Essar Global to acquire Algoma Steel for CDN$1.85 billion



    TSX Symbol:  AGA

    MUMBAI, INDIA and SAULT STE. MARIE, ON, April 15 /CNW/ - Essar Global
Limited, through its wholly owned subsidiary Essar Steel Holdings Limited,
("Essar") and Algoma Steel Inc. ("Algoma") today announced that they have
signed a definitive arrangement agreement providing for the acquisition by
Essar of all of the common shares of Algoma for Cdn$56.00 per share, or an
aggregate equity value of $1.85 billion, payable in cash. The offer price
represents a premium of 48% to Algoma's volume weighted average stock price
for the 20-day period ending on February 14, 2007 when Algoma confirmed that
it was in discussions regarding a potential transaction.
    Under the terms of the agreement, Algoma will undertake a court approved
plan of arrangement pursuant to which an Essar subsidiary will acquire all of
the shares of Algoma in consideration for Cdn$56.00 in cash per share. The
arrangement must be approved by Algoma's shareholders by the affirmative vote
of at least 66 2/3rds percent of the votes cast, in person or by proxy, at a
shareholders meeting, and is subject to customary closing conditions including
necessary regulatory approvals. The support agreement provides for payments to
Essar in the event that the acquisition is not completed under certain
circumstances.
    Mr. Benjamin Duster, Chairman of Algoma's Board of Directors said, "The
Board of Directors unanimously supports the Essar proposal as it reflects a
significant premium to the historical share price of Algoma. This transaction
will also benefit Algoma's employees and the City of Sault Ste. Marie as it
will result in new ownership that is committed to investment in Algoma's
facilities to support growth and business sustainability."
    Mr. Shashi Ruia, Chairman, Essar Global Limited said, "We believe Algoma
is an excellent addition to our existing steel business and also offers growth
potential. This acquisition fits in with our global steel vision of having
world class low cost assets, with a global footprint. Algoma provides us with
an excellent platform for the Canadian and North American markets. We are
impressed with Algoma's management team and employees and look forward to
working with them to enhance our industry leadership."
    Algoma expects that the shareholders meeting to approve the arrangement
will be held in June and that the acquisition will be completed shortly
thereafter if approved by the shareholders. The Board of Directors of Algoma
has unanimously recommended that Algoma shareholders vote in favour of the
transaction. Genuity Capital Markets is acting as exclusive financial advisor
to Algoma in the transaction and has delivered an opinion to Algoma's Board of
Directors that the consideration to be received by Algoma shareholders is
fair, from a financial point of view.
    UBS Investment Bank is acting as exclusive financial advisor to Essar and
sole arranger of Essar's transaction financing. Stikeman Elliott LLP is acting
as legal counsel to Essar, and Torys LLP is acting as legal counsel to Algoma
Steel.

    About Algoma Steel:

    Algoma Steel Inc. is an integrated steel producer based in Sault Ste.
Marie, Ontario with steel shipments of 2.4 million tons in 2006. Revenues,
which totaled Cdn$1.9 billion in 2006, are derived primarily from the
manufacture and sale of rolled steel products including hot and cold rolled
steel and plate.

    About Essar:

    Essar Global is an international conglomerate operating in six business
areas - steel, oil & gas, power, communications, shipping & logistics and
construction. It has offices world-wide and employs approximately 20,000
people, including over 3,500 persons in the United States. The group has built
a portfolio of assets with expected revenues of US$10 billion in the year to
March 2008. For further information, please visit: www.essar.com
    Essar Steel Holdings Limited is an emerging global steel company. It is a
fully integrated manufacturer and one of the lowest cost producers of steel
globally. Essar Steel Holdings Limited, along with its subsidiaries, operates
an integrated steel plant of 4.6 million tonnes per annum (tpa) in India,
which is expected to be increased to an 8.5 million tpa steel complex for flat
products by 2009. The complex also comprises a cold rolling plant, down stream
facilities and a 5 meter wide plate mill. It is India's largest exporter of
flat steel.
    Essar Steel Holdings Limited also operates a cold rolling complex in
Indonesia and has now finalized plans to setup an integrated steel plant for
flat products in Trinidad and Tobago and a hot strip mill in Vietnam.

    Forward Looking Statements:

    Certain statements made in the News Release are forward-looking
statements that involve risks and uncertainties. These forward-looking
statements reflect Essar's and Algoma's best judgement based on current
information, and although the Companies base these statements on circumstances
that they believed to be reasonable when made, there can be no assurance that
future events will not affect the accuracy of such forward-looking
information. As such, the forward-looking statements are not guarantees of
future performance, the actual results may vary materially from the results
and expectations discussed herein. Factors that may cause or contribute to
such differences include, but are not limited to: the risk that the conditions
to the offer set forth in the agreement will not be satisfied, changes in both
companies businesses during the period between now and the closing and
developments in obtaining regulatory approvals for the transaction. All
statements other than statements of historical facts included in this News
Release are forward-looking statements. All forward-looking statements speak
only as of the date of this News Release. Essar and Algoma do not undertake
any obligation to update or revise any forward-looking statements, whether as
a result of new information, future events or otherwise.
    %SEDAR: 00001257E




For further information:

For further information: Essar Group, William Clutterbuck, Phone:
44-207-379-5151, Email: wclutterbuck@maitland.co.uk; Manish Kedia, Senior Vice
President, Phone: 91-098197-30092, Email: mkedia@essar.com; B Ganesh Pai,
General Manager, Phone: 91-098197-30225, Email: gpai@essar.com; Algoma Steel,
Brenda Stenta, Manager, Corporate Communications, Phone: (705) 945-2209,
Email: bstenta@algoma.com

Organization Profile

ALGOMA STEEL INC.

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