Essar Steel Algoma seeks creditor protection
Slump in steel prices blamed as Essar announces plans to restructure
Essar Steel Algoma Inc. says it will seek creditor protection as it deals with a continued slump in the price of steel.
The company has filed requests with Canadian and U.S. courts as it seeks to restructure its long-term debt, and has raised $200 million US from a group of investors led by Deutsche Bank to fund ongoing operations.
Essar Steel Algoma is the second biggest steel producer in Canada and the largest employer in Sault Ste. Marie, Ont., with close to 3,000 employees.
The company is a subsidiary of India-based global conglomerate Essar Steel.
In 2013, Essar Steel Algoma won a battle against organized labour when the Ontario government approved a new rule that allowed it to lower its pension contributions, which the company said had become unsustainable.
It said it plans to continue operations while it undergoes restructuring.
"This process will provide the company with the time and stability to restructure our finances. We expect that Essar Steel Algoma will emerge stronger and better able to compete as an advanced manufacturer," CEO Kalyan Ghosh said in a news release.