Essar Steel Algoma and a group of unsecured noteholders have agreed to a restructuring plan to refinance the money-losing Sault Ste. Marie steel maker.
After missing a June 15 interest payment on unsecured bonds, the company began negotiations last month with creditors representing 70 per cent of the 9.875 per cent of US$385 million in senior unsecured notes.
Under the agreement, the Essar Global Fund – a unit of the parent company Essar Global in Mumbai, India – will provide as much as $300 million in new equity to the Canadian operation.
The company provided no further details of the restructuring plan.
The former Algoma Steel was once one of the most efficient and profitable North American steel mills after emerging from bankruptcy protection in 2002. The Mumbai, India-based Essar Group purchased the operation in 2007.
The steel plate and sheet manufacturer has lost money over the last nine consecutive quarters.
Company CEO Kalyan Ghosh was understandably pleased.
“This path offers the best means to maximize long-term value while offering certainty of supply for customers and continued security for our employees, retirees, vendors and all other important stakeholders, which were key considerations.”