June 22, 2016

Private Equity Group to Rescue Essar Steel Algoma

Troubled Canadian steelmaker Essar Steel Algoma will sell most of the company’s assets to a consortium of bidders formed by private equity firm KPS Capital Partners LP. The company will seek approval of the Asset Purchase Agreement with the Ontario Superior Court of Justice.

The New York-based KPS is a leading equity firm in the manufacturing sector, with a “track record of transforming businesses into vibrant independent companies,” Essar Steel executives say.

Essar Steel Algoma is an integrated production facility in Sault Ste. Marie, Ontario. The company produces hot-rolled and cold-rolled sheet and plate, with production capacity of 2.8 million tons.

In addition to the court approval process, the transaction is subject to a number of conditions relating to employees and benefits, plus capital projects and environmental matters.

“We are pleased that we have reached this point in the CCAA process and look forward to exiting. The new company formed by the consortium will securely position New Algoma with a capital structure to sustain all phases of the steel cycle,” says Kalyan Ghosh, president and CEO of Essar Steel Algoma. “We are also well within the timeline set out in our restructuring plan.”

The transaction is slated to close on or before the end of August. Essar Steel Algoma filed for protection under Canada’s Companies Creditors Arrangement Act in November 2015.


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