Daily News: October 14, 2014

Essar Global Fund Provides $400MM for Algoma Refi

Essar Steel Algoma announced it intends to launch a comprehensive refinancing of its current capital structure next week, beginning a bank meeting with investors on October 15, 2014.

As part of the refinancing, Algoma’s ultimate parent, Essar Global Fund 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 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 to $80 million and revenues for such period to be $520 to 530 million.