A huge first-quarter loss, overwhelming long-term debt and massive steel dumping into North America by foreign countries have forced Algoma Steel to file for court protection from its creditors.
The Sault Ste. Marie, Ont.-based company has been given an order for protection that will allow it to restructure its debt and keep creditors at bay, at least in the short term.
The quarterly loss amounted to $76.8 million, compared with a $9-million loss in the corresponding period of 2000. Long-term debt exceeds $500 million.
The 100-year-old steelmaker has about 4,000 workers and 8,000 pensioners on its payroll. The company pays $300 million to employees and pensioners each year.
Algoma filed for court protection previously, in 1991, after Hamilton, Ont.-based Dofasco abandoned its share of the money-losing steelmaker during a lengthy strike by steelworkers. The provincial government stepped in and provided loan guarantees and helped organize an employee takeover of Algoma. The operation proved profitable the following year.
But a costly expansion, designed to make operations more efficient, left the company hundreds of millions of dollars in debt, just as the offloading of foreign imports dramatically reduced steel prices. In the fall of 2000, the company announced a series of layoffs.
Algoma is Canada’s third-largest integrated steel producer, behind Hamilton steel giants Dofasco and Stelco. Algoma manufactures rolled steel products, including hot and cold rolled sheet and plate.
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