According to local reports, Essar Steel Algoma will soon begin the process of finding a buyer or investor for its Sault Ste. Marie, Ontario mill.
In a letter sent to suppliers last week, the company’s CEO Kalyan Ghosh said, “We expect to begin the sale and investment solicitation process (SISP) and the search for a buyer by mid-February. While we are hopeful that 2016 will bring improved market conditions and new opportunities, Essar Steel Algoma is contending with a tight deadline for its financial restructuring.”
Ghosh said that because the company is operating with US$200-million debtor-in-possession (DIP) financing that expires on September 1, any deal must be completed and approved by August 31.
However, court-appointed monitor Brian Denega of Ernst & Young Inc. said in a statement, “An expedited timeframe is imperative as there is substantial risk that [Essar Steel Algoma and related companies] may exhaust their available liquidity under the DIP facilities before the DIP agreement expires on August 31, 2016, subject to possible extension until September 30.”
Essar Steel Algoma sought creditor protection in November 2015 under the Companies’ Creditors Arrangement Act.
“In order to meet the SISP approval deadline, [Essar Steel Algoma and related companies] with the assistance of their advisors and the monitor, will soon begin to engage with prospective interested parties to determine their level of interest in the operating assets of Algoma,” Denega said.
He added that “a key piece of information interested parties will require to evaluate Algoma’s operations is Algoma’s business plan, which in turn requires a substantial degree of certainty as to iron ore supply arrangements.”