Essar Steel Algoma demands cover against bankruptcy in US

KOLKATA: Essar Steel's Canadian arm, Essar Steel Algoma has filed for protection against bankruptcy in the US even as it gets ready to rework its capital structure.

The debt-ridden company filed for protection under chapter 15 of the Bankruptcy Code in the US while listing liabilities of more than $1 billion.

As part of its ongoing efforts at financial restructuring, Algoma Steel said it had entered into an agreement with its owner Essar Global Fund Limited (EFGL).

The agreement would involve an equity infusion of $300 million from EFGL, an investment fund which is the owner of Algoma Steel.

The move is likely to further stretch the finances of Essar Group which has been looking to shed some of its foreign assets.

Last week, the group sold off the US arm of its outsourcing unit, Aegis for $610 million.