SAULT STE. MARIE, ON, Dec. 4 /CNW/ - Essar Steel Algoma Inc. (the "Company") announced today that it has priced its previously announced offering of senior secured notes, and will issue US$400 million aggregate principal amount of senior secured notes due 2015 (the "Notes").
The Notes will bear interest at the rate of 9.375% per annum and were issued at 98.51376% of face value, for net proceeds of approximately US$386.3 million and representing a yield to maturity of 9.75%.
The Notes will be guaranteed on a senior unsecured basis by the Company's parent company, Algoma Holdings B.V., and on a senior secured basis by its existing and future subsidiaries, other than immaterial subsidiaries. The Notes will be secured by a senior lien on substantially all of the assets (other than accounts receivable, letter of credit rights, inventory, deposit accounts, securities accounts, instruments and chattel paper, general intangibles, records related to any of the foregoing, proceeds and products of the foregoing and certain assets related thereto and specified excluded assets) owned by the Company and the guarantors from time to time, and by a junior lien on accounts receivable, letter of credit rights, inventory, deposit accounts, securities accounts, instruments and chattel paper, general intangibles, records related to any of the foregoing, proceeds and products of the foregoing and certain assets related thereto owned by the Company and the guarantors from time to time. Additional secured indebtedness may be incurred by us that will rank pari passu with the Notes in respect of the collateral securing the Notes. The Company will also have the ability to incur certain priority liens on a limited basis.
The Company intends to use the net proceeds from the sale of the Notes to repay all amounts outstanding under its existing senior secured term loan facility and its existing senior secured revolving credit facility and the remainder for general corporate purposes. Pursuant to an amendment of the Company's senior secured revolving credit facility being entered into in connection with the offering of the Notes, the maximum commitments under such facility will be reduced upon the closing of the offering from US$425 million to US$350 million.
The Notes have not been and will not be registered under the United States Securities Act of 1933, as amended (the "Securities Act"), and may not be offered or sold in the United States without registration under the Securities Act or pursuant to an applicable exemption from such registration.
The Notes will be offered in the United States only to qualified institutional buyers in reliance on Rule 144A under the Securities Act and outside the United States in reliance on Regulation S under the Securities Act.
This press release shall not constitute an offer to sell or a solicitation of an offer to purchase the Notes and shall not constitute an offer, solicitation or sale in any state or jurisdiction in which, or to any person to whom, such an offer, solicitation or sale would be unlawful. Any offers of the Notes will be made only by means of a private offering circular.
There can be no assurances that the offering of the Notes will be completed as described herein or at all.
To the extent any statements made in this press release contain information that is not historical, these statements are forward-looking statements ("forward-looking statements"). These forward-looking statements relate to, among other things, our objectives, goals, targets, strategies, intentions, plans, beliefs, estimates and outlook, and can generally be identified by the use of words such as "believe", "anticipate", "expect", "intend", "plan", "will", "may", "target", "potential" and other similar expressions. In addition, any statements that refer to expectations, projections or other characterizations of future events or circumstances are forward-looking statements.
Although the Company believes that the expectations reflected in such forward-looking statements are reasonable, such statements involve risks and uncertainties and readers are cautioned not to place under reliance on such statements. Certain material factors or assumptions are applied in making forward-looking statements, and actual results may differ materially from those expressed or implied in such statements. Important factors that could cause actual results to differ materially from these expectations include, among other things, market factors affecting the price of debt securities, the amount of cash generated from the Company's business, the prevailing interest rates and the existence of alternative uses for the Company's cash. Additional information about these factors and about the material factors or assumptions underlying such forward-looking statements may be found in the body of this press release, as well as under the heading "Risks and Uncertainties" in the Company's management's discussion and analysis relating to its most recent audited financial statements found on www.essarsteelalgoma.com.
The Company cautions that the foregoing list of important factors that may affect future results is not exhaustive. When relying on the Company's forward-looking statements to make decisions with respect to the Company, investors and others should carefully consider the foregoing factors and other uncertainties and potential events. The Company undertakes no obligation to update or revise any forward-looking statement, except as required by law.
A member of the Essar Group, Essar Steel Algoma Inc. is based in Sault Ste. Marie, Ontario. As a fully integrated steel producer, the Company derives its revenues primarily from the manufacture and sale of hot and cold rolled steel products including sheet and plate.
SOURCE Essar Steel Algoma Inc.
For further information: For further information: COMPANY CONTACT: Brenda Stenta, Manager Corporate Communications, Phone: (705) 945-2209, E-mail: firstname.lastname@example.org