Essar Steel Algoma announced Nov. 9 that it has sought protection under the Companies’ Creditors Arrangement Act (CCAA) before the Ontario Superior Court of Justice.
The Sault Ste. Marie steelmaker also said it has initiated a corresponding filing in the United States under Chapter 15.
Operations will continue as normal during the restructuring, a company press release said.
The court has appointed Ernst & Young Inc. to act as monitor. Evercore Group L.L.C., Weil Gotshal & Manges LLP and Stikeman Elliott LLP represent the company as financial advisor and outside US and Canadian legal counsel, respectively.
“We have taken aggressive measures that succeeded in curtailing costs and significantly enhancing productivity, ranking Essar Steel Algoma among the top quartile for low cost producers in North America,” said Kalyan Ghosh, Essar Algoma president-CEO.
“Despite these efforts we have been forced to take action today to ensure the continued success of our business given the record low steel markets, a barrage of imports, and the untimely and wrongful termination of our long-term iron ore supply contract (with Cliffs Natural Resources)
“I want to assure our customers, vendors and employees that we fully expect this restructuring not to disrupt daily operations,” said Ghosh.
“This process will provide the company with the time and stability to restructure our finances. We expect that Essar Steel Algoma will emerge stronger and better able to compete as an advanced manufacturer.”
The company further announced today it has secured a USD $200 million debtor in-possession financing facility from a syndicate of lenders by Deutsche Bank AG to provide adequate liquidity to operate while it restructures its debt.
Details on the restructuring can be viewed at www.ey.com/ca/essaralgoma and http://cases.primeclerk.com/EssarSteel for the Chapter 15 filing.
