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Essar Algoma Sale to Take More Time to Finalize
08/19/2016 - The group of lenders proposing to acquire Canada’s Essar Steel Algoma is continuing to negotiate the sale with the company’s bondholders, federal and provincial governments and the United Steelworkers union, but a closing doesn’t yet appear to be at hand, according to a court filing.
In a report from the monitor overseeing Essar Algoma’s creditor protection case, the monitor said that given the ongoing discussions, it’s not yet time to move on court approval for the sale.
Essar Algoma, which filed for creditor protection last year, announced in June that it had come to terms on a sales agreement with a consortium made up of its term lenders and KPS Capital Partners, a New York-based private equity firm.
KPS’ intent was to acquire Essar Algoma and U.S. Steel Canada, which also is operating under creditor protection, and merge the two steelmakers. However, KPS later withdrew. Nevertheless, the term lenders said they intend to move forward on the deal.
While the negotiations continue to play out, Essar Algoma is lining up new debtor-in-possession financing, having drawn down the pool of money available to it, according to the monitor’s report.
The monitor said the company plans to ask for court approval for a new financing plan, as well as for an extension of its protection from creditors, no later than 15 September. The new financing will provide the company with operating cash into 2017, the monitor said.
You can read the full report here.
Essar Algoma, which filed for creditor protection last year, announced in June that it had come to terms on a sales agreement with a consortium made up of its term lenders and KPS Capital Partners, a New York-based private equity firm.
KPS’ intent was to acquire Essar Algoma and U.S. Steel Canada, which also is operating under creditor protection, and merge the two steelmakers. However, KPS later withdrew. Nevertheless, the term lenders said they intend to move forward on the deal.
While the negotiations continue to play out, Essar Algoma is lining up new debtor-in-possession financing, having drawn down the pool of money available to it, according to the monitor’s report.
The monitor said the company plans to ask for court approval for a new financing plan, as well as for an extension of its protection from creditors, no later than 15 September. The new financing will provide the company with operating cash into 2017, the monitor said.
You can read the full report here.
