Algoma Steel Restructures

Algoma Steel Inc., Canada’s third-largest integrated steel producer, emerged from court protection under the CCAA on January 29, 2002 and implemented a corporate restructuring and reorganization approved by its creditors.

Elements of Algoma’s restructuring plan include new credit facilities of $230 million extended by Bank of America, N.A. as arranger and agent on behalf of a syndicate of lenders, arrangements to restructure Algoma’s pension plan liabilities, new collective bargaining agreements to achieve more than $100 million of savings over the term of the agreements and the compromise of more than $550 million of note indebtedness. Under the restructuring plan, Algoma’s noteholders received new common shares representing 75 per cent of the equity and US$187.5 million of new notes, its unsecured creditors received new common shares representing 5 per cent of the equity and $2 million, and Algoma employees received 20 per cent of the equity. The new common shares are listed for trading on the TSE.

The reorganization was led by in-house counsel Paul Finley; James Gage, John Salmas and Lori Bieler (bankruptcy and restructuring), Michael Barrack and Geoff Hall (litigation), Gregory Winfield (pensions), James McCartney, Q.C., Daryl McLean, Robert Stephenson, Gordon Baird, Frank DeLuca and Sumit Soni (business) and James Morand (tax) of McCarthy Tétrault LLP; Kenneth Blackman, Craig Miller, Edward Alterman, Joshua Wechsler and C.B. Richardson of Fried, Frank, Harris, Shriver & Jacobson; and Lisa Gretchko of Pepper Hamilton LLP in Detroit, Michigan. Tony DeMarinis, Michael Rotsztain, John Laskin, Kevin Morris, Adam Delean, Hugh O’Reilly, Len Griffiths, Corrado Cardarelli, Dennis Mahony, David Outerbridge, Jamie Feehely, Janie Tremblay, David Boyko and John Emanoilidis of Torys LLP represented the bondholders.

Hap Stephen of Stonecrest Capital Inc. acted as chief restructuring officer for Algoma, assisted by Sandra Rosch. Algoma’s operating lenders, who provided a “debtor-in-possession” facility during the restructuring period and exit facilities, were represented by a team from Ogilvy Renault that included Kevin Morley, Mario Forte and Derrick Tay (finance and restructuring), Virginie Gauthier and Adam Walsh (finance), John Porter and Alan Merskey (litigation) and John Mastoras (labour). James Riley and Michael Weinczok of Ogilvy Renault represented Algoma’s board of directors. James Grout of ThorntonGroutFinniganLLP acted as counsel to Ernst & Young Inc., the monitor in Algoma’s CCAA proceedings.

Ken Rosenberg, Lily Harmer and Marcus Knapp of Paliare Roland Rosenberg Rothstein LLP; David Pamenter, Tom Cumming, Sharon Bennett, Enzo Sallese, Paul Fornazzari and Michael Bayer of Gowling Lafleur Henderson LLP; and Michael Kainer of Sack, Goldblatt, Mitchell provided corporate finance and restructuring advice to the USWA.

David Vincent and Michael MacNaughton (insolvency) of Fasken Martineau DuMoulin LLP in Toronto represented the province of Ontario. Susan Rowland of Koskie Minsky led the Ontario Superintendent of Financial Services team, with advice from Robert M.C. Holmes, PricewaterhouseCoopers Inc. Gale Rubenstein and Michele Altaras of Goodmans LLP represented PwC. Norman Bayne of the Department of Justice represented the Ministry of Industry (Canada).