Essar Steel Algoma Announces Commencement of Recapitalization and Refinancing


Essar Steel Algoma Inc. (“Algoma”) announced today that it intends to launch a comprehensive refinancing of its current capital structure next week, beginning with investor meetings, including a bank meeting with investors on October 15, 2014.

As part of the refinancing, Algoma’s ultimate parent, Essar Global Fund Limited and its affiliates are providing more than US$400 million of support to Algoma through the infusion of new cash equity, conversion of existing obligations into preferred equity and the purchase of the Port of Algoma.

The refinancing is expected to result in a reduction of gross debt of US$240 million and an increase in liquidity for Algoma to approximately US$90 – $100 million. The new debt facilities will be sized at US$975 million comprised of secured and junior secured debt.

Algoma intends to launch a tender offer for its existing senior secured notes, exercise the cash payout option for the existing senior notes under its plan of arrangement, and repay the existing term loan with the proceeds from the refinancing.

Based on preliminary results for the three months ending September 30, 2014, Algoma expects EBITDA to be in the range of US$75 to $80 million and revenues for such period to be US$520 to 530 million.

The proposed debt offerings are subject to customary closing conditions, successful syndication and current market conditions. There can be no assurance that Algoma will be able to consummate the debt offerings or the tender offer on the terms described or at all.

None of the debt has been or will be registered under the Securities Act of 1933, as amended, or any state securities laws and may not be offered or sold in the United States absent registration under the Act or an applicable exemption from the registration requirements of the Securities Act of 1933 and applicable state securities laws.

This press release shall not constitute an offer to sell or the solicitation of an offer to buy,
nor shall there be any sale of the debt in any state or jurisdiction in which such an offer,
solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such state or jurisdiction. This press release shall not constitute the launch of the tender offer for the company’s existing notes.