Judge gives thumbs up, but Algoma sale not finalized yet

A Toronto judge has given a positive endorsement to work completed to broker the sale of Sault Ste. Marie’s steelmaker but the deal has not yet been finalized.

The court heard that the Port of Algoma’s financeer GIP and Algoma’s purchaser have come to an agreement, resolving the final non-governmental outstanding matter for the sale to take place.

Superior Court Justice Glenn Hainey is providing time to the parties to finalize that agreement and return it to the court.

“The court recognized that the asset purchase agreement and sale transaction was in the best interest of Algoma and the stakeholders and should be approved,” said Mayor Christian Provenzano shortly after he received the news. “They didn’t approve it today and the parties are going to finalize the agreement between the secured creditors and the Port company and bring it back (to court).”

All indications suggested that the deal was something the judge believes to be in the best interest of all the parties.

The only outstanding matters now are the support of the federal and provincial government.

Members of council may consider penning a resolution urging both levels of government to move quickly to complete their due diligence and come to an agreement that will see Algoma emerge from CCAA. If that happens, Provenzano said he’d have no problem supporting it.

Provenzano said he’s in touch regularly with MP Terry Sheehan and MPP Ross Romano and committed to continue working with them to get the support of their respective governments.

In the meantime, he called the court hearing good news for Sault Ste. Marie and its future. “This process is coming on three years and we’ve worked hard throughout it. It’s been a challenging process,” Provenzano said.

“It’s nice to see a lot of the more complex issues are resolved,” he said.

Provenzano said he’s pleased labour agreements are in place that they are satisfied with, the City of Sault Ste. Marie property tax issue has been finalized and that the Port of Algoma lenders and company have resolved their matters.

“It leads me to conclude that we are very close to being done with this process and when we are done there will be a very significant investment in that asset and that will be very, very good for our community,” he said.

The investment will be beneficial for Algoma, local businesses, the labour force and the community at large.

Court documentation filed in advance of Wednesday’s court hearing state the new owner, a BC numbered company, will enter into a revolving line of credit of US $125 million and the new owner will assume the Port of Algoma lease agreement.

The successful bidders in the sales process, now the new owners, have been identified as the consenting creditors based on a joint bid of KPS Capital Partners LP and the term lenders.

The deal will ultimately reduce Algoma’s debt significantly from US $1.2 billion to US $300 million, provide new financing up to US $$300 million along with a new asset backed loan facility of US $125 million or greater to fund operations.

Still outstanding is the provincial and federal government’s stamp of approval and their input that will finalize the process.

The sale was contingent on completing other issues including agreements with the City of Sault Ste. Marie regarding final property tax payment agreements, special regulations to comply with Ontario’s Pension Benefits Act, new collective agreements with unionized workers and a provincial decree releasing the new owner from pre-existing environmental liabilities.

A final court date has not been set.

The parties are hoping the matter is resolved before Sept. 30.