Essar Steel Algoma Files for Protection
November 10 2015 - 7:40AM
Dow Jones News
Essar Steel Algoma Inc. sought court protection from creditors
in the U.S. and Canada Monday, amid a prolonged contract fight with
ore supplier Cliffs Natural Resources Inc.
Canadian steelmaker Essar has been hit with demands for damages
from Cliffs due to alleged violations of a supply contract for iron
ore. Essar has countersued, accusing Cliffs of violating the
contract.
In a statement, Essar said it filed for protection under
Canadian insolvency law to "strengthen its financial health and
solidify its long-term business prospects."
Kalyan Ghosh, Essar's president and chief executive officer,
said daily operations would continue unimpeded. The company has
signed up $200 million in bankruptcy financing. Mr. Ghosh cited
"record-low steel markets, a barrage of imports, and the untimely
and wrongful termination of our long-term iron ore supply
contract," as the reasons Essar sought protection under the
Companies' Creditors Arrangement Act in the Ontario Superior Court
of Justice.
Essar also filed a chapter 15 bankruptcy case in the U.S., to
shield its U.S. assets from creditor action while it works through
its problems in Canada, the main forum for the restructuring.
Write to Peg Brickley at peg.brickley@wsj.com
Subscribe to WSJ: http://online.wsj.com?mod=djnwires
(END) Dow Jones Newswires
November 10, 2015 08:25 ET (13:25 GMT)
Copyright (c) 2015 Dow Jones & Company, Inc.
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