Algoma Steel completes $500M financing with gov't

Executive Summary

• Algoma Steel Group Inc. has completed a $500-million financing transaction with the governments of Canada and Ontario, strengthening its balance sheet to support its Electric Arc Furnace (EAF) transformation.
• The transaction consists of $400 million from the Canada Enterprise Emergency Funding Corporation (CEEFC) and $100 million from the Province of Ontario.
• The financing includes equity components in the form of 6.77 million common share purchase warrants issued to the government lenders.

Key Details

• Total Financing Amount: $500 million.
• Canada Tranche: $400 million provided by the Canada Enterprise Emergency Funding Corporation (CEEFC), a subsidiary of Canada Development Investment Corp. (CDEV). This includes an $80 million secured tranche.
• Ontario Tranche: $100 million provided by the Province of Ontario. This includes a $20 million secured tranche.
• Warrant Terms: Algoma issued 6.77 million common share purchase warrants to CEEFC and Ontario proportionately.
  • Exercise Price: $11.08 per common share.
  • Term: 10 years.
  • Vesting: Proportionately as unsecured draws are made under each facility.
• Facility Structure: Seven-year facilities.
• Drawdown Strategy: The company expects to draw from the secured tranches first to provide immediate liquidity for operations and near-term transformation milestones.
• Strategic Purpose: To strengthen the balance sheet, provide financial flexibility, and support the transition to Electric Arc Furnace (EAF) steelmaking and a "plate-first" commercial strategy.

Notable Quotes

• "Completing this financing reinforces our strong partnership with both levels of government and supports our ability to navigate current market conditions as we complete our EAF transition... This support provides Algoma with long-term financial flexibility." — Michael Garcia, Chief Executive Officer.
• "Finalizing these facilities marks another key milestone in executing our financial strategy... the new funding allows us to remain focused on operational efficiency, cash generation and our plate-first commercial strategy." — Rajat Marwah, President and Chief Financial Officer.