Recent media reports indicate that Essar Steel Algoma may be heading for another return to insolvency as it struggles to meet its debts. According to media reports, the company has engaged a law firm and restructuring specialist to advise it and may file for insolvency by the end of the month.
Although Essar Steel Algoma has not confirmed the reports, spokesperson Brenda Stenta at Essar Steel Algoma provided SMU with the following statement.
“With regards to the current situation, we are operating our business as always with a focus on delivering the best quality product to our customers and the health and safety of our employees,” wrote Stenta.”
“Recent staff layoffs reflect difficult times in the international and domestic steel business overall. World steel prices have fallen dramatically over the past year as a result of overcapacity and reduced demand in the energy and mining sectors. In Canada, this pressure has been increased by the proliferation of low-priced steel flooding the market.”
The company laid off 100 employees last month at its plate and cold mills. Last week, salaried workers from USW Local 2742 were asked to vote on a work-share proposal that would allow two employees to share a job, avoiding complete job loss. Workers rejected the proposal in a 77-23 vote.
When Essar Steel Algoma was under court protection in July 2014, parent company Essar Global stepped in to provide funding. Soo Today reports that Essar Group has a plan to sell a 50 percent stake in Essar Oil to provide financing for its ailing steel segment abroad and in Canada. It is not confirmed that Essar will divert any of the funds of that sale to Algoma.
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