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Essar Steel Algoma Inc (ESA) has agreed to sell its assets to a consortium formed by New York-based private equity firm KPS Capital Partners and its lenders.

The Company is serving a motion today with the Ontario Superior Court of Justice seeking approval of the APA.

KPS is a leading private equity firm in the manufacturing sector, with a track record for transforming businesses into vibrant independent companies. ESA, 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.

"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.