With its court-ordered protection from creditors due to expire tomorrow, Essar Steel Algoma has obtained an extension through September 16, SooToday reported.
Granting the extension June 15 in a Toronto courtroom, Superior Court Justice Frank Newbould remarked that it was unopposed by any of the 82 parties involved in the Sault Ste. Marie steelmaker's insolvency proceedings.
The company asked for the extension to allow it to complete its search for new owners, negotiate with lenders and other stakeholders in the restructuring and to continue normal operations.
SooToday reported on a second decision by Judge Newbould, denying a City of Sault Ste. Marie demand for immediate payment of millions of dollars in unpaid property taxes owed by Essar Algoma.
"I realize that the city needs the money," the judge said. "But there are others who need money that are not being paid....such as the special catch-up payments on pension obligations and payments to the Port of Algoma."
"It will be of no benefit to the city if [Essar Steel Algoma] does not survive," said Newbould, supporting the steelmaker's contention that it requires a US$20 million cash cushion to ensure it continues meeting its obligations.
Even without paying municipal taxes, Essar Algoma's cash balance was estimated at $9 million on June 10 and forecast to be $11 million on July 15.
Court filings indicate that the city has previously allowed the steelmaker to make late tax payments subject to 15 percent interest.
"The steel business is no easy road," Judge Newbould said. "The need for a cash cushion is obvious."
A report in the Hamilton Spectator linked the Essar parent company, Essar Group of India to the search for a new owner for U.S. Steel Canada. They, along with KPS Capital Partners LP of New York, are interested in operating the former Stelco operations in Hamilton and Nanticoke and are involved in the final stage of bidding, the newspaper reported.
The Globe and Mail also reported that KPS is interested in acquiring Essar Steel Algoma.
