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KPS Capital pulls out of joint bid for Essar Steel Algoma

New York-based KPS Capital Partners LP pulled out of aconsortium that offered to acquire ESSAR Steel Algoma, the steel manufacturer said in anews release July 14.

This comes recently after a group including shareholdersinked a letter ofintent with United Steelworkers Union's local unit to negotiate a transactionto acquire Essar Steel Algoma for about US$900 million.

However, certain term lenders are still interested inacquiring the troubled steelmaker.

"While it is unfortunate that KPS has withdrawn fromthe consortium, I am pleased that the term lenders remain committed to closingthe transaction," Essar Steel Algoma CEO Kalyan Ghosh said in the newsrelease. "Algoma will seek to work with its stakeholders to achieve theoptimal outcome for the future of Algoma, its employees, pensioners and thecustomers we serve."

Meanwhile, the United Steelworkers Union said the departureof KPS Capital provides an opportunity to pursue the restructuring proposal.

"The USW would like the restructuring effort to be moreresponsive to the interests of key stakeholders and is considering bringing amotion to the court seeking relief to that effect," the union was quotedas saying by Reuters in a July 14 report.

Essar Steel Algoma, which had been under since November 2015,accepted in June thejoint bid led by KPS Capital Partners, a deal which Essar Global did notsupport.