Essar Steel Algoma announced lenders holding a majority of the company's US$315.7 million loan credit have agreed to changes in its credit agreement to give the company some operating wiggle room.
The Sault Ste. Marie steel maker is once again struggling with credit problems that triggered Moody's Investors Service to warn in August that Algoma is “highly unlikely” to be in compliance with its covenants in the senior secured term agreement.
In a Sept. 10 release, the company stated given depressed market conditions, it was compelled to seek “relaxation of the terms of the facility.”
Essar Steel Algoma CEO Armando Plastino said, “This amendment is an endorsement from our lenders, demonstrating their confidence in the company's ability to effectively respond to these unprecedented market conditions."
The company's release stated that with steel markets steadily improving in price and volume, 600 laid-off workers have been recalled and others on a work-sharing program have returned full-time.
“We are confident that this amendment now provides the company with the necessary flexibility and stability to continue to weather this market cycle with a view to long term sustainability,” said Plastino.
