Former Essar Steel Minnesota plan calls for $250 million contribution

By Caroline Salls

Pittsburgh, Feb. 3 – Mesabi Metallics Co. LLC, formerly Essar Steel Minnesota LLC, and ESML Holdings Inc. filed a plan of reorganization and related disclosure statement Thursday with the U.S. Bankruptcy Court for the District of Delaware.

The companies said the plan is conditioned on receipt of an order approving the assumption of mineral leases.

Under the plan, existing equity interests will be cancelled, and 100% of new membership interests, less membership interests to be distributed to holders of pre-bankruptcy lender secured claims, will be distributed to a plan sponsor in exchange for at least $250 million in cash.

The plan also requires the company to obtain a $600 million exit credit facility.

In addition, the reorganized company will issue new pre-bankruptcy lender notes and pre-bankruptcy lien trade creditor notes.

A litigation trust will be established for the benefit of holders of class A-1, A-2, A-3, B-1, B-2, B-3 and B-4 beneficial trust interests.

Holders of general unsecured claims will receive a share of B-4 trust interests.

The litigation trustee, in consultation with an advisory board, will prosecute transferred causes of action, compel prosecution and/or settlement of insurance coverage actions, prosecute and/or settle objections to and estimations of trust claims and calculate and implement plan distributions to be made from trust assets.

The iron ore producer is based in Hibbing, Minn., and is part of India-based Essar Group. The company filed bankruptcy on July 8, 2016 under Chapter 11 case number 16-11626.

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