Essar Steel Algoma indicates it looks like clear sailing toward new ownership and bringing the company out of creditor protection after almost three years.
The Sault Ste. Marie steelmaker – rebranded as Algoma – announced that an agreement in principle has been reached regarding its port, one of the last outstanding issues between the steel company and the port company that needed resolution before the sale to new ownership could proceed.
An Essar Steel Algoma statement released late on Aug. 22 indicated Superior Court Justice Glenn Hainey, who is overseeing the restructuring process, recommended the approval of the asset purchase agreement and congratulated the parties on reaching an agreement in principle, “noting that the sale is in the best interests of Algoma and its stakeholders.”
"Resolution of the port matter was the final hurdle standing between us and a successful sale transaction,” said Algoma CEO Kalyan Ghosh in a company statement.
“This agreement will position Algoma securely as an advanced steel manufacturer with the liquidity and wherewithal to make the investments necessary to secure the next generation of steel makers."
The steel company will seek an approval and vesting order once the agreement between (its lenders) GIP and the consenting creditors regarding the port has been documented.
The sale of the steelmaker to a British Columbia numbered company - 1076318 B.C. Ltd. - is expected to be finalized Sept. 30.
The numbered company is associated with Essar’s term lenders and consenting senior secured noteholders.
The transaction will cover worker pensions, city taxes, a co-generation plant, the port and lenders who covered the steel company’s expenses through the CCAA process. It will reduce Essar’s debt, provide up to US$300 million in financing, plus up US$125 million in available loans for plant upgrades.
The company filed for creditor protection under the Company's Creditors Arrangement Act in November 2015.
