Algoma Steel Group Inc. (NASDAQ: ASTL; TSX: ASTL) (“Algoma” or the
“Corporation”), a leading Canadian producer of hot and cold rolled
steel sheet and plate products, today announced it is commencing
its previously announced substantial issuer bid (the “Offer”) to
purchase for cancellation up to US$400 million of its common shares
(“Shares”). The Offer will expire at 5:00 p.m. (Eastern Time) on
July 27, 2022, unless extended or withdrawn.
The Offer by Algoma is being made by way of a
“modified Dutch Auction”, allowing shareholders who choose to
participate in the Offer to individually select the price, within a
price range of not less than US$8.75 and not more than US$10.25 per
Share (in increments of US$0.10 per Share), at which they will
tender their Shares to the Offer. Upon expiry of the Offer, Algoma
will determine the lowest purchase price (which will not be more
than US$10.25 per Share and not less than US$8.75 per Share) that
will allow it to purchase the maximum number of Shares properly
tendered to the Offer, and not properly withdrawn, having an
aggregate purchase price not exceeding US$400 million.
Shareholders who wish to participate in the
Offer will be able to do so through: (i) an auction tender, in
which they will specify the number of Shares being tendered at a
specific price per Share; or (ii) a purchase price tender, in which
they will agree to have a specified number of Shares purchased at
the purchase price to be determined pursuant to the auction and
have their Shares considered as having been tendered at the minimum
price of US$8.75 for the purposes of determining the purchase
price. Shareholders who validly deposit Shares without specifying
the method in which they are tendering their Shares will be deemed
to have made a purchase price tender, understanding that those
Shares will be considered to have been tendered at the minimum
price of US$8.75 per Share. All Shares tendered at or below the
finally determined purchase price will be purchased, subject to
proration and “odd lot” priority, at the same purchase price
determined pursuant to the terms of the Offer. Shares that are not
purchased, including Shares tendered pursuant to auction tenders at
prices above the purchase price, will be returned to
shareholders.
The Offer is not conditional on receipt of
financing or on any minimum number of Shares being tendered to the
Offer, but is subject to other conditions, which are described in
the offer to purchase. Algoma intends to fund any purchases of
Shares pursuant to the Offer from cash on hand.
On June 21, 2022, a tender offer statement on
Schedule TO, including an offer to purchase, a letter of
transmittal for registered shareholders and related documents, will
be filed by Algoma with the United States Securities and Exchange
Commission (the “SEC”), and a separate issuer bid circular, letter
of transmittal for registered shareholders and related documents
will be filed by Algoma with Canadian securities regulatory
authorities.
Algoma has engaged BMO Nesbitt Burns Inc. and
BMO Capital Markets Corp. to act as financial advisors and dealer
managers (the “Dealer Managers”) for the Offer and TSX Trust
Company to act as depositary (the “Depositary”). Any questions or
requests for information regarding the Offer may also be directed
to the Dealer Managers or the Depositary.
Algoma has also obtained a liquidity opinion
from Cormark Securities Inc. (“Cormark”) to the effect that, based
on and subject to the qualifications, assumptions and limitations
stated in such opinion, a liquid market for the Shares exists as of
June 21, 2022, and that it is reasonable to conclude that,
following the completion of the Offer in accordance with its terms,
there will be a market for the holders of Shares who do not tender
to the Offer that is not materially less liquid than the market
that existed at the time of the making of the Offer. A copy of the
opinion of Cormark will be included in the Offer documents, which
will be made available under the Corporation’s profile on SEDAR at
www.sedar.com and on EDGAR at www.sec.gov.
This news release is for informational purposes
only and is not intended to and does not constitute an offer to
purchase or the solicitation of an offer to sell Shares. The
solicitation and the Offer will only be made pursuant to the Offer
documents filed with securities regulatory authorities, including a
tender offer statement on Schedule TO, including an offer to
purchase, a letter of transmittal and related documents, will be
filed by Algoma with the SEC, and a separate issuer bid circular
and related documents will be filed by Algoma with the OSC. The
Offer will not be made to, nor will tenders be accepted from or on
behalf of, holders of Shares in any jurisdiction in which the
making or acceptance of offers to sell Shares would not be in
compliance with the laws of that jurisdiction. The Board of
Directors of Algoma has approved the Offer, however, none of
Algoma, its Board of Directors, the Dealer Managers, Cormark or the
Depositary makes any recommendation to shareholders as to whether
to tender or refrain from tendering any or all of their Shares
pursuant to the Offer, whether shareholders should elect an auction
tender or a purchase price tender or the purchase price or prices
at which shareholders may choose to tender Shares. SHAREHOLDERS ARE
STRONGLY URGED TO CAREFULLY READ THE TENDER OFFER STATEMENT
REGARDING THE OFFER, OFFER TO PURCHASE, ISSUER BID CIRCULAR, THE
LETTER OF TRANSMITTAL AND RELATED DOCUMENTS FILED WITH SECURITIES
REGULATORY AUTHORITIES, AS THEY MAY BE AMENDED FROM TIME TO TIME,
BECAUSE THEY CONTAIN IMPORTANT INFORMATION. Shareholders may obtain
free copies of the offer to purchase, issuer bid circular, the
letter of transmittal and related documents filed with the SEC at
the website maintained by the SEC at www.sec.gov or with Canadian
securities regulatory authorities under the Corporation’s profile
on SEDAR at www.sedar.com (in each case, when available).
Shareholders may also obtain those materials from TSX Trust
Company, the depositary for the Offer. Shareholders are urged to
read those materials and evaluate carefully all information related
to the Offer, consult their own financial, legal, investment and
tax advisors and make their own decisions as to whether to deposit
Shares pursuant to the Offer and, if so, how many Shares to deposit
and at what price.
ADVISORY REGARDING FORWARD-LOOKING
STATEMENTS
This news release contains forward-looking
statements or information (collectively, “forward-looking
statements”) within the meaning of applicable securities
legislation, including Section 27A of the Securities Act of 1933,
as amended, and Section 21E of the Securities Exchange Act of 1934,
as amended. Forward-looking statements include: terms of the Offer,
including price range and number of the Shares Algoma may purchase
under the Offer; timing for launch and completion of the Offer; and
sources and availability of funding for the Offer. Forward-looking
statements involve assumptions, risks and uncertainties that may
cause such statements not to occur or results to differ materially.
Many factors could cause actual future events to differ materially
from the forward-looking statements in this document, including but
not limited to, the risks that Algoma will be unable to realize its
business plans and strategic objectives, including its investment
in electric arc furnace steelmaking and the retirement of certain
secured long term debt; the risks associated with the steel
industry generally; the impact of Share price volatility on the
Offer; receipt of regulatory approvals for the Offer documents;
satisfaction of conditions associated with the Offer, including the
impact of Share price volatility on completing the Offer; risk that
the Offer will not be completed on the terms described in this
press release (including the price range and number of Shares
Algoma may purchase under the Offer) or at all; changes in general
economic conditions, including as a result of
the COVID-19 pandemic, inflation and the ongoing conflict
in Ukraine; and other risks and uncertainties as described in the
Annual Report on Form 20-F filed by Algoma with the Ontario
Securities Commission (the “OSC”) (available under Algoma’s SEDAR
profile at www.sedar.com) and with the SEC (available at
www.sec.gov), as well as in the other documents Algoma has filed
with the OSC and the SEC. Forward-looking statements speak only as
of the date they are made.
Although Algoma believes such forward-looking
statements are reasonable, there can be no assurance they will
prove to be correct. The above assumptions, risks and uncertainties
are not exhaustive. Forward-looking statements are made as of the
date hereof and, except as required by law, Algoma undertakes no
obligation to update or revise any forward-looking statements.
About Algoma Steel
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.
Algoma’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 upgraded its DSPC facility and recently installed its No. 2
Ladle Metallurgy Furnace. Additionally, Algoma has cost cutting
initiatives underway and is in the process of modernizing its plate
mill facilities.
Today Algoma is on a transformation journey,
investing in its people and processes, optimizing and modernizing
to secure a sustainable future. Our customer focus, growing
capability and courage to meet the industry’s challenges head-on
position us firmly as your partner in steel.
For more information, please contact:
Mike MoracaTreasurer and Investor Relations
OfficerAlgoma Steel Inc. Phone:
705.945.3300E-mail: IR@algoma.com
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