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Essar Steel Algoma Accepts Sale Bid From Investment Firm, Lenders
06/17/2016 - A consortium made up of an American private equity firm and a group of lenders has reached an agreement to acquire Essar Steel Algoma, the Canadian steelmaker announced on Friday.
Essar said the agreement is with New York-based KPS Capital Partners LP and the term lenders Essar Algoma had in place prior to its creditor protection filing last year.
“We are pleased that we have reached this point in the (Companies’ Creditors Arrangement Act) process and look forward to exiting. The new company formed by the consortium will securely position (the new) Algoma with a capital structure to sustain all phases of the steel cycle,” said Kalyan Ghosh, president and chief executive of Essar Steel Algoma.
Essar Algoma said the consortium’s bid includes a cash consideration, a credit bid equivalent to the term loan, and the assumption of certain liabilities. It did not provide more details.
However, The (Toronto) Globe and Mail newspaper reported that the consortium will not take on “legacy obligations,” which would be pension deficits of more than CA$500 million.
And in order for the deal to pass muster, Essar Algoma will need to secure changes to union agreements and pension relief, the newspaper said.
The company said it plans to close on the deal by 31 August.
“We are pleased that we have reached this point in the (Companies’ Creditors Arrangement Act) process and look forward to exiting. The new company formed by the consortium will securely position (the new) Algoma with a capital structure to sustain all phases of the steel cycle,” said Kalyan Ghosh, president and chief executive of Essar Steel Algoma.
Essar Algoma said the consortium’s bid includes a cash consideration, a credit bid equivalent to the term loan, and the assumption of certain liabilities. It did not provide more details.
However, The (Toronto) Globe and Mail newspaper reported that the consortium will not take on “legacy obligations,” which would be pension deficits of more than CA$500 million.
And in order for the deal to pass muster, Essar Algoma will need to secure changes to union agreements and pension relief, the newspaper said.
The company said it plans to close on the deal by 31 August.
