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A crucible once used to carry molten steel is seen outside the Essar Steel Algoma plant on Nov. 13, 2015 in Sault Ste. Marie, Ont.Kenneth Armstrong/The Globe and Mail

Essar Steel Algoma Inc., which has put itself up for sale as it operates under creditor protection, now says it is considering trying to restructure without an outside investor.

While the steel maker is nearing the end of a sales and investment solicitation process that has been narrowed down to two bidders, the company is "evaluating other potential restructuring alternatives, including a potential replacement [debtor-in-possesion financing] and a stand-alone restructuring plan," according to a filing with the Ontario Superior Court.

Rajat Marwah, Essar Algoma's chief financial officer, made the statement in an affidavit filed to support the company's application for an extension of protection under the Companies' Creditors Arrangement Act (CCAA) to Sept. 16.

Mr. Marwah did not elaborate or explain in the filing what has changed to make the company consider alternatives as the sales process it established moves toward a conclusion.

"All restructuring options remain under consideration," Essar Algoma spokeswoman Brenda Stenta said Tuesday.

The parties interested in purchasing the company have been narrowed down to New York-based private equity firm KPS Capital Partners LP and the syndicate of lenders that provided the original debtor-in-possession financing to the company when it was granted CCAA protection last November, sources familiar with the negotiations said.

While that appears to indicate that the end of the restructuring may be within sight, several sources said they expect it to continue for several months.

"What's the Churchillian phrase?" asked one source familiar with the discussions. "This is the beginning of the end or the end of the beginning? I think it's the end of the beginning."

Any deal is expected to be drawn out in part because the buyer will have to reach agreements with the United Steelworkers (USW) union, which represents workers in the mill and the office staff at the company's operation in Sault Ste. Marie, Ont.

The need to reach a deal with the union gives it an effective veto on any buyer, said two sources familiar with the current restructuring talks.

"Right now, there isn't a deal on the table that is acceptable" to the union, one source said.

The source noted that KPS is a private equity firm and "private equity firms like to buy things and flip them."

On its website, KPS said it invests in turnaround situations where it can put in place a new business strategy, reduce costs and invest capital to restore a business to health.

David Shapiro, one of the managing partners of the firm, knows Essar Algoma well, having been an adviser to the USW during the previous Algoma Steel Inc. restructuring under CCAA that began in 2001.

KPS also has experience dealing with unions in Canada from the days when it owned bus maker Motor Coach Industries International Inc. of Winnipeg. The private equity firm sold Motor Coach to competitor New Flyer Industries Inc. last November.

The experience for workers under KPS was better than under its previous equity firm owner, Joseph Littlejohn & Levy, said Kevin Baillie, president of lodge 1953 of the International Association of Machinists and Aerospace Workers in Winnipeg.

There were no major job cuts and KPS did not threaten to close Motor Coach factories in the city and move them elsewhere, said Mr. Baillie, who was chief shop steward for the union when KPS owned Motor Coach.

KPS "more or less turned us around and made us profitable," he said.