Davis Polk Advises Lenders in Connection with Successful Credit Bid for Assets of Essar Steel Algoma, Inc. and Exit Financing in Connection with Algoma’s Emergence Canadian Restructuring Proceedings

Davis Polk advised a group of prepetition term loan lenders of Essar Steel Algoma, Inc. (together with its affiliates that were debtors in the below-referenced proceedings, “Algoma”), certain of which were also term lenders under Algoma’s debtor-in-possession credit facility, in connection with a credit bid for substantially all of the assets of Algoma by Algoma Steel Inc. (“Algoma Steel”), a newly-formed entity controlled by Algoma’s prepetition term lenders and senior secured noteholders. The transaction was approved by the courts presiding over Algoma’s restructuring proceedings under the Companies’ Creditors Arrangement Act in Canada and chapter 15 in the United States.

In connection with the asset purchase, Davis Polk also advised Algoma Steel, as borrower, in connection with (i) a $285 million senior secured term facility and (ii) a $250 million asset based revolving credit facility. The proceeds of the facilities were used to repay Algoma’s DIP facility and prepetition revolving credit facility in full, satisfy certain other priority claims and finance the asset purchase and the related restructuring transactions and will be available for Algoma Steel’s general corporate purposes.

Based in Sault Ste. Marie, Ontario, Algoma Steel is the second-largest steel producer in Canada and the largest employer in Sault Ste. Marie.

The Davis Polk insolvency and restructuring team included partner Damian S. Schaible and associate Christopher Robertson. The corporate team included partner Stephen Salmon and associates Bryan M. Quinn and Donald K. Lang. The finance team included partners J.W. Perry and associates Jonathan B. Brown and Louis Labriola. Partner Lucy W. Farr and associate Tracy L. Matlock provided tax advice. Members of the Davis Polk team are based in the New York and Northern California offices.