Steel Mills
KPS Withdraws from Consortium, Algoma to Proceed with Term Lenders
Written by Sandy Williams
July 14, 2016
SAULT STE. MARIE – Essar Steel Algoma Inc. (Algoma) has received notice from the Term Lenders that the Consortium Agreement between KPS Capital Partners LP and certain Term Lenders has been terminated. The Term Lenders have indicated that they remain committed to a going-concern outcome for Algoma and all of its stakeholders, and to closing the transaction contemplated by the Asset Purchase Agreement as soon as possible.
As a result of this development Algoma is seeking an adjournment of the motion for approval of the Asset Purchase Agreement.
Essar Steel Algoma CEO Kalyan Ghosh commented on the development, “While it is unfortunate that KPS has withdrawn from the consortium, I am pleased that the Term Lenders remain committed to closing the transaction. Algoma will seek to work with its stakeholders to achieve the optimal outcome for the future of Algoma, its employees, pensioners and the customers we serve.”
SMU Note: USW members recently negotiated a purchase bid with Ontario Steel, which is backed by Essar Global. The withdrawal of KPS is likely due to an inability to reach a contract agreement with the union. KPS was not willing to take on the pension liabilities and the union said it preferred to pursue a purchase by Essar Global.
Sandy Williams
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