Government of Canada Endorses Algoma Steel’s Transformation Plan Commitment of up to $420 Million

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Trudeau Algoma Steel
Trudeau addresses the media prior to a scrum.

SAULT STE. MARIE, ONTARIO (July 5, 2021) – Algoma Steel Inc.’s (“Algoma Steel”) potential to become the “greenest” flat-rolled steel producer in Canada marked another significant milestone today with the Government of Canada’s commitment of up to $420 million in financial support. Unless otherwise specified, all amounts are in Canadian dollars.
The Right Honourable Prime Minister of Canada Justin Trudeau was on site today along with the Minister of Innovation, Science and Industry, the Honourable François Phillippe Champagne, to make the announcement to facilitate Algoma Steel’s proposed transformation to electric arc furnace steelmaking (EAF).

The financial commitment includes up to $200 million from the Innovation Science and Economic Development Canada’s Strategic Innovation Fund (SIF) through the Net Zero Accelerator to rapidly expedite decarbonization projects and accelerate Canada’s industrial transformation. Under an investment agreement in principle, the Canada Infrastructure Bank is committing a further $220 million towards the project. The funding will be provided over four years and will support thousands of very good direct and indirect jobs in Sault Ste. Marie and the province of Ontario, and ensure green steel products are available for inclusion in automobiles, consumer products, and renewed infrastructure that utilizes Algoma steel
Algoma Steel’s proposed EAF transformation has the potential to reduce Algoma Steel’s carbon emissions by approximately 70%, making the project among the lowest-cost-per-tonne of GHG reduction in Canada. When combined with Ontario’s low-carbon power, Algoma Steel will be positioned as the “greenest” producer of flat-rolled steel in Canada, and among the greenest in North America.

Algoma Steel Chief Executive Officer, Michael McQuade commented on today’s development, “Having a commitment of this magnitude from the Government of Canada shows leadership towards a net-zero, climate-resilient Canada, and is so very important as we look to make our proposed transformation to EAF steelmaking a reality. We were honoured to host Prime Minister Trudeau and Minister Champagne today and we took to the opportunity to showcase our new No. 2 Ladle Metallurgy Furnace, another significant milestone in Algoma Steel’s transformation journey which we commissioned this past February. The momentum is building on our path to our enhanced sustainability, with the promise of good secure jobs and a greener future for our community and our customers.”

Cautionary Information About Forward-Looking Statements

This news release contains forward-looking statements within the meaning of applicable securities legislation. These forward-looking statements generally are identified by the words “believe,” “project,” “expect,” “anticipate,” “estimate,” “intend,” “strategy,” “future,” “opportunity,” “plan,” “pipeline,” “may,” “should,” “will,” “would,” “will be,” “will continue,” “will likely result,” and similar expressions. Forward-looking statements are predictions, projections and other statements about future events that are based on current expectations and assumptions. Many factors could cause actual future events to differ materially from the forward-looking statements in this document, including but not limited to: the risk that the anticipated benefits of the Government of Canada’s funding will fail to materialize as planned or at all; the ability of Algoma Steel to implement and realize its business plans, including Algoma’s ability to transform to EAF; and Algoma Steel’s ability to reduce its carbon intensity. The foregoing list of factors is not exhaustive and readers should also consider the other risks and uncertainties set forth in subsequent filings with the U.S. Securities and Exchange Commission (the “SEC”), including the proxy statement/prospectus described below that will be filed by Algoma Steel’s parent company (“Algoma”) and Legato Merger Corp. (“Legato”) in connection with their previously announced merger transaction (the “Transaction”). Forward-looking statements speak only as of the date they are made. Readers are cautioned not to put undue reliance on forward-looking statements, and Algoma and Legato assume no obligation and do not intend to update or revise these forward-looking statements, whether as a result of new information, future events, or otherwise.

Additional Information and Where to Find It

This news release is not a proxy statement or solicitation of a proxy, consent or authorization with respect to any securities or in respect of the Transaction and does not constitute an offer to sell, buy or exchange or the solicitation of an offer to sell, buy or exchange any securities or the solicitation of any vote or approval in any jurisdiction, nor shall there be any sale, purchase, or exchange of securities or solicitation of any vote or approval in any jurisdiction in contravention of applicable law.

In connection with the proposed Transaction between Algoma and Legato, Algoma will file with the SEC a registration statement on Form F-4 which will include its prospectus as well as Legato’s proxy statement (the “Proxy Statement/Prospctus”). Legato plans to mail the definitive Proxy Statement/Prospectus to its stockholders in connection with the Transaction once available.

INVESTORS AND SECURITYHOLDERS OF LEGATO ARE URGED TO READ THE PROXY STATEMENT/PROSPECTUS AND OTHER RELEVANT DOCUMENTS FILED OR TO BE FILED WITH THE SEC CAREFULLY WHEN THEY BECOME AVAILABLE BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION ABOUT ALGOMA, LEGATO, THE TRANSACTION AND RELATED MATTERS.

Investors and security holders will be able to obtain free copies of the Proxy Statement/Prospectus (when available) and other documents filed with the SEC by Algoma and Legato through the website maintained by the SEC at www.sec.gov. In addition, investors and securityholders will be able to obtain free copies of the documents filed with the SEC on Legato’s website at https://legatomerger.com or by directing a written request to Legato at 777 Third Avenue, 37th Floor, New York, NY 10017 or by contacting Algoma at 705.206.1022 or [email protected]

Participants in the Solicitation

Legato, Algoma and certain of their respective directors, executive officers and employees may be considered to be participants in the solicitation of proxies in connection with the Transaction. Information regarding the persons who may, under the rules of the SEC, be deemed participants in the solicitation of the stockholders of Legato in connection with the Transaction, including a description of their respective direct or indirect interests, by security holdings or otherwise, will be included in the Proxy Statement/Prospectus described above when it is filed with the SEC. Additional information regarding Legato’s directors and executive officers can also be found in Legato’s final prospectus dated January 19, 2021 and filed with the SEC on January 21, 2021. These documents are available free of charge as described above.
About Algoma Steel Inc.

Based in Sault Ste. Marie, Ontario, Canada, Algoma is a fully integrated producer of hot and cold rolled steel products including sheet and plate. With a current raw steel production capacity of an estimated 2.8 million tons per year, Algoma’s size and diverse capabilities enable it to deliver responsive, customer-driven product solutions straight from the ladle to direct applications in the automotive, construction, energy, defense, and manufacturing sectors. Algoma is a key supplier of steel products to customers in Canada and Midwest USA and is the only producer of plate steel products in Canada. The Company’s mill is one of the lowest cost producers of hot rolled sheet steel (HRC) in North America owing in part to its state-of-the-art Direct Strip Production Complex

(“DSPC”), which is the newest thin slab caster in North America with direct coupling to a basic oxygen furnace (BOF) melt shop.
Algoma has achieved several meaningful improvements over the last several years that are expected to result in enhanced long-term profitability for the business. Algoma has modernized its DSPC facility and recently installed its No. 2 Ladle Metallurgy Furnace. Additionally, the Company has cost cutting initiatives underway and is in the process of investing to modernize its plate mill facilities.

Today Algoma is returning to its roots as a customer-focused, entrepreneurial company with the courage and growing capability to meet the industry’s challenges head-on. It is investing in its people and processes, optimizing and modernizing so that it might continue to be your partner in steel.

For more information, please call:
Brenda Stenta Manager Communications & Branding Algoma Steel Inc. Phone: +1.705.206.1022 E-mail: [email protected]

18 COMMENTS

  1. Article on this issue in National Post today. Apparently, it reads, the union boycotted the announcement – the company did not consult the union about redevelopment plans, as per contract agreements. There are concerns expressed about eventual job losses.

    • Well, I told you yesterday Susan… Trudeau is more afraid of the NDP than the Conservatives. (sorry my comment is gone already)
      Nothing is granted and the Liberals have a lot of skeletons in the closet, while they can’t seem to find skeletons in O’Toole’s closet and that make them nervous, but what really don’t let Trudeaupers sleep is the NDP ability of pulling laughing skeletons to entertain the voters.

      • You may be right Paul, but I did not comment yesterday, or today, on the Liberals being afraid of either the Conservatives or the NDP, just that the Liberals are worried about the next election outcome, my opinion – why would they bother visiting the Sault if they weren’t? I *did* say, that (paraphrased), I am ok the current Conservative MPs forming a government, despite the fact that their leadership isn’t appearing as sharp as it could be, paraphrased. Again, my opinion.

        • My bad, then. Apologies for that. It was a lady name that I responded. It will not change the events. I still believe that for Trudeau, the NDP is far more important than the Conservatives. The NDP is too close to him and can stab him faster than the conservatives. He’s been partnering with the NDP and that for sure requires a lot of invetment. Yes, the conservative party is going through a cleaning house process and for some reason I think they are more focused in taking distance from Harper than searching for a new leader. Trudeau still needs the whole Canada vaccinated and two or three months on top of it for voters to relax… Anything before that could backfire.

  2. Who owns Algoma these days? How are they allowed to keep the ownership secret when they are getting taxpayer money? Dan…maybe you can find out???

    • Algoma Steel Inc. ownership is shared between Essar Group and Ontario Steel Investment Fund, then 1839688 Alberta ULC is in one hand a subsidiary, therefore Algoma Steel Inc. is it’s parent organizacion, but the gambit is as follows 1839688 Alberta ULC (Cannelton Iron Ore) is as well a parent organization of Essar Steel Algoma Inc. USA, Essar Tech Algoma Inc. and Essar Steel Canada Inc.
      At the end of the day, it’s privately owned with a numbered company with Directors collection millions of dollar in salaries paid with taxpayers money.
      Maddoff could be physically dead, but his spirit is alive and well.

  3. Liberals dumping more hard-earned tax dollars into the Algoma dump. What a waste. Can’t wait for the next CCAA filing, when the handouts run out…

    • Luc, you know as well as I do that Algoma is gonna be a worlwide steel warehouse. There is a difference between a steel storage plant and a steel producer plant.
      USA must protect it’s market. No option. And Algoma is what’s needed to funnel the steel from China.
      They are hiring a pest control company to keep the spiders at shore inside the burners.

      • what i know is that the coke ovens are crumbling and there’s a lot of near impossible hurdles to overcome in order to build a new one.

        factor in climate change and it is apparent that steelmaking is going to evolve going forward.

  4. They hand over 420 large and still don’t even know who owns Algoma steel! I would wager that the corrupt Ruia brothers still have their fingers in the pie, one way or another.
    This would explain why it’s such a tightly held secret as to the true ownership of Algoma Steel.
    Try as they did the only answer the media could get out of the Algoma spokesperson as to the identity of the owners was “A group of investors”
    That’s not nearly good enough of an answer.

  5. Yes, big job reduction plan by Algoma and have the government pay for it. Going green is a dream in Canada that will not happen unless the big polluters U.S, Russia, China, India, participate. Canada puts out only 1.7 % of total world carbon emissions we could go to zero and it would mean nothing, since reduction targets by countries are voluntary and not mandatory, you will be exporting more jobs to China etc.

  6. So, what should I glean from this cautionary advice given to us by Algoma Steel? As I understand it, Algoma Steel does not want people to run out and buy shares in the company based on factors and promises that may not materialize – the Canadian government is making these promises, not Algoma Steel. Seems a fair and ethical disclaimer. Also, whether this is by design or by default, this cautionary advice/ disclaimer seems to have the impact of subtly telling the PM that Algoma Steel will not used as a soapbox for *forward-looking* election promises. Do I have this somewhat right?

  7. Electric Arc Furnace – EAF

    This requires zero iron making. Terrific investment for the next 4 years but when the EAF is completed, what happens to the employees working in the lime plant, the coke ovens, by products, the blast furnace and any other iron making related area of ASI? Only so many can be relocated to an electric furnace that will be largely automated had only so many can be packaged out? Is there a plan for the retention of these impacted employees?

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