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View Full Version : Essar Steel Algoma Insolvency



ctf
10-29-2015, 05:27 PM
Here we go again.

IMHO
10-29-2015, 06:44 PM
They are always after money handouts but many local businesses would just like to see them pay their bills. Why do they think they should not pay their bills? Lets see if Sheehan can stop these steel imports that are crippling our steel industry.

ctf
10-29-2015, 07:14 PM
They are always after money handouts but many local businesses would just like to see them pay their bills. Why do they think they should not pay their bills? Lets see if Sheehan can stop these steel imports that are crippling our steel industry.

Not only do they not pay them here but in their other operations as well. They have a $67 million dollar loan due at month end for Minnesota iron ore. They were supposed to have a steel production plant as well as the iron ore mine process in order to get the loan. They are going to default on the loan as there is no steel plant (slab production) and the iron ore mine is still 3rd quarter of 2016 at best.

http://www.startribune.com/state-must-figure-out-how-to-deal-with-essar-s-deadline-miss/330176491/

They are behind there as they lost time when contractors who were not paid pulled out. They took over a plant (Algoma Steel) in 2007 that was $800 million in the bank and doing well. They have grandiose ideas - (Sea Port, Iron ore mill, Slab Plant, start #6 BF, New LMF, maybe buy Stelco) but only if they can get someone else to pay and hope they don't want their money back.

Hans
10-29-2015, 07:30 PM
The problem is the drive of companies to make profits, the more the better.
They claim they do it for their shareholders. But is that the real reason?

So if you take $800 million and divide it equally among 2000 employee, how much would every employee have received?
And if they would have done that, would they not be at the same spot as they are today?

To me, employees should be worth more than shareholders. Sadly it is always the other way around.

ctf
10-29-2015, 08:09 PM
In this situation there are only 2 shareholders. The 800 million should have been reinvested as had been done by the previous leadership. During the previous administration the CoGen plant was started using money from operations. This plant has now been severed from Essar Steel Algoma and all profits from it (Power Generation) are not put back into plant operations as had been the original intent. Any profits are also not seen by the employees thru the profit sharing plan.
Yes companies need to make profits, but it is in their best interest to help themselves as well. Keeping the plant upgraded and maintained means for long existence.
The steel business is cyclic, those companies that survive know this and manage their affairs in good times to survive the dreaded bad times.

riggs
10-29-2015, 09:18 PM
The problem is the drive of companies to make profits, the more the better.
They claim they do it for their shareholders. But is that the real reason?

So if you take $800 million and divide it equally among 2000 employee, how much would every employee have received?
And if they would have done that, would they not be at the same spot as they are today?

To me, employees should be worth more than shareholders. Sadly it is always the other way around.

Profit sharing at Essar works on percentage...the formula below may not be perfect but close

Between 50 mill - 99 mill the employees receive 6% of that 49 mill
Between 100 mill - 149 mill the employees receive 8 % of that 50 mill
From the 150 million mark and beyond, the employees receive 10%

ctf
10-30-2015, 08:19 AM
Works on a percentage of a formula based loosely on EBIDTA - not exact but close. This allows for many kinds of doubtful numbers being used. Any monies from the CoGen are not included in this formula - that is one of the biggest problems. Essar made this a separate company and it is not included even though it is run and mostly maintained with Steel Plant employees on a loosely based cooperative. Gases to run it are basically free (not NGas but BF and Coke) in any case you are correct it is a formula that has over the years been degraded to mean basically nothing.

Chachinga
10-30-2015, 11:31 AM
They cry about being broke after they funnel all of the huge profits out of the country to the mother ship and then want more handouts.
A forensic audit should be done to prove where all these profits go.

It should be shut down for good if they don't want to bail it out with their own billions, we can do without half of the population getting cancer and respiratory diseases from the massive pollution that it pukes out daily into the air and water, not to mention covering Sault Michigan in a cloud of poison every time the wind blows that way.

Sault Ste. Marie Ontario is destined to be a retirement town anyway so let's quit delaying the inevitable and get on with it, people's health will start to improve so the sooner the better.

IMHO
10-30-2015, 01:24 PM
What a dumb thing to say. We need EVERY job we can muster up.

riggs
10-30-2015, 03:59 PM
Works on a percentage of a formula based loosely on EBIDTA - not exact but close. This allows for many kinds of doubtful numbers being used. Any monies from the CoGen are not included in this formula - that is one of the biggest problems. Essar made this a separate company and it is not included even though it is run and mostly maintained with Steel Plant employees on a loosely based cooperative. Gases to run it are basically free (not NGas but BF and Coke) in any case you are correct it is a formula that has over the years been degraded to mean basically nothing.

I remember their legal but questionable decision to transfer the Co-Gen to the Essar Energy Division. It was my understanding that Algoma Steel had already reached a contract with the government and the company had already set aside the funds prior to the purchase. It was estimated it would add 30 million annually to corporate profits. I know 30 mill doesn't sound like much but it would add up over the life of the 20 year contract.
You hit the nail on the head with your assessment. We supply everything it needs to function and be maintained yet nothing is returned.

riggs
10-30-2015, 04:03 PM
Sault Ste. Marie Ontario is destined to be a retirement town

We are one industry away from being another Elliot Lake.

Barry Morris
10-30-2015, 05:52 PM
We are one industry away from being another Elliot Lake.

Methinks you don't know much about Elliot Lake!!

We should be so prosperous!!!

riggs
10-30-2015, 06:10 PM
Methinks you don't know much about Elliot Lake!!

We should be so prosperous!!!

Perhaps not. Other than retirement funds feeding the community, what else is there?

Anapeg
10-30-2015, 07:37 PM
Methinks you don't know much about Elliot Lake!!

We should be so prosperous!!!

I believe Elliot Lake received a kick start with cheep housing when miners and their families walked away from homes or sold them at fire sale prices. How many thousands of home went on sale at approximately the same time? I have the answer and confirmed it by counting on fingers and toes- LOTS! Now, after the fact Elliot Lake may be prosperous but it was damn shaky for a decent stretch.

ctf
11-09-2015, 12:55 PM
Post an article last week about major construction and now this

http://www.sootoday.com/content/news/details.asp?c=100629

Can't they make up their minds what is going on?

Typical smoke and mirrors - just like their Minnesota operation.

blueboy
11-09-2015, 01:51 PM
All the Idiots have all the ans.England closed there biggest steel plant/South Africa closed the 2 largest steel plants,US steel in big trouble.China is dumping steel in Europe,USA and Canada.Our steel mills can't take the lost $$$$ yr after yr.Hope our Pension,s are secure,look at US steel Hamilton they lost everything

riggs
11-09-2015, 02:37 PM
http://www.business-standard.com/article/companies/ruias-to-close-essar-steel-s-asset-sale-by-fy16-end-115110200053_1.html

Perhaps some good news for those in the steel industry under Essar's umbrella.

"The group's asset-sale plan is exclusive of the London-based holding company's plans to sell a 49 per cent stake in Essar Oil to Russian oil giant, Rosneft, in an all-cash deal worth $2.8 billion, for bringing down its debt.

The group's aggression in bringing down the debt of Essar Steel stems from the fact that rating agencies have downgraded its Rs 30,500-crore debt into default category, causing some worry among its bankers, which have asked Ruias, the promoters of the group, to expedite their asset-sale plan."

This sell off is now reported at 3.2 billion.

riggs
11-09-2015, 02:41 PM
http://www.sootoday.com/content/news/details.asp?c=100630

BFLPE
11-14-2015, 09:52 AM
The problem is the drive of companies to make profits, the more the better.True. If only all employers were like the government and could rely on the magic money tree.

Hans
11-14-2015, 02:30 PM
It is not a magic money tree. It is a money tree. You don't have to squeeze every little penny out of it, just like you don't have to give everything to the shareholders.
Even a large company like Apple realized that, and has put it's philanthropic machine back in business.
Other large companies have done the same for years.

Hans
11-14-2015, 02:32 PM
http://www.sootoday.com/content/news/details.asp?c=100630

Is it not interesting the money comes from a German bank?

riggs
11-14-2015, 03:34 PM
Is it not interesting the money comes from a German bank?

More of a background in hedge funds than banking......very costly

Hans
11-14-2015, 03:45 PM
Also interesting 2 branches of that bank are a main creditor, located in different countries.