Essar Steel Algoma launches amendment to waive covenants through June 2010

By Sara Rosenberg

New York, Sept. 2 - Essar Steel Algoma Inc. launched an amendment to its term loan on Wednesday that would eliminate the leverage and interest coverage ratio requirements for four quarters through the quarter ending June 30, 2010, according to a market source.

Also, the amendment would increase pricing on the term loan to Libor plus 650 basis points and add a 1.5% Libor floor to the tranche.

As part of the amendment, the company would be required to pay down $50 million of its term loan debt by Dec. 31 or it will pay a 7% fee on the amount of outstanding loans, the source said.

Consents are due on Friday at 5 p.m. ET.

Lenders are being offered a 50 bps amendment fee.

UBS is the administrative agent on the deal.

Essar Steel Algoma is a Sault Ste. Marie, Ont.-based steel producer.

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