Essar Steel Algoma has received final approval for its refinancing plan.
The Ontario Superior Court of Justice approved Essar’s Plan of Arrangement, deeming it fair under the Canada Business Corporations Act. The decision follows a vote of support for the plan by 92 per cent of 9.875 per cent of senior unsecured noteholders who voted at the Sept. 10 noteholders’ meeting.
After missing a June 15 interest payment on unsecured bonds, the company began negotiations with creditors representing 70 per cent of the 9.875 per cent of US$385 million in senior unsecured notes.
The Plan of Arrangement provides the company with a near-term capital infusion from Essar Global Fund Ltd. (EGFL) of up to US$100 million to ensure the appropriate liquidity required to complete scheduled capital improvements and allow for the seasonal raw material build. The final order paves the way for the recapitalization and refinancing transaction to be completed on or before Nov. 15, 2014, subject to, among other things, the execution of definitive documentation.
“This plan provides for a comprehensive capital infusion, a substantial deleveraging of our balance sheet and the refinancing of all of Algoma’s senior secured debt,” CEO Kalyan Gosh said in a statement.
“In recent months, we have been able to capitalize on the favourable market environment, building on sustainable operational improvements that positioned the company well for the future. In July and August alone we generated EBITDA of CDN$22 million and CDN$30 million, respectively. Our order book is full and we are currently taking orders for November.”
Details regarding the Plan of Arrangement and the court proceedings can be found at www.donlinrecano.com/essarsteelcanada and www.donlinrecano.com/essarsteelus.
