Essar Steel Algoma and US Steel Canada in Final Sale Phases

Despite the “cone of silence” that the media has called the quiet period around the Algoma negotiations, the Globe and Mail reports that Essar’s parent company, Essar Group, has been disqualified from the bidding due to lack of financial resources to complete a transaction.

Under terms of the Sale and Investment Solicitation Process (SISP), a bidder may be rejected if it is “inadequate or insufficient, or is otherwise contrary to the best interest of the applicants and its creditors and other stakeholders.” Such a bid was deemed to be unsatisfactory on April 20, 2016.

USW Local 2251 and Local 2724 requested the court re-qualify the bidder and allow it to continue to Phase II of the proceedings.

Local 2251 argued they were not consulted about the elimination or formally notified of the disqualification as required by the SISP thereby it “effectively disenfranchises Local 2551 and erodes its position as a critical stakeholder.”

Justice Newbould ruled, “In this case, technically perhaps Essar Algoma should have consulted with the USW after the financial information from the subject bidder was received on April 18…. It would however have been a meaningless consultation as the USW had no role to play in the decision as to the financial capability of the subject bidder and it was that decision which led to the rejection of the subject bid.”

The sales process is expected to conclude by August 31.

US Steel Canada

US Steel Canada and those involved in the sales process are also prohibited from revealing bidder identity or other information regarding the sale.

USSC spokesman Trevor Harris explained:

“While I appreciate there is a great deal of interest regarding the status of U. S. Steel Canada’s Sale and Investment Solicitation Process (SISP), in order to preserve the integrity of the process and to respect the non-disclosure agreements signed by all parties who participated in Phase 2, I am unable to comment at this time.

“Over the coming weeks, the U. S. Steel Canada Board of Directors will be working with management and their advisors under the guidance of the Court Monitor, to review and evaluate the multiple bids that have been received.

“We will provide additional comments regarding the status of the SISP as circumstances warrant.”

Submission of final offers for Phase II was extended to May 13, 2016 by the court.