Essar Steel Minnesota announced Friday that bondholders have agreed to give it an extension to secure the $461 million in equity and loan financing necessary to complete a $1.8 billion taconite plant on Minnesota's Iron Range.
The money was supposed to have been secured by Thursday, but Essar officials requested an extension.
Essar Steel, whose parent company is based in Mumbai, India, had promised bondholders that it would put about $361 million of its own money into the Iron Range project.
In exchange the bondholders agreed to sell $450 million worth of high-yield bonds for Essar. The bondholders sold the bonds, but Essar had trouble meeting its end of the bargain on time.
If an extension had not been granted, Essar would have had to return the $450 million to the bondholders. The bonds have a yield rate of 11.5 percent.
It is unclear how long the new extension will last. Essar officials declined to comment beyond a statement.
If Essar succeeds in securing its part of the financing, the cash will help it complete the highly anticipated project that has been cash-strapped for at least two years. Essar originally broke ground in Nashwauk in 2008, but halted operations last year due to financing woes.
Essar officials said in a statement Friday that they expect the plant to open in mid-2015: "The extension will not alter the expected timetable to begin production by the middle of 2015." Construction activity is to ramp up soon, officials said.
Essar also noted that it already has invested $367.5 million in the project and has committed $350 million. □