Steel Mills
Essar Steel Algoma Files For Bankruptcy Protection
Written by Sandy Williams
July 20, 2014
Essar Steel Algoma has filed for Chapter 15 bankruptcy protection at the U.S. Bankruptcy Court in Delaware and the Ontario Superior Court of Justice as part of its restructuring efforts.
The filing under Chapter 15 in the U.S. is a recognition proceeding,” said a spokesperson for Essar Steel Allgoma. “The sole purpose of the US filing is to ensure that the bondholders and the Company’s debt holders are bound by the Canadian court orders as issued under the Canada Business Corporations Act.”
Essar Steel Algoma reported liabilities of more than $1.2 billion in its bankruptcy documentation with the US Bankruptcy Court in Delaware. The bankruptcy filing is in conjunction with an agreement by parent company Essar Global Fund Limited to help with refinancing and restructuring. EFGL, which holds more than 70 percent of its 9.875 percent senior unsecured notes, will provide a cash infusion of up to $300 million to Algoma. The agreement was negotiated after Algoma could not fulfill its interest payment on the notes in June.
Algoma CEO Kaylan Ghosh said the deal with EFGL will result in recapitalized business and refinanced capital structure. “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.”
Algoma said the extreme winter conditions that delayed ore shipments in the first half of the year prevented the company from producing at full capacity and taking advantage of improved steel demand and pricing.
Sandy Williams
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