Under the agreement, CAD 400 million will be provided by the Government of Canada and CAD 100 million by the Province of Ontario as loans.
The company emphasized that the support is of critical importance due to prolonged trade uncertainties and the pressure from the 50% tariff imposed by the United States on Canadian steel. In a statement, Algoma CEO Michael Garcia emphasized that , ‘’This support is a vital step for both our industry and our transformation journey. Canadian steel will continue to be one of the cornerstones of our nation’s economic strength.”
Details of the credit facilities
- CAD 100 million: A secured tranche ranking third after Algoma’s existing credit facilities.
- CAD 400 million: An unsecured tranche linked to 6.77 million share purchase warrants. The warrants will be exercisable at CAD 11.08 per share for a period of 10 years.
- The loans will have a maturity of seven years, with an interest rate of CORRA + 200 basis points for the first three years, increasing by 200 basis points each year thereafter.
Along with the financing, Algoma is also taking significant steps in its production strategy. Due to the Section 232 tariffs restricting access to the U.S. market, the company will gradually phase out its blast furnace and coke oven operations, accelerating its transition to electric arc furnace (EAF) production.
The EAF transformation project, with an estimated cost of approximately CAD 987 million, will enable Algoma to reduce its carbon emissions and focus on high quality plate and coil products primarily for the Canadian market.
CFO Rajat Marwah stated, ‘’With this support, we are aligning with market realities, confidently advancing our EAF strategy, and securing the future of our company.”
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