Essar Steel Algoma Inc. (“Algoma” or the “Company”) is announcing the pricing of an offering of US$375
million aggregate principal amount of 9.50% senior secured notes due 2019 (the “Notes”).
The Notes will be guaranteed by each of the existing and future subsidiaries of Algoma on a secured basis and by each of the Company’s direct parent companies on an unsecured basis.
The offering is expected to close on November 14, 2014, subject to customary closing conditions and the consummation of the other recapitalization transactions described below.
The Company expects that the net proceeds of the offering, together with the proceeds from the entry into a bank debt facility, an equity investment by the Company’s parent company, Essar Global Fund Limited, consisting of: the cancelation of certain obligations in exchange for preferred equity with an aggregate liquidation preference of US$150 million; a cash contribution of US$150 million of which US$33 million has already been contributed for new shares of common stock; the lease of the Company’s port facility to a portfolio company of its parent company and the sale of related port facility equipment for aggregate net proceeds of approximately US$166 million, US$146 million of which will be paid upon consummation of the offering; and the exchange of certain of the Company’s outstanding unsecured notes for a combination of a cash payment to the holders of such notes and the issuance of new junior secured notes, will be used to repay all of the Company’s existing indebtedness and for general corporate purposes.
The Notes and the related guarantees have been offered in the United States to qualified institutional buyers pursuant to Rule 144A under the Securities Act of 1933, as amended (the “Securities Act”), and outside the United States pursuant to Regulation S under the Securities Act. The Notes and the related guarantees have not
been and will not be registered under the Securities Act and may not be offered or sold in the United States absent registration or an applicable exemption from the registration requirements. This press release does not constitute an offer to sell or a solicitation of an offer to purchase the Notes.
