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LONDON, UNITED KINGDOM AND SAULT STE. MARIE,
ONTARIO - 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 Canadian$ 56.00 per share, or an aggregate
equity value of Canadian $1.8 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
Canadian $ 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) 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 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.
UBS Investment Bank is acting as exclusive financial
advisor to Essar and sole arranger of Essar's
transaction financing. 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. 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 Canadian$ 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 3500 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 tones 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.
For Further Information
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