Essar Steel Algoma Inc. announced Monday that it has sought protection under the Companies’ Creditors Arrangement Act (CCAA) before the Ontario Superior Court of Justice in order to strengthen its financial health and solidify its long-term business prospects. The Company has initiated a corresponding filing in the United States under Chapter 15 to recognize and give effect to the Canadian filing. The Company fully expects to continue normal operations during its restructuring.
“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, president and chief executive officer of Essar Steel Algoma. “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. I want to assure our customers, vendors and employees that we fully expect this restructuring not to disrupt daily operations.”
Ghosh further added, “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.”
Essar Steel Algoma also announced 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.
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.