Algoma Union Wants Court to Allow New Bidder

MAGA – an acronym for Make Algoma Great Again and a nod to the U.S. president – is described in a motion filed by Local 2724 as a “single purpose entity, incorporated for the purpose of acquiring Algoma’s assets.” Financing for the entity will be provided by TMC Strategic Opportunity Fund, DSA Group, and KeyBanc Capital Markets. If MAGA should win the bidding, ownership and control of the entity will pass to the financiers. Details of the purchase price and other payments were redacted from public viewing in the motion documents.

The union argues that a successful bid by MAGA will benefit all the stakeholders:

• It provides fair value for the company assets;
• Has the support of USW Locals 2724 and 2252 and Algoma’s retirees;
• Restores operations and stability to the company; and
• Restores funding withheld to stakeholders like the City of Sault Ste. Marie and the Port of Algoma.

The union complained in its motion that the lenders’ bid has had a negative impact on Algoma and its stakeholders. “Labor relations have become toxic at a company that has not experienced a lockout or strike in over 25 years,” wrote Local 2724. “In the face of threats by its DIP lender, the employer has been forced to threaten to seek no board reports and initiate unilateral changes to the terms of employment of Algoma’s active employees, forcing the employees to vote in overwhelming numbers in favor of a strike.”

The union has asked the court to review the bid by MAGA on August 18.

A recent article by Soo Today was attacked by Local 2251, which said statements quoted from an affidavit were “misleading and inaccurate.”

“The comments regarding the behavior of the union are uncalled for and are biased statements made by the financial advisor to the applicant,” said union officials. “In point of fact, it is my belief that the purpose is to attempt to persuade the court that the union is being unreasonable. Quite frankly, that position is completely inaccurate. At all times this negotiating committee has attempted to negotiate with various parties who maintained unreasonable positions. To suggest that the lack of a deal is due to the actions of our local is ludicrous.”

Soo Today reports a letter was sent Sunday to Algoma from Mark Wasserman, attorney representing the term lenders. The letter stated:

“The lenders are of the view that the time has come for the applicants and their stakeholders, including those opposing the DIP [debtor-in-possession] approval motion, to focus their efforts on attempting to achieve consensus on a restructuring, which will enable the company to emerge from these CCAA proceedings as rapidly and efficiently as possible in the near term.”