Algoma Steel emerges from creditor protection
Published Friday, November 30, 2018 4:12PM EST
Last Updated Friday, November 30, 2018 6:10PM EST
It's been over three years coming, but the former Essar Steel, currently operating as Algoma is officially sold as of Friday.
The buyers are the lenders who've kept the place afloat in the last few years.
A new company has emerged, free of creditor protection, with a new official name: Algoma Steel Inc.
Many in Sault Ste. Marie may breathe a sigh of relief, as the steel plant begins its new chapter.
“This is incredible news for Sault Ste. Marie. This is awesome news! I think what it means is obvious to every average person on the street. We have been living under a cloud with CCAA (Companies’ Creditor Arrangement Act)ever since November 2015, when the company first filed.” said the city’s MPP, Ross Romano.
With the new owners, who are the lenders that have been backing the plant for three years, the steel plant is now out of creditor protection. They have promised to spend $300 million in investments in the plant.
"This means a lot of stability to the community. It means a lot of stability for the employees, means stability for the contractors, means stability for the suppliers, and it also means stability for the pensioners. It's a great day for our community." said Sault Ste. Marie Mayor Christian Provenzano.
Kalyan Ghosh, the Chief Executive Officer of the company, says the plant debt has drastically changed.
"$1 billion of debt has been shaved off our balance sheet. And our debt servicing costs have been reduced by an incredible 80%." said Ghosh.
He also says Algoma Steel is returning to financial stability with what he calls “a healthy balance sheet, less debt, and sustainable pension plans.” And that the company is now positioned for growth and hiring.
Ghosh says when Essar Global bought the steel plant back in 2007 the company inherited $1.2 billion of debt. Today, the new owners are inheriting $370 million of debt, a big difference, which should mean good things for the community.
Sault Ste. Marie’s steel plant, Algoma Steel, announced Friday that it has finalized the sale of all Essar Steel Algoma’s assets and has emerged from the Companies’ Creditor Arrangement Act (CCAA).
Algoma Steel employs over 2,900 workers in Sault Ste. Marie.
The new owners are committed to a $300 million investment to modernize its facilities and expand capacity and grade capability in order to position the company to be more efficient and globally competitive.
“When we take a look around at the domestic and international steel markets, what we see is a lot of room for growth for Algoma Steel. We have a long and proud history in Canada, manufacturing 100% of our products right here in Sault Ste. Marie. Today Algoma Steel is an independent and strong niche player, manufacturing a comprehensive mix of hot and cold rolled steel sheet and plate products not just for Canadian markets, but also beyond.” said Kaylan Ghosh, Chief Executive Officer of Algoma Steel.
With the support and approval of the provincial government, the company’s three defined benefit pension plans are secure and sustainable.
“Today, we’re hiring. We are coming out of this restructuring positioned for growth, thanks in part to the determination and professionalism demonstrated by our employees in the face of uncertainty. We are eternally thankful for the patience of our suppliers and the confidence expressed by our customers through this process. We have also enjoyed incredible support from the federal, provincial, and municipal governments as Algoma Steel worked hard to get back to being a cornerstone manufacturer not only in Sault Ste. Marie, but also in Ontario and Canada.” said Ghosh.