Davis Polk is advising a group of prepetition senior secured term lenders (the “Term Lenders”) to Essar Steel Algoma, Inc. (together with its affiliates that are debtors in the below-referenced proceedings, “Essar Algoma”), certain of which are also term lenders (the “DIP Term Lenders”) under Essar Algoma’s debtor-in-possession credit facility (the “DIP Facility”). On September 15, 2016, a majority of the Term Lenders announced that they had entered into a Restructuring Support Agreement (the “RSA”) with certain of Essar Algoma’s senior secured noteholders pursuant to which the Term Lenders and the senior secured noteholders will provide up to $450 million of new capital and reduce Essar Algoma’s total debt by over $1 billion. In connection with the restructuring proposal, certain of the DIP Term Lenders agreed to an amendment and extension of the DIP Facility that extends the maturity date from September 30, 2016 to January 31, 2017, and provides Essar Algoma with $35 million of additional liquidity. Davis Polk represented the Term Lenders in connection with structuring, negotiating and execution of the RSA and the DIP Term Lenders with respect to the amendment and extension of the DIP Facility.

Essar Algoma was purchased by Indian conglomerate Essar Global in 2007. It is the second-largest steel producer in Canada and the largest employer in its operating base, Sault Ste. Marie, Ontario. The depressed price of steel, coupled with a debt load of over $1 billion, led the company to seek protection under the Canadian Companies’ Creditors Arrangement Act (the “CCAA”) and chapter 15 of the Bankruptcy Code by the Bankruptcy Court for the District of Delaware on November 9, 2015.

The Davis Polk insolvency and restructuring team includes partner Damian S. Schaible and associates Christopher S. Robertson, Adam L. Shpeen and Thomas D. Malinowsky. The corporate team includes partner Kirtee Kapoor and associates Bryan M. Quinn and Donald K. Lang. The credit team includes partner Kenneth J. Steinberg and associate Vivian Y. Wong. Members of the Davis Polk team are based in the New York and Northern California offices.

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