Steel Mills
Essar Steel Algoma Production in January Best Since 2014
Written by Sandy Williams
February 16, 2017
Essar Steel Algoma, under protection by the Companies’ Creditors Arrangement Act since November 2015, held its own in production and sales in January. January production surpassed 232,000 tons making it the highest single month production since September 2014. Improved selling prices and increased shipments brought in revenue of CAD $153 million in January for an adjusted EBITDA of $22 million for the month, $7 million higher than December. The company shipped an estimated 209,317 tonnes in January.
Essar Steel Algoma’s court monitor Brian Denega addressed in his Twenty-fifth Monitors Report a motion by Essar Capital to reopen the Sales Investment and Solicitation Process (SISP). Denega said in the report he does not believe there is a need to reopen the SISP. He suggests any party that is serious about acquiring or restructuring Algoma engage in Negotiations with the Term Lenders “rather than negotiating through the press, which tends to be not only unproductive but may well be harmful” to the CCAA proceedings.
The reference is in regards to a flurry of accusations that occurred between Essar Global Fund and Essar Steel Algoma and its Term Lenders after a letter from Essar Global was published in the press criticizing the SISP proceedings and requesting consideration as a bidder.
Collective bargaining commenced last week between the local unions and Essar Steel Algoma with a representative of the Term Lenders present for the discussions. The USW local has sought direction and advice from the court regarding engaging in discussions with Ontario Steel, an entity owned and controlled by Essar Global and favored by union workers. Denega strongly opposed the union’s motion, noting that Essar Global never submitted a formal bid for the company.
“Transactional discussions between Ontario Steel and the unions, where there is no concrete offer or proposal from Ontario Steel, much less one that has the necessary support of the term lenders and the consenting secured noteholders, will detract from this priority and would therefore be inappropriate and detrimental to Algoma’s restructuring process,” said Denega.
United Steelworkers Local 2251 intends to hold a strike mandate vote on Tuesday, February 28.
Sandy Williams
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