New Delhi/London: Essar Steel Algoma, the Canadian subsidiary of the Ruia-owned Essar Steel, on Tuesday said it has successfully completed the USD 1.4 billion recapitalisation and refinancing process.
Algoma successfully raised a total of over USD 1.2 billion which includes equity of USD 466 million, cash, preference shares and proceeds from the sale of port assets.
The refinancing also includes debt of USD 750 million comprised a term loan (USD 375 million) and senior secured notes (USD 375 million).
Exchanged junior secured notes for USD 252 million is also a part of it, the company said, adding that a new revolver with USD 50 million of availability for liquidity rounds out the financing package.
The resulting impact on the company's balance sheet is a deleveraging of more than USD 200 million and an approximate USD 47 million reduction in annual cash interest expense, it added.
Essar Steel Algoma CEO Kalyan Ghosh said, "Through the concerted efforts of our management team and our 2,800 employees, in combination with the support of key stakeholders including our 6,300 pensioners and our union locals, we have addressed our pension structure to ensure ongoing manageability.
"We have also renegotiated our raw material supply contract at competitive market prices, and made step changes in both our productivity and conversion costs, positioning us in the best quartile in North America as a low cost, high quality steel producer."
The company is operating near full capacity and generating strong quarterly EBITDA, he said, adding that the company is now soundly positioned for strategic reinvestment in optimisation and growth opportunities.
On the development, Prashant Ruia, Chairman, Essar Capital Ltd said: "As we have demonstrated since the acquisition in 2007, we remain committed to Algoma. Algoma is Essar?s cornerstone asset in the North American marketplace and with this investment it is now poised for growth. We are proud to continue Algoma's steelmaking tradition as one of Canada?s leading manufacturers."
The Company today also delivered notice that it has called for redemption of all its outstanding 9.375 per cent senior secured notes due 2015.
Redemption of such notes is expected to occur on December 15, 2014.
Essar Steel Algoma Inc is based in Sault Ste Marie, Ontario. As a fully integrated steel producer, Algoma derives its revenues primarily from the manufacture and sale of hot and cold rolled steel products including sheet and plate.
