Essar Steel Algoma Inc [ESSRGE.UL] (ESA) said on Friday it had agreed to sell its assets to a consortium formed by New York-based private equity firm KPS Capital Partners and its lenders.
The Canadian steel company, which had been purchased nearly a decade ago by Indian energy and resources conglomerate Essar Group, had put itself up for sale while operating under creditor protection.

The company manufactures steel products and sells them to the automotive, light manufacturing, construction, shipbuilding and energy industries. It ran into trouble following a drop in the price of steel.

KKR specializes in the manufacturing sector and looks to turn around struggling businesses and sell them for a profit.

Its investments include Heritage Home Group, a designer, manufacturer and retailer of home furnishings, and United Copper Industries, a maker of building wires and cables.

"The new company formed by the consortium will securely position New Algoma with a capital structure to sustain all phases of the steel cycle," said Kalyan Ghosh, president and chief executive of ESA.

ESA said that the consortium's bid was made up of cash, credit equivalent to a loan provided by the lenders when it was granted creditor protection last November, and the assumption of liabilities by the buyer.

The company has served a motion with the Ontario Superior Court of Justice seeking approval of the agreement.

(Reporting by Matt Scuffham and John Tilak; Editing by Alan Crosby).