Sysco Update
NOTE TO EDITORS: A technical briefing by Matthew Harris of Ernst & Young and John Traves of the Nova Scotia government will be held at 3 p.m. today, Tuesday, June 5, at Ernst & Young, 13th Floor, Purdy''s Tower 1, Halifax.
The Province of Nova Scotia announced today several decisions regarding the future of the Sydney Steel Corp.
Economic Development Minister Gordon Balser announced that the government has accepted the recommendations of Ernst & Young and selected liquidators to sell the assets of Sysco and that a firm has been contracted to remove the structures in conjunction with the asset sale.
As well, the minister provided an update on the government’s decision regarding the Sysco pier and the final outcome of the province’s settlement with Sysco’s employees.
Asset Sale:
A consortium has been selected to sell off the assets of Sydney Steel Corp.
The consortium of Henry Butcher International, Michael Fox International and Trans-Canada Liquidations was recommended to government by Ernst & Young as the group that would provide the province with highest potential return on the assets of the steel plant. The liquidation process will result in $9 million-$14 million in net revenue to the province, depending on the final price for scrap steel.
"We went with E & Y''s recommendation and chose the most experienced consortium to do the job," said Mr. Balser. "This group provides the best return to Nova Scotia taxpayers for the assets of the steel plant."
The recommendation was made after an extensive evaluation of 27 submissions. The successful submission provided the highest return to the province and did not require any additional government investment, which was an explicit requirement of the request-for-proposals process. The consortium will receive a 10 per cent commission of gross sales in its 18-month contract.
Butcher, Fox and Trans-Canada have considerable steel expertise with market reach throughout North America and into Europe, Asia and South America. They will market Sysco''s steelmaking assets internationally and conduct an on-site auction of smaller items.
Trans-Canada Liquidations Ltd. is a fully integrated asset- management company based in Toronto. Its professional team of auctioneers, project managers and marketing staff undertake full responsibility for projects, providing hands-on management and supervision of all aspects of the sale project. For more information, visit the Web site at www.managingyourassets.com .
Based in London, England, Henry Butcher was founded more than 120 years ago by Henry George Butcher. The original firm began in 1877 and since then has provided auction and valuation services to industry and commerce. The business is now structured as Henry Butcher International Ltd. and organized into three operational divisions -- Consulting, Disposal and Finance. Core activities remain related to the disposal and valuation of plant, machinery and equipment of all types. For more information, visit the website at www.henrybutcher.com .
Based in New York, Michael Fox International specializes in industrial machinery and equipment within a wide range of industries including steelmaking. For more information visit the website at www.michaelfox.com .
Structure Removal:
The minister also announced that Philip Demolition of Toronto, a subsidiary of Philip Services, has been contracted by the province and will work with the liquidators to remove the structures. The entire liquidation and demolition phase could take between 24 and 36 months to complete. Significant work will take place over the course of the summer. Activities will include auction preparation work, preparation of scrap steel, demolition of five towers on the site, a large local auction of smaller items, transporting of equipment off-site, and demolition of vacant buildings as the sale progresses.
Philip will receive $7.7 million -- a fixed-price contract -- requiring them to return the site to grade. The province will retain the value of the scrap steel derived from demolition. There will be approximately 150,000 to 210,000 tonnes of saleable scrap steel recovered from demolition. That is expected to cover the cost of the demolition contract.
The company has extensive experience in the demolition of industrial structures throughout North America, and provides turnkey plant decommissioning and environmental services to clients in government, industrial and commercial business.
It offers a complete range of top-quality industrial services including decommissioning, demolition, contaminant abatement (asbestos, lead, PCB, mould, etc.), industrial redevelopment, investment recovery and soil/groundwater remediation. For more information, visit the Web site at www.domolish.org .
Pier Assets:
Based on E & Y’s recommendation, the government has chosen to retain the pier for the time being. It became evident during the process and subsequent federal decisions regarding Devco that the pier and its facilities have an ongoing role to play in Sydney’s economy.
In making the announcement, the minister said, “Sysco''s pier will continue to operate and generate economic benefits in Sydney. In the short term, it will be required to handle the sale of thousands of tons of scrap steel and perhaps handle coal for local power generation requirements.”
In the meantime, the minister committed to opening discussions with the bidders for the pier assets, including Cape Breton Regional Municipality, to ascertain whether there are solutions that would optimize the contribution of the pier to the local economy for the long term. Bids for the pier ranged from $250,000 to $2.2 million.
Employees:
The province has fulfilled its commitment to be fair to steelworkers, Mr. Balser said.
Effective June 1, all 879 former Sysco employees have received either a pension or severance. 589 unionized employees are now receiving the enhanced pension benefits and 213 unionized employees have received severance payments. Another 76 salaried employees have received severance payments or are on pension.
The minister said, consistent with its previous announcements, the province will spend almost $50 million dollars treating employees fairly.
"We have fulfilled our promise to be fair to all steelworkers. This ends the years of ups and downs about what would become of Sysco. We sincerely hope that the workers can move forward and build a good life and future for themselves and their families."
The Sydney Steel Corp. is a provincial Crown corporation that has been operating the steel plant for more than 30 years. Over that period, the province has spent some $3 billion supporting Sysco.