Hibbing, Minnesota: Essar Steel Minnesota LLC (ESML) announced today that it has named Matthew Stock as its new CEO, effective immediately. Mr. Stock, who has over 25 years of experience in the metals and mining business, has led efforts to build and complete several iron ore beneficiation and pelletization facilities around the world. His employment by ESML is viewed as a major step in the Company's strategy to complete its 7 million ton per year iron ore mine and pellet plant operation located in northern Minnesota.
Construction on the facility was suspended last year as a result of funding shortfalls. Recent efforts to get the project back on track with new financing were delayed when Cliffs Natural Resources announced that it had entered into an offtake agreement with ArcelorMittal USA LLC in May. The Company then sought to put in place a $50 million bridge financing from SPL Advisors LLC that would give the Company additional time to work out the terms of a comprehensive recapitalization. The proposed financing also would have permitted the Company to immediately pay about $15 million to local contractors in Minnesota who had
outstanding amounts for work previously done at the project (including payment in full to about 83% of such vendors). However, when the State of Minnesota Department of Natural Resources (who has leases with ESML covering approximately 40% of its iron ore reserves) balked at the deal late last week, the Company concluded that its best path forward was to utilize chapter 11 of the federal bankruptcy law to facilitate its restructuring and to complete the plant.
"I am very excited about the opportunity to get the project back under way and to see it through to completion as quickly as possible," said Mr. Stock. "We face many challenges, but overcoming them will be more than worth it when the plant goes online and becomes the lowest cost iron ore pellet producer in the U.S."
"The experience that Matthew brings to the table is a critical ingredient in our strategy to finally realizing the vision we originally had when we first began investing in this important Minnesota project," said Prashant Ruia, a member of ESML's board and a director of Essar Capital Limited. "To get the plant completed under the current circumstances, we recognized that a change in leadership was needed. Matthew will provide the new leadership and SPL will provide the new capital."
Madhu Vuppuluri, who has made significant contributions and served as the Company's CEO since 2007, has taken a new leadership position with Essar Capital.