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Algoma Commences Recapitalization of Company’s Capital Structure

October 13, 2014, 07:41 AM
Filed Under: Industry News

Essar Steel Algoma Inc. (Algoma) announced it intends to launch a comprehensive refinancing of its current capital structure, beginning with investor meetings, including a bank meeting with investors on Oct. 15, 2014.

As part of the refinancing, Algoma's ultimate parent, Essar Global Fund Limited and its affiliates are providing more than $400 million of support to Algoma through the infusion of new cash equity, conversion of existing obligations into preferred equity and the purchase of the Port of Algoma.

The refinancing is expected to result in a reduction of gross debt of $240 million and an increase in liquidity for Algoma to approximately $90 million to $100 million. The new debt facilities will be sized at $975 million comprised of secured and junior secured debt.  Algoma intends to launch a tender offer for its existing senior secured notes, exercise the cash payout option for the existing senior notes under its plan of arrangement, and repay the existing term loan with the proceeds from the refinancing.

Based on preliminary results for the three months ending September  30, 2014, Algoma expects EBITDA to be in the range of$75 million to $80 million and revenues for such period to be $520 million to $530 million.

Essar Steel Algoma Inc. is based in Sault Ste. Marie, Ontario.  As a fully integrated steel producer, Algoma derives its revenues primarily from the manufacture and sale of hot and cold rolled steel products including sheet and plate.

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