Essar Steel Minnesota’s new CEO, Matthew Stock, has wasted no time introducing himself to Iron Range officials.
Stock, who replaced Madhu Vuppuluri in July, addressed the Nashwauk City Council Tuesday in an attempt to assure locals that the company does, indeed, have a path forward.
Stock’s company has been under Chapter 11 bankruptcy protection since July of this year. Essar, which proposes a taconite mining and processing facility at the former Butler Taconite Mine near Nashwauk, has faced numerous work stoppages due non-payment to contractors as well as other factors. The half-built project has been under construction for nearly a decade.
The new CEO recapped recent developments, which include his appointment and the entrance of a new investor, California-based SPL Advisors, to the project. SPL has provided $35 million in debtor-in-possession (DIP) financing that will allow operations to continue while the company is under bankruptcy protection.
That funding, however, won’t immediately help any of the contractors owed an estimated $49 million by Essar. Stock acknowledged that further delay in payment is a source of frustration for contractors but he reported that all, thus far, have indicated a willingness to continue to work with the company under new management.
Although Essar is still officially the project owner, the new CEO reported that new stock would likely be issued at some point in the future. Timelines call for the company to continue to gather estimates from contractors on the costs to finish the project through the end of this month. A restructuring plan will take shape in November and Stock anticipates emerging from bankruptcy protection in March of next year. Executives hope to resume construction next April.
Those timelines, however, are dependent on upcoming bankruptcy court proceedings falling in Essar’s favor. The state of Minnesota has petitioned bankruptcy court in Delaware asking it to extract state-held mineral leases from the bankruptcy proceedings. A decision of the matter is expected at an Oct. 20 hearing.