Exhibit 10.17
                                                          Y.P. (Yvonne) Sugimoto
                                                            Royal Bank of Canada
Senior Account Manager                                   Business Banking Centre
                                               11th Floor, 335 - 8th Avenue S.W.
                                                        Calgary, Alberta T2P 1C9

                                                                 Transit:  08829
                                                            Tel.: (403) 292-3896
                                                             Fax: (403) 292-3154

December 27, 2000



Prudential Steel Ltd.
1800, 140 - 4th Avenue S.W.
Calgary, Alberta
T2P 3N3

Attention:    Mr. Fred Rea
Vice President - Finance

Dear Sirs:

Re:      Credit Facilities

Further to our  discussions,  we are pleased to confirm the  availability of the
credit facilities  described in this letter (the "Credit Facility"),  subject to
the following  terms and  conditions.  Should you find the  following  terms and
conditions  of the Credit  Facility  to be  acceptable,  please  acknowledge  by
signing and  returning  the  duplicate  copy of this letter by December 29, 2000
after which date our offer will expire.

The Credit Facility described below is in addition to the undernoted  facilities
which are governed by separate agreements:

                                            Royal Bank Leases $ 300,000



BORROWER:                  Prudential Steel Ltd. (the "Borrower")


LENDER: Royal Bank of Canada (the "Bank") through its branch of account ("Branch
of Account") at Main Branch, Calgary, Alberta, T2P 1 C9.


AMOUNT:                    Segment 1)


$40,000,000 or the equivalent amount in US Dollars is available by way of:


                           Prime Based Loans;
     US Base Rate Loans;
     LIBOR Loans;
     Bankers' Acceptances; and
     Letters of Credit.

                           Segment 2)

                           $1,350,000 is available by way of FEF Contracts.

PURPOSE:                   Segment 1)

General operating and corporate purposes, provided that the Borrowings shall not
be used to acquire  shares of any  corporation  unless the board of directors of
such  corporation  has  approved  such  acquisition  or unless the  Borrower has
provided  the Bank  with  prior  notice  thereof  and the Bank has  advised  the
Borrower  that  the Bank  does not have a  conflict  of  interest  in  providing
Borrowings for such purpose.

                           Segment 2)

                           Foreign Exchange transactions.


INTEREST
RATES:                     Segment 1)

                           Prime Based Loans: Prime + 0% per annum.
                           US Base Rate Loans: USBR + 0% per annum.
                           LIBOR Loans: LIBOR + 1/2% per 360 day period.

                           All Segments

The  Borrower  shall pay the Bank  interest on all Prime Based Loans and US Base
Rate Loans in the  currency in which such loans are  denominated.  The  Borrower
shall pay such interest monthly in arrears at the applicable rates per annum set
out above  calculated on a daily basis on the  outstanding  amount of such loans
and based on the  actual  number of days  elapsed  in the  period for which such
interest  is  payable.  Such  interest  shall be payable on the last day of each
month or on such  other day in each month as may be  specified  by the Bank from
time to time. The Borrower shall pay interest in US Dollars at the rates per 360
day period set forth above on the amount of each LIBOR Loan. Such interest shall
be payable on each LIBOR  Interest Date  applicable to such LIBOR Loan and shall
be  calculated  on the basis of the actual number of days elapsed in the portion
of the  applicable  LIBOR  Interest  Period for which such  interest  is payable
divided by 360.  The yearly rates of interest to which the rates  determined  in
accordance with the foregoing  provisions of this paragraph are equivalent,  are
the rates so determined  multiplied by the actual number of days in the calendar
year  commencing  on the first day of the  period  for which  such  interest  is
payable and divided by 360.

The Borrower shall pay interest on all overdue  amounts  outstanding  under this
Agreement  at a rate per  annum  equal to USBR  plus 2% in  respect  of  amounts
outstanding  in US  Dollars  and at a rate per annum  equal to Prime  plus 2% in
respect of amounts outstanding in Canadian Dollars,  such interest to be payable
monthly in arrears on the last day of each month.  All  interest  payable  under
this Agreement shall be payable both before and after default,  demand, maturity
and judgment.


ACCEPTANCE
FEES:                      Segment 1)

RBPAF minus 1/2% per 365 day period.

The  Borrower  shall pay to the Bank  acceptance  fees in  Canadian  Dollars  in
advance  at the rate  set  forth  above  at the  time of issue of each  Bankers'
Acceptance.  Acceptance  fees  shall be  calculated  on the face  amount  of the
Bankers'  Acceptance issued and based upon the number of days in the term of the
Bankers' Acceptance issued.


LETTER OF
CREDIT FEES:               Segment 1)

                           Scheduled Rates.

Letter of Credit fees are payable to the Bank at the scheduled rates of the Bank
from time to time in effect  on the date of issue in the  currency  in which the
Letter of Credit is  issued.  The  Letter of Credit  fee shall be based upon the
amount of the Letter of Credit issued and  calculated on the number of days that
the Letter of Credit is to be outstanding.


FEES:                      Segment 1)

The Borrower shall pay to the Bank, by way of a credit facility revolvement fee,
the amount of Cdn.  $125 per month,  payable  on the last  Business  Day of each
month during the term of this agreement.


NOTICE  REQUIREMENTS:  The  Borrower  agrees that the Bank may from time to time
establish  reasonable  notice  requirements  for  obtaining  advances and making
repayments hereunder.


REPAYMENT: All amounts outstanding under this Credit Facility including the face
amount of all Letters of Credit and Bankers'  Acceptances  are payable on demand
and  the  following  repayment  provisions  are  in  addition  to  (and  not  in
substitution for) the Bank's right to make such demand.

Operating Credit Facility Segment

Segment 1) is a revolving operating credit facility. The Borrower authorizes the
Bank to advance  and repay  Prime  Based Loans and US Base Rate Loans in minimum
amounts of $100,000 and US $100,000  respectively  in order to cover  overdrafts
and utilize deposits in account #315-710-4 and 400-313-3 respectively or in such
operating  deposit  accounts of the Borrower as may be specified by the Borrower
to the Bank from time to time.


SPECIAL

PROVISIONS:  The Special Provisions  contained in Schedule "A" attached
hereto form part of this Agreement.


EVIDENCE OF  INDEBTEDNESS:  The Bank shall maintain on the records of the Branch
of Account accounts  evidencing the Borrower's  liability to the Bank in respect
of amounts  outstanding  by the Borrower to the Bank under this  Agreement.  The
Bank shall record the amounts  outstanding  under this  Agreement,  all payments
made from time to time in respect thereof and all other amounts  becoming due to
the Bank under this Agreement  which remain unpaid when due. The Bank's accounts
constitute,  in the  absence of  manifest  error,  prima  facie  evidence of the
indebtedness  of the  Borrower  to the  Bank  pursuant  to this  Agreement.  The
Borrower authorizes and directs the Bank to automatically  debit, by mechanical,
electronic  or manual  means,  the bank accounts of the Borrower for all amounts
payable  under this  Agreement,  including  but not limited to the  repayment of
principal  and the payment of interest,  fees and all charges for the keeping of
such bank account.


PREPAYMENTS:  Subject to any  provisions to the contrary  which are contained in
this Agreement or any other agreement  entered into by the Borrower with respect
to amounts outstanding hereunder, amounts outstanding may be prepaid at any time
without penalty.


COVENANTS:  The Borrower,  by accepting this Agreement,  covenants with the Bank
that: (a) it will pay duly and  punctually  all amounts due  hereunder;  it will
deliver  to the  Bank  such  financial  and  other  information  as the Bank may
reasonably  request  from  time  to time  including,  but not  limited  to,  the
following:


audited annual  financial  statements of the Borrower within 120 days after each
fiscal  year  end or,  if the  Borrower  has any  Subsidiaries,  audited  annual
consolidated  financial  statements  of the Borrower  within 120 days after each
fiscal year end;

if the Borrower has any Subsidiaries,  unaudited annual unconsolidated financial
statements of the Borrower (and such other major Subsidiaries of the Borrower as
may be  specified  by the Bank from time to time)  within  120 days  after  each
fiscal year end;

unaudited  quarterly  financial  statements of the Borrower within 60 days after
each fiscal  quarter end or, if the  Borrower  has any  Subsidiaries,  unaudited
quarterly consolidated financial statements of the Borrower within 60 days after
each  fiscal  quarter  end;  if the  Borrower  has any  Subsidiaries,  unaudited
quarterly  unconsolidated  financial  statements of the Borrower (and such other
major  Subsidiaries of the Borrower as may be specified by the Bank from time to
time) within 60 days after each fiscal quarter end;

quarterly Compliance Certificate within 60 days after each fiscal quarter end;

quarterly aged list of accounts  receivable owing to the Borrower within 25 days
after each  quarter  end,  such list to be  certified  by the Borrower as to its
accuracy and to be in form and substance satisfactory to the Bank;

quarterly statement of inventory owned by the Borrower within 25 days after each
quarter end,  such  statement to be certified by the Borrower as to its accuracy
and to be in form and substance satisfactory to the Bank; and

such income and cash flow forecasts as may be produced by the Borrower from time
to time;

it will  promptly  pay when due all  business,  income and other taxes  properly
levied  on  its  operations  and  property  and  remit  all  statutory  employee
deductions when due;


it will insure and keep insured all  properties  customarily  insured by persons
carrying  on a similar  business  in similar  locations  or owning or  operating
similar  properties,  against  loss or  damage  by fire  and from  other  causes
customarily insured against by similar persons;


it will advise the Bank  forthwith  of any default by the Borrower or any of its
Subsidiaries in the repayment of any indebtedness for borrowed money;


it will  maintain  its  corporate  existence as a validly  subsisting  corporate
entity;


except for  Permitted  Financial  Assistance,  the Borrower will not provide any
Financial  Assistance to any of its Associates;  including,  but not limited, to
Maverick Tube Corporation;


except for Permitted Dispositions,  it will not and will not allow or permit its
Subsidiaries to sell,  transfer or otherwise dispose of any part of its property
or assets; and


except for Permitted  Encumbrances,  the Borrower will not and will not allow or
permit any of its Subsidiaries to grant,  create,  assume or suffer to exist any
Lien affecting any of its properties,  assets or other rights, whether now owned
or hereafter acquired; and


the Borrower and its subsidiaries  will not, in any fiscal year,  declare or pay
dividends,  to  any  entity  including,   but  not  limited  to,  Maverick  Tube
Corporation  if such payment would reduce  consolidated  shareholders  equity to
below C$145,000,000; and


except  for  Permitted  Debt,  the  Borrower  will not and will  not  allow  its
Subsidiaries to incur additional interest bearing debt.

All covenants contained herein shall remain in force for the benefit of the Bank
at all times before,  on and after the making of advances  hereunder  and/or the
taking of security pursuant hereto.  Upon the request of the Borrower,  the Bank
shall  (at the sole cost of the  Borrower)  execute  and  deliver  such  further
assurances as may  reasonably be necessary to give full effect to the provisions
of  paragraphs  (h) and (i) of this  Section of the  Agreement  which permit the
Borrower  to  grant  or  create  Permitted  Encumbrances  and to make  Permitted
Dispositions.

ENVIRONMENTAL  PROVISIONS:  The Borrower  confirms  that it has disclosed to the
Bank all  environmental  matters  which  could  have a  material  effect  on the
financial  condition or  operations  of the Borrower and its  subsidiaries.  The
Borrower  will keep the Bank fully  informed of all such matters and will comply
(and  will  ensure  its  subsidiaries  comply)  in all  material  respects  with
applicable environmental laws and any environmental permits which may govern its
operations.  The Bank  shall have the right to make good  faith  inquiries  with
governmental agencies regarding environmental matters affecting the Borrower and
its subsidiaries and, upon reasonable notice to the Borrower,  the Bank (and its
consultants)  shall have the right to enter the premises of the Borrower and its
subsidiaries  to carry out such  environmental  reviews  as the Bank in its sole
discretion deems advisable.

PERFORMANCE  OF  COVENANTS:  If the  Borrower  fails  to  perform  any  covenant
hereunder,  the Bank may, in its sole discretion,  perform any such covenant and
expend such money as may be necessary for purposes thereof. Any such expenditure
so made by the Bank  shall be repaid by the  Borrower  on demand  and shall bear
interest at the rate and in the manner set forth  hereunder for overdue  amounts
from the date the Bank makes such  expenditure  until and including the date the
Bank is repaid.

COLLATERAL
SECURITY:                  Existing Security:

The Bank acknowledges that it presently holds the following  documentation which
the Borrower  hereby  acknowledges  is held by the Bank in connection  with this
Credit Facility:

                           Segment 1)


- Bankers'  Acceptances  Services Agreement supported by Resolution of the Board
of Directors respecting Jumbo Bankers' Acceptances.

CONDITIONS PRECEDENT:  The obligation of the Bank to make available any advances
under the Credit Facility is conditional  upon the receipt in form and substance
satisfactory to the Bank of: (b) a duly executed copy of this Agreement.

The obligation of the Bank to make  available the Credit  Facility is subject to
the Bank being satisfied, at the time of advance, that a material adverse change
in the financial  condition or operation of the Borrower has not occurred,  that
the  Borrower  is not in  default  hereunder,  and  that no stay of  proceedings
against the Borrower or its property is then in effect.

RESERVE  INDEMNITY:  The  Borrower  shall  reimburse  the Bank that amount which
compensates the Bank for any additional cost or reduction in income caused by an
imposition,  implementation or increase of reserves, capital adequacy or similar
requirement  against assets or liabilities held by the Bank,  deposits in or for
the account of the Bank, loans made by the Bank, bankers'  acceptances  accepted
by the Bank,  letters of credit issued by the Bank,  commitments  by the Bank to
fund loans or any acquisition by the Bank of funds for loans made by the Bank.

GENERAL  INDEMNITY:  The Borrower shall  indemnify the Bank from and against all
losses, damages, expenses and liabilities which the Bank may sustain or incur as
a  consequence  of any  default  by the  Borrower  under any  provision  of this
Agreement or as a consequence of any environmental matter,  whether existent now
or  in  the  future,   which  affects  the  property  of  the  Borrower  or  its
subsidiaries.


PAYMENTS:  References  herein to "$" means  Canadian  Dollars and  references to
"US$" means US Dollars. All payments hereunder are payable for value on the date
on which they are due.

RENEWAL:  The Credit  Facility is available from time to time at the Bank's sole
discretion and is subject to review by the Bank at any time.

EXPENSES:  All legal costs,  fees and expenses  incurred in connection  with the
preparation,  negotiation,  documentation  and operation of the Credit Facility,
including the enforcement of the Bank's rights under each document  delivered in
connection  with the Credit  Facility  will be for the account of the  Borrower.

OTHER CREDIT  FACILITIES:  The Borrower  confirms  that,  except for this Credit
Facility,  there are at the present time no other credit facilities available to
the Borrower from the Bank.

We very much appreciate the opportunity to continue our  relationship  with your
company.

Yours truly,

ROYAL BANK OF CANADA


/s/ Y.P. Sugimoto
Y.P. Sugimoto
Senior Account Manager
Agreed to and Accepted this 28 day of December 2000

PRUDENTIAL STEEL LTD.


Per: /s/ Fred Rea

Title: V.P. and CFO

Per:

Title:




                               SPECIAL PROVISIONS


                  PROVISIONS APPLICABLE TO BANKERS' ACCEPTANCES

The  term  "Bankers'  Acceptances"  means  bankers  acceptances  denominated  in
Canadian  Dollars which are issued by the Borrower and accepted by the Bank. The
term "RBPAF"  means the annual rate  announced  from time to time by the Bank as
its reference rate then in effect for determining  fees on bankers'  acceptances
accepted by the Bank in Canada.  Bankers'  Acceptances;  shall have a term of at
least  thirty  (30) days and not more than one  hundred  and  eighty  (180) days
excluding  days of grace.  Two business days prior written notice for the issue,
the reissue  and the method of  repayment  on maturity of a Bankers'  Acceptance
shall be given by the  Borrower  to the Bank and must be received by the Bank by
no later than 10:00 a.m. on the stipulated notice date. If the Borrower fails to
give  notification  to the  Bank  of  the  method  of  repayment  of a  Bankers'
Acceptance in accordance with the notice  requirements  set out above,  then the
Borrower shall be deemed to have converted the Bankers'  Acceptance into a Prime
Based Loan on the maturity date of the applicable Bankers' Acceptance.


                     PROVISIONS APPLICABLE TO FEF CONTRACTS

The term "FEF Contracts" means foreign exchange forward  contracts  entered into
from time to time by the Borrower with the Bank. For purposes of determining the
amount  available  from time to time under  Segment 3) of this Credit  Facility,
amounts  outstanding by way of FEF Contracts  shall be deemed to be 10% (or such
other  percentage  as may be specified by the Bank from time to time) of amounts
payable  from  time to time  on the  settlement  dates  applicable  to such  FEF
Contracts.  Except as set  forth in this  paragraph,  the  terms and  conditions
applicable to each FEF Contract  shall be determined  without  reference to this
Agreement  other  than  the  section  of this  Agreement  entitled  Evidence  of
Indebtedness.


                   PROVISIONS APPLICABLE TO LETTERS OF CREDIT

The term  "Letters of Credit'  means letters of credit issued by the Bank at the
request  of the  Borrower.  Letters  of Credit  shall not be issued for a period
longer than one year without the prior  consent of the Bank.  Prior to utilizing
the Credit Facility by obtaining a Letter of Credit,  the Borrower shall deliver
to the Bank a  written  Letter  of  Credit  application  in form  and  substance
satisfactory  to the  Bank.  Each  such  application  shall be  executed  by the
authorized  signing  officers of the Borrower and delivered to the Bank at least
one  business  day  prior to the date on which  the  Letter  of  Credit is to be
issued.


                      PROVISIONS APPLICABLE TO LIBOR LOANS

For purposes of this Agreement, the following terms have the following meanings:


"Banking  Day"  means a day which is both a  business  day in the city where the
Branch of Account is located  and a day on which  dealings  in US Dollars may be
carried on by and between banks in the London, England interbank market;


"LIBOR" means,  with respect to each LIBOR Interest Period applicable to a LIBOR
Loan,  the rate of  interest  based on a 360 day year,  at which  the  Bank,  in
accordance with its normal practice, would be prepared to offer to leading banks
in the  London  interbank  market  for  delivery  on the first day of such LIBOR
Interest  Period for a period equal to each such LIBOR Interest  Period based on
the  number  of days  comprised  therein,  deposits  in US  Dollars  of  amounts
comparable  to the amount of such LIBOR Loan,  at or about  10:00 a.m.  (Toronto
time) two (2) Banking Days prior to a drawdown date or a conversion  date as the
case may be, for the initial LIBOR  Interest  Period,  and  thereafter,  two (2)
Banking Days prior to the first day of each successive LIBOR Interest Period;


"LIBOR  Interest Date" means the last day of each LIBOR  Interest  Period and if
the Borrower  selects a LIBOR Interest Period for a period longer than 3 months,
the LIBOR  Interest  Date  shall be the date  falling  every 3 months  after the
beginning  of such  LIBOR  Interest  Period  and on the last  day of such  LIBOR
Interest Period;


"LIBOR  Interest  Period" means with respect to a LIBOR Loan the initial  period
(subject  to  availability)  of  approximately  3 months,  6 months or 12 months
commencing with the date on which a LIBOR Loan is made or on which another basis
of  borrowing is  converted  into a LIBOR Loan and ending on the LIBOR  Interest
Date  failing  on the last  day of the  applicable  LIBOR  Interest  Period  and
thereafter  (subject to availability)  each successive period of approximately 3
months,  6 months or 12  months  commencing  on the last day of the  immediately
prior LIBOR Interest Period; and


"LIBOR Loans" means LIBOR rate based loans in US Dollars made by the Bank to the
Borrower.


Drawdowns  and/or  rollovers of LIBOR Loans are subject to the notice  provision
set out below  and the  availability  to the Bank of US  Dollars  in the  London
interbank  market for the LIBOR Interest Period and for the amount of LIBOR Loan
requested.


The  Borrower  may select  LIBOR  Interest  Periods of 3,6 and 12 months.  Three
Banking Days prior to the drawdown of LIBOR Loans,  conversion  into LIBOR Loans
or the expiration of each LIBOR Interest  Period,  the Borrower shall select and
notify the Bank of the next LIBOR Interest  Period  applicable.  If the Borrower
fails to select and notify the Bank of the LIBOR Interest Period applicable, the
Borrower  shall be deemed to have  converted  the LIBOR Loan into a US Base Rate
Loan.


All  repayments or  prepayments  of LIBOR Loans shall be made on the last day of
the applicable LIBOR Interest Period.  The Borrower shall reimburse the Bank for
any  loss,  costs or  expenses  incurred  as a result of  currency  conversions,
accelerations,  repayments or prepayments relative to LIBOR Loans effected other
than on the last day of a LIBOR Interest  Period  applicable to the amount being
converted, accelerated, repaid or prepaid.


If, at any time during the term of this Agreement,  the Bank  determines,  which
determination is final, conclusive and binding upon the Borrower, that:


adequate and fair means do not exist for  ascertaining the rate of interest on a
LIBOR Loan;


the costs to the Bank of  making,  funding  or  maintaining  the LIBOR  Loan are
increased or the income receivable by the Bank is reduced;

the making of a LIBOR Loan has become  impracticable  by reason of circumstances
which materially or adversely affect the London interbank market; or

deposits in US Dollars  are not  available  to the Bank in the London  interbank
market  in  sufficient  amounts  in the  ordinary  course  of  business  for the
applicable period to make, fund or maintain the LIBOR Loan during such period;

then, the Bank shall  promptly  notify the Borrower by written  notice,  and the
Borrower  shall within five (5) business  days of receipt of such notice  notify
the Bank as to the substitute  basis of borrowing  pursuant to this Agreement it
has selected. If such notice is not given by the Borrower, the Borrower shall be
deemed to have given notice to the Bank to convert the LIBOR Loan into a US Base
Rate Loan.

If it  should  become  unlawful  or  prohibited  for  the  Bank to  perform  its
obligations  under this Agreement with respect to LIBOR Loans,  the Bank may, by
written  notice to the  Borrower  terminate  the Bank's  obligations  under this
Agreement  with respect to LIBOR Loans and the Borrower  shall prepay such LIBOR
Loans together with all accrued but unpaid  interest as may be applicable to the
date of payment or convert the LIBOR Loan into another  basis of  borrowing  and
the  Borrower's  right to  borrow  by way of  LIBOR  Loan  shall  be  terminated
forthwith.

Minimum  initial  drawdown on LIBOR Loans  shall be US $500,000  and  additional
multiples of US $250,000.



                   PROVISIONS APPLICABLE TO PRIME BASED LOANS

The term "Prime Based  Loans"  means Prime rate based loans in Canadian  Dollars
made by the Bank to the  Borrower.  The term  "Prime"  means the annual  rate of
interest  announced  from time to time by the Bank as being its  reference  rate
then in effect for  determining  interest  rates on Canadian  Dollar  commercial
loans in Canada.



                   PROVISIONS APPLICABLE TO US BASE RATE LOANS

The term "US Base Rate Loans"  means USBR rate based loans in US Dollars made by
the Bank to the  Borrower.  The term  "USBR"  means the annual  rate of interest
announced  by the Bank  from time to time as being  its  reference  rate then in
effect for  determining  interest  rates on US Dollar  commercial  loans made in
Canada.


SCHEDULE "A" TO A LETTER AGREEMENT DATED DECEMBER 19,2000
BETWEEN ROYAL BANK OF CANADA AND PRUDENTIAL STEEL LTD.


SCHEDULE "B" TO A LETTER AGREEMENT DATED DECEMBER 19,2000
BETWEEN PRUDENTIAL STEEL LTD. AS BORROWER
AND ROYAL BANK OF CANADA AS LENDER





                                   DEFINITIONS


Associate  means an  associate,  as defined  in the  Business  Corporations  Act
(Alberta).

Compliance Certificate means a Compliance Certificate, substantially in the form
attached hereto as Schedule C, duly completed and executed by the Borrower.

Financial  Assistance means providing or agreeing to provide (either directly or
indirectly)  financial assistance to any person (including,  without limitation,
financial assistance by way of a loan,  guarantee,  equity  contribution,  share
purchase or credit support arrangement).

Permitted Debt: means the Prudential Steel Inc US Bank  US$10,000,000  revolving
line of credit which is to be reduced to US$5,000,000 on, or before, January 31,
2001.

Permitted Dispositions:  means:

a) the sale of products or services by the Borrower and its  Subsidiaries in the
ordinary  course of business to persons  other than  Affiliates of the Borrower;
and

b) the sale or disposition by the Borrower or its  Subsidiaries  of assets which
are obsolete or no longer  useful for their  intended  purpose to persons  other
than Affiliates of the Borrower.


Permitted Encumbrances:  means, in respect of the Borrower:

a) liens for taxes,  assessments  or  governmental  charges which are not due or
delinquent,  or the  validity of which the  Borrower or any of its  Subsidiaries
shall be contesting in good faith;  provided that  enforcement  proceedings have
not yet commenced or a stay of  enforcement is in effect and the outcome of such
contest could not reasonably be expected to involve any appreciable risk of loss
of any material part of the property of the Borrower and its Subsidiaries  taken
as a whole;

b) the lien of any judgment  rendered,  or claim filed,  against the Borrower or
any of  its  Subsidiaries  which  the  Borrower  or  such  Subsidiary  shall  be
contesting in good faith;  provided that  enforcement  proceedings  have not yet
commenced or a stay of  enforcement is in effect and the outcome of such contest
could not reasonably be expected to involve any appreciable  risk of loss of any
material  part of the property of the Borrower and its  Subsidiaries  taken as a
whole;

c) liens,  privileges  or other  charges  imposed  or  permitted  by law such as
carriers'  liens',  builders'  liens',  material  mean  liens and  other  liens,
privileges  or other  charges of a similar  nature which  relate to  obligations
which are not due or delinquent;

d)  undetermined  or  inchoate  liens  arising  in the  ordinary  course  of and
incidental  to  construction  or  current  operations  which have not been filed
pursuant to law against the Borrower or any of its  Subsidiaries,  in respect of
which no steps or proceedings to enforce such lien have been initiated and which
relate to obligations which are not due or delinquent;

e)  easements,  rights-of-way,  servitudes,  zoning or other  similar  rights or
restrictions in respect of land held by the Borrower or any of its  Subsidiaries
(including,  without  limitation,  rights-of-way  and  servitudes  for railways,
sewers,  drains,  pipe lines, gas and water mains,  electric light and power and
telephone or telegraph or cable television  conduits,  poles,  wires and cables)
which,  either alone or in the aggregate,  do not detract from the value of such
land or  materially  impair  its use in the  operation  of the  business  of the
Borrower or any such Subsidiary; and

f) Liens,  other than those  referred to above in this  definition  of Permitted
Encumbrances,  on property and assets having an aggregate  book value not at any
time in excess of Cdn. $2,500,000.


Permitted Financial Assistance:  means:

a) a cash payment for goods and services which is made in the ordinary course of
business by the  Borrower to any of its  Associates;  provided the amount of any
such payment is not greater than the fair market value of the goods and services
for which such payment is made; and

b) financial assistance will not at any time be in excess of an aggregate amount
of U.S.  $7,500,000  which will include a maximum of US$5,000,000  million to be
made  available  to  Prudential  Steel Inc and maximum  US$2,500,000  to be made
available to Maverick Tube Corporation et al. In addition, the Lender will allow
the  Borrower  to advance to a maximum of  US$5,000,000  million to its  parent,
Maverick Tube  Corporation,  and repayment will be made before December 31, 2000
to comply to covenant cap of US$7,500,00 million.

Subsidiary:  means a  subsidiary,  as defined in the Business  Corporations  Act
(Alberta).


SCHEDULE "C" TO A LETTER AGREEMENT DATED MAY 15, 1997
BETWEEN PRUDENTIAL STEEL LTD. AS BORROWER
AND ROYAL BANK OF CANADA AS LENDER





                             COMPLIANCE CERTIFICATE


I, , of the City of Calgary,  in the  Province of Alberta  hereby  certify in my
corporate (and not in my personal) capacity as follows:

1. That I am the [President or Chief Financial Officer] of Prudential Steel Ltd.
(the "Borrower");

2. That this Certificate applies to the fiscal quarter ending , 19;

3. That I am  familiar  with and have  examined  the  provisions  of the  credit
facility letter agreement (the "Letter Agreement") dated May 15,1997 between the
Borrower  and Royal Bank of Canada which  provides for a Credit  Facility to the
Borrower and I have made  reasonable  investigations  of  corporate  records and
inquiries  of other  officers  and senior  personnel  of the  Borrower as I have
deemed necessary for purposes of this certificate;

4. That  based on the  foregoing,  the  Borrower  is not in breach of nor has it
breached any provision of the Letter  Agreement  and no condition,  event or act
has occurred thereunder which with the giving of notice or the lapse of time, or
both, would constitute a default under the Letter Agreement.

5. That all capitalized terms used in this certificate have the same meanings as
in the Letter Agreement.

WITNESS MY HAND AND THE CORPORATE  SEAL OF Prudential  Steel Ltd. at the City of
Calgary, in the Province of Alberta this day of , 19.



PRUDENTIAL STEEL LTD.

By:_______________________
Title