAA costs. Not too bad for a worthless company (lol).

I'm waiting for the annual report for 2006; I'm anxious to see the amount of the deferred debt issue costs."

I had mentioned earlier that there was a suit going on with a U.S. investor against Tricap. Wonder if any of your readers can expand on this?

I think the legacy of Judge Farley is yet to be written, and that in the future many readers will be commenting on it.

The bottom line to the whole fiasco is that the Farley's and the Pratt's and the string-pullers at Brascan/Brookfield all put their pants on same as Mom & Pop. They just do their business as quietly as possible behind the scenes. As long as scoundrels intend to screw one another, that's fine by Mom & Pop; but when Mom & Pop lose personal wealth over the shenanigans, that's a different story altogether. Eventually, it is a story that will come to light.

In any event, I am off for the day now.