Algoma Steel (ALG-T), Canada’s third-largest integrated steel producer, has been granted a two-month extension of its protection under the companies’ creditors arrangement act.
The extension runs until August 24. It is the company’s second since the original court order on April 23. That order was set to expire May 23, but an Ontario court extended it until June 22.
“The two-month extension is a positive development,” says Hap Stephen, Algoma’s chief restructuring officer. “It provides time for Algoma and its stakeholders to address a number of issues and develop a restructuring plan.”
Protection from creditors was originally sought when the company suffered from a huge first-quarter loss, overwhelming long-term debt and massive steel dumping into North America by foreign countries.
The quarterly loss was $76.8 million, compared with a $9-million loss in the corresponding period of 2000. Long-term debt exceeded $500 million.
The century -old steel-maker, which is based in Sault Ste. Marie, Ont., has about 4,000 workers and 8,000 pensioners on its payroll, which costs the company $300 million each year.
The company previously filed for protection in 1991, after Hamilton-based Dofasco (DFS-T) abandoned its share of money-losing Algoma during a lengthy strike by steelworkers. The provincial government stepped in. It provided loan guarantees and helped organize an employee takeover of Algoma. The operation was profitable in the following year.
However, 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 manufactures rolled steel products, including hot and cold rolled sheet and plate.
Be the first to comment on "Algoma protection extended"