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Essar Steel Agrees To Repay $66M Loan

The company failed to meet the requirements by the state as specified in the loan agreement.

Essar Steel Agrees To Repay $66M Loan
Essar Steel Minnesota on Wednesday accepted Gov. Mark Dayton’s final offer for a $66 million loan repayment after the company failed to abide by all the terms of the loan agreement.
 
The offer, which came in a letter sent by Dayton last week, requires Essar to repay $3.4 million by February and another $6.6 million by the end of March. The approximately $56 million remaining will be billed in 16 quarterly payments that must be repaid by the end of 2020.
 
The issue dates back to 2008 when the company—that has its Minnesota headquarters based in Hibbing and global headquarters in India—broke ground on a multi-billion dollar project in Nashwauk that included taconite mining and processing and an iron and steelmaking facility with the help of a $66 million loan. But the company eventually shelved half the plans and decided to move forward with only the taconite facility, a breach of the agreement.
 
Dayton emphasized the importance of Essar accepting the agreement to keep the project on track, noting that it is supporting 700 construction jobs and will create an expected 350 permanent jobs when the plant opens.
 
“This project is tremendously important to the Iron Range,” he said in a statement. “(Essar’s) willingness to accept the state’s final offer—and repay the loan because it did not live up to the terms of its original agreement—is an important step to move this project forward.”
 
Earlier this year, the governor had threatened to recall Essar’s loan when it was discovered that the company was behind on payments to Minnesota contractors and vendors. In addition to repaying back the loan, the agreement specifies that Essar make quarterly reports to the state on the status of contractor and vendor payments.
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