Essar Steel Agrees To Loan Payback Plan, Dayton Says

ST. PAUL, Minn. (AP) -- Essar Steel Minnesota has agreed to repay the state loans tied to its taconite plant project on Minnesota's Iron Range after the company was given a deadline to accept a repayment timeline, Gov. Mark Dayton said Thursday.

Dayton said he was notified Wednesday that Essar Steel Minnesota and its parent company, Essar Global Fund Ltd., have accepted his final offer for repayment of the state's $66 million in loans.

Last week Dayton gave the company until Dec. 30 to reach a repayment plan for state loans toward construction at the Nashwauk taconite plant site in northeastern Minnesota.

In a statement, Dayton called the project "tremendously important to the Iron Range, supporting more than 700 construction jobs and an expected 350 permanent jobs once the plant opens." The governor said Essar Steel Minnesota CEO Madhu Vuppuluri's willingness to accept the state's final offer and repay the loan "is an important step to move this project forward."

Essar Steel Minnesota said Thursday it has told Dayton that the company accepts the state's proposed repayment terms and is pleased that an agreement was reached.

"With his issue resolved, Essar will continue to focus its efforts on keeping payments flowing to our contractors and vendors and on moving forward again with this historic project," Essar said in a statement.

The offer requires Essar Steel to start making payments on the loan in February 2016, repaying $10 million to the state by the end of March 2016.

The remaining $56 million will then be repaid in quarterly payments, starting in 2017 and ending in 2020. If Essar sells its ownership interest in the project, it would have to pay its remaining debt in full.

Essar has struggled to open the proposed $1.8 billion iron ore processing plant. The offer also requires the company to notify the state of the status of its payments to vendors each quarter.

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