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Investor group proposes alternative to KPS-led buy of Essar Algoma: Reuters

A group that includes shareholders of Essar Global said it signed a letter of intent with a local unit of the United Steelworkers Union to negotiate a deal to buy Essar Steel Algoma Inc for about US$900 million.

Essar Global said in a statement last month that it did not support a deal to sell Essar Steel Algoma’s assets to a consortium formed by U.S. private equity firm KPS Capital Partners.

The KPS-led acquisition deal was announced by Essar Steel Algoma in late June.

Algoma, bought nearly a decade ago by Indian energy and resources conglomerate Essar Global, had put itself up for sale while operating under creditor protection.

Ontario Steel Investment Ltd, the group that includes shareholders of Essar Global, said on Tuesday it would assume Algoma’s pension and benefit liabilities as part of the agreement.

Ontario Steel said it would also pay outstanding taxes owed to Sault Ste. Marie, Ontario, where Algoma is based, within six months of a change in ownership.

(Reporting by Arathy S Nair in Bengaluru; Editing by Shounak Dasgupta)

(This story has been edited by Kirk Falconer, editor of PE Hub Canada)

Photo courtesy of Reuters/Rajesh Nirgude