news-essar steel algoma   Statement from Essar Steel Algoma…
Confirms Secured Lenders Unite in Recapitalization Proposal
SAULT STE. MARIE – Essar Steel Algoma Inc. (“Essar Steel Algoma” or the “Company”)
obtained an Order today from the Ontario Superior Court of Justice extending the stay of
proceedings under the Companies’ Creditors Arrangement Act (CCAA) to January 31, 2017.
The Court further approved an amendment and extension to the existing Debtor-in-Possession
financing facility (the “DIP”) with a corresponding maturity of January 31, 2017, which provides
the Company with an additional USD $35 million of liquidity.
Essar Steel Algoma further confirms that the majority of its Term Lenders and Senior Secured
Noteholders have advised that they have reached agreement on a Recapitalization Proposal
(the “Proposal”) for the Company which contemplates either a restructuring plan or the
acquisition of substantially all of the assets of Essar Steel Algoma. The Proposal contemplates
an investment of up to US$425 million, a reduction of the Company’s funded debt by
approximately US$1.15 billion and a reduction in annual cash interest expense by
approximately US$125 million, thereby providing improved liquidity and financial flexibility.
Essar Steel Algoma Chief Executive Officer Kalyan Ghosh commented on today’s
developments, “We are very pleased to see an overwhelming majority of our secured lenders
unifying to present a plan for the future of Algoma. This cooperation signals a collaborative
approach and we look forward to working with them, the USW, the various levels of
government, and all other stakeholders towards a final plan that achieves our shared goal of a
stronger, more competitive Algoma. In the interim, the stay extension and the DIP amendment
will provide the Company with the stability required to continue operations, secure its winter raw
material build, and see this process through to a successful transaction.”
The terms of the Recapitalization Proposal are described in the Restructuring Support
Agreement, dated as of September 15, 2016, among the Consenting Lenders and the
Consenting Noteholders.
Essar Steel Algoma Inc. is based in Sault Ste. Marie, Ontario. As a fully integrated steel
producer, the Company derives its revenues primarily from the manufacture and sale of hot and
cold rolled steel products including sheet and plate.
Essar Steel Algoma Inc. filed for creditor protection under the Companies Creditors
Arrangement Act on November 9, 2015. The Sale and Investment Solicitation Process was
launched on February 11, 2016. Relevant documents, including the Restructuring Support
Agreement, can be found on the Monitor’s website at www.ey.com/ca/essaralgoma and on the
Prime Clerk website at http://cases.primeclerk.com/EssarSteel.