'Record low' steel prices, imports force company to pursue protection
SAULT STE. MARIE, Ont.—Turbulence in the Canadian steel industry is not limited to Hamilton and Nanticoke. Sault Ste. Marie-based producer, Essar Steel Algoma Inc., has again sought creditor protection under the Companies’ Creditors Arrangement Act.
Along with a filing before the Ontario Superior Court of Justice, the company has initiated a corresponding filing in the U.S. under Chapter 15.
“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,” Kalyan Ghosh, president and CEO of Essar Steel Algoma, said. “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.”
The company, which has been owned by Indian conglomerate, Essar Group, since 2007, said it is looking to strengthen its financial health and solidify its long-term business prospects.
“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,” Ghosh added.
Meanwhile, Algoma also announced it has secured a US$200 million debtor-in-possession financing facility from a syndicate of lenders led by Deutsche Bank AG, which will provide the company with “adequate liquidity to operate while it restructures its debt.”