Steel Mills
Essar Steel Algoma Paying Down Debt
Written by Sandy Williams
March 30, 2017
Essar Steel Algoma is making progress on paying its debts. According to the latest (27th) Monitors report, Algoma has repaid $42.7 million as of March 25, 2017 through weekly “cash sweeps” to its Debtor in Possession lenders. Another $2.5 million will be paid on April 3 which will result in reducing the outstanding balance under its second DIP Amendment to approximately $164.8 million.
The extension of Algoma’s funding to a third DIP amendment requires the payment of a forebearance fee of $1.25 million and a further extension fee of $800,000. As of May 5, 2017 the outstanding balance of the DIP is estimated at US $165 million and cash balance for the company CAD $28 million (approximately $21 million USD).
Raw material inventory is expected to absorb improved revenue as the company restocks following the opening of the Great Lakes shipping season. Operating cash flow is expected to total $12 million (US$ 9 million).
Payments for monthly cargo handling to Portco were suspended as of May 2016 pending resolution of an oppression act against Essar Global.
Mediation discussions are ongoing between the USW, DIP lenders and Algoma management and are being conducted under a media blackout.
Said court monitor Brien Denega in his report, “The Company has engaged with both Locals 2724 and 2251 in collective bargaining discussions. Where this process will lead remains highly uncertain at this time. Potential labour disruptions in this process, if any, would severely impact the Company’s operations and cash flow over next several months. In this scenario, the Projection does not contemplate any business disruptions other than certain preparedness efforts.”
Essar Steel Algoma is hoping to resolve labor discussions in order to facilitate the restructuring and have asked for a Stay Extension under CCAA until April 30, 2017.
Sandy Williams
Read more from Sandy WilliamsLatest in Steel Mills
Stelco Considering Bid for U.S. Steel: Bloomberg
Canadian steelmaker Stelco Holdings Inc. is now in the mix to purchase U.S. Steel, according to an article in Bloomberg on Thursday, which cited people familiar with the matter.
USS Expects Lower Q3 Earnings, Says UAW Strike Partly To Blame
U.S. Steel expects earnings to drop in the third quarter vs. the prior quarter and the same period a year earlier as the company adjusts production because of the United Auto Workers (UAW) union strike.
SDI to Provide Steel for Mercedes Plant in Alabama
Steel Dynamics Inc. (SDI) and Mercedes-Benz have signed an agreement for the automaker to source 50,000 metric tons of C02-reduced steel for its plant in Tuscaloosa, Ala.
Algoma’s CEO Highlights the Switch to Greener Steelmaking
As the world works to decarbonize and limit greenhouse-gas emissions to reach the goals outlined in the Paris Agreement, many steel companies have joined others in setting their own targets to reach net zero emissions by 2050.
U.S. Steel Idling Granite City ‘B’ Furnace in Response to UAW strike
U.S. Steel said on Monday it plans to temporarily idle blast furnace ‘B’ at its Granite City Works near St. Louis. The Pittsburgh-based steelmaker said it made the move in response to the United Auto Workers (UAW) union strike against “Big Three” automakers Ford, General Motors, and Stellantis. “Following the announcement of UAW strike actions, […]