U.S. Steel making money while restructuring

U.S. Steel is making money, even as it gets set to ask a bankruptcy judge to grant an extension of creditor protection.

A court monitors report on the companys cash flow from Nov. 22 to Jan. 2 shows the company had a net positive cash flow of $85.4 million.

The companys cash position now stands at $188 million, with expectations that while the growth wont continue until May 15 the date the company wants creditor protection extended until it wont need to rely on the $185 million debtor-in-possession (DIP) loan from its American parent, U.S. Steel Corp.

• U.S. Steel wants creditor protection extended

• Judge OKs U.S. Steels $185M loan, workers worry about future

U.S. Steel sought bankruptcy protection under theCompanies Creditors Arrangement Actlast September, citing years of loses totalling some $2.4 billion since 2009. The companys goal is to sell its Canadian operations by the end of October, 2015.

Alex Morrison, the court monitor,highlights the companys complex positive and negative business dealings behind the profitable period in his latest monitors report. As a disclaimer, Aziz notes the cash flow figures and projections noted in his report are based on unaudited financial information produced by U.S. Steel.

Rolf Gerstenberger, President of United Steelworkers Local 1005, said in the big picture the profit means little to steelworkers.

Gerstenberger said its his understanding the Lake Erie operation made some money while Hamilton didnt, but that the company did do better than it had expected.

Its better than them being into the DIP, Gerstenberger said, adding he wasnt sure what would happen should the company be able to avoid using the $185 million loan during the restructuring process.

Steelworkers were upset the judge OKd the DIP loan last fall, as it meant U.S. Steel Corp. became the largest creditors and would get its money out first if the U.S. Steel Canada became insolvent.

U.S. Steel expected to get extension

Gerstenberger said union executives and some steelworkers are planning to attend U.S. Steels court date in Toronto on Wednesday afternoon.

Chief Restructuring Officer Bill Aziz has recommended Superior Court Justice Herman Wilton-Siegel grant the companys request to extend its protection from creditors referred to in the documents as the "stay period."

The North American steel market is expected to remain in a period of uncertainty in the coming months, the court monitor's report says.

"The Applicant advised that the dramatic fall in oil prices over the last several months is having a significant impact on demand for steel products sold into the oil and gas sector," Morrison writes.

U.S. Steel Corp. plans to lay off over 600 employees after idling a plant in Lorain, Ohio that specializes in tubular steel, a move it blames squarely on weak demand from the oil industry.

The Ontario plants havent been hit as badly, as nearly a quarter of their output goes to the auto industry, where demand has been steady, writes Morrison.

Overall, steel prices have been in decline since last fall.