Steel Mills

Essar Steel Algoma Files Oppression Claim Against Essar Global Fund

October 22, 2016

Essar Steel Algoma has filed a legal proceeding against Essar Global Fund and its affiliates charging that the Essar Group has engaged in a course of conduct that consistently preferred the interests of the Essar Group and, in particular, Essar Global Fund, to those of Algoma and its stakeholders.

This conduct, charges Algoma, includes the unfair and prejudicial transactions of long term control over Algoma’s port facilities. Algoma is declaring that agreements through the exercise of de facto control over Algoma by the Essar group constitute Oppression.

Examples of the conduct include:

• Divestiture of Algoma of its cogeneration plant leaving Algoma without certainty of its electrical supply from that facility;

• Payments by Algoma to an Essar Group coal supply company that were higher than prices charged by Algoma’s other coal suppliers;

• Multi-million dollar prepayments to an Essar Group company for supply of raw materials, that amounted to interest free loans for the benefit of the Group, to the detriment of Algoma;

• Payment by Algoma for residential and commercial premises in New York City and a private corporate jet unrelated to Algoma’s business or benefit;

• Transfer of Algoma’s port facilities to Essar Global Fund and Essar Group that gave them control over the port and veto over Algoma transactions and business.

The Claim for Relief states, “Taken together, these transactions reflect a pattern of control by EFGL and adverse outcomes for Algoma to the benefit of the Essar Group, and demonstrate an ongoing and unfair disregard for the interests of Algoma’s stakeholders.”