Steel Mills
Algoma Union Supporting Anonymous Bidder
Written by Sandy Williams
April 12, 2017
USW Local 2251 voted 98.6 percent in favor of ratification of a Support Agreement for an undisclosed party interested in acquiring the assets of Essar Steel Algoma Inc. The announcement was made April 10 in a press release signed by Local 2251 president Mike Da Prat.
Da Prat told the Sault Star that he could not disclose the name of the entity due to a gag order imposed by Judge Newbould on mediation talks among the unions, company and DIP Term Lenders. Da Prat confirmed that the entity is not the term lenders but would not offer further information.
“I will just say that it is another party, separate of the term lenders,” DaPrat said as quoted by the Sault Star. “We wait and see if the entity is let in and we’re very hopeful. It’s up to the court to decide what’s next,” he added.
Essar Global has pressed its case with the courts to be allowed to bid for the CCAA protected steel company but had not re-submitted an official bid for the company after an early rejection in the submission process. The union had signaled its support of returning to ownership by former parent Essar.
The former owner (Essar Global) purchased the mill in 2007 and took the mill into bankruptcy twice, in 1991 and again in 2001. In 2014 Algoma completed a recapitalization and refinancing plan supported by Essar Global Fund. Faced with growing debt and net loss, Algoma entered its most recent entry to CCAA protection in November 2015. Essar Global has also taken Minnesota Steel into bankruptcy.
Essar Steel Algoma file an oppression case against Essar Global Fund and its affiliates in October 2016 charging that Essar consistently put the interests of Essar Group ahead of Algoma and its stakeholders. One of the issues was an agreement made with the Port of Algoma. In a March decision, Superior Court Judge Frank Newbould agreed that the terms of a lease agreement made by Essar Global with the Port of Algoma (Portco) in 2014, was “unfairly prejudicial to, and unfairly disregarded, the interests of Algoma’s trade creditors, employees, pensioners and retirees.”
Essar Steel Algoma’s latest stay period extension will expire April 30.
Sandy Williams
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