Stelco Holdings Inc. Announces Intention to Commence Substantial Issuer Bid

HAMILTON, ON, Dec. 21, 2021 /CNW/ - Stelco Holdings Inc. (TSX: STLC) ("Stelco" or the "Company") announced today its intention to commence a substantial issuer bid (the "Offer") pursuant to which the Company will offer to purchase up to $250,000,000 in value of its outstanding common shares (the "Shares") from holders of Shares (the "Shareholders") for cash. As of December 20, 2021, there were 77,315,265 Shares issued and outstanding. The Offer would be for approximately 10.4% of the total number of issued and outstanding Shares if the purchase price is determined to be $31.00 (which is the minimum price per Share under the Offer) or approximately 8.7% of the total number of issued and outstanding Shares if the purchase price is determined to be $37.00 (which is the maximum price per Share under the Offer).

The Offer will proceed by way of a "modified Dutch auction". Holders of Shares wishing to tender to the Offer will be entitled to do so pursuant to: (i) auction tenders in which they will specify the number of Shares being tendered at a price of not less than $31.00 and not more than $37.00 per Share in increments of $0.25 per Share, or (ii) purchase price tenders in which they will not specify a price per Share, but will rather agree to have a specified number of Shares purchased at the purchase price to be determined by auction tenders.

The purchase price to be paid by the Company for each validly deposited Share will be based on the number of Shares validly deposited pursuant to auction tenders and purchase price tenders, and the prices specified by Shareholders making auction tenders. The purchase price will be the lowest price which enables the Company to purchase the maximum number of Shares not exceeding an aggregate of $250,000,000 in value based on valid auction tenders and purchase price tenders, determined in accordance with the terms of the Offer. Shares deposited at or below the finally determined purchase price will be purchased at such purchase price. Shares that are not taken up in connection with the Offer, including Shares deposited pursuant to auction tenders at prices above the purchase price, will be returned to Shareholders that tendered to the Offer.

If the aggregate purchase price for Shares validly tendered pursuant to auction tenders and purchase price tenders is greater than the amount available for auction tenders and purchase price tenders, the Company will purchase Shares from the holders of Shares who made purchase price tenders or tendered at or below the finally determined purchase price on a pro rata basis, except that "odd lot" holders (holders of less than 100 Shares) will not be subject to proration.

The Offer will commence on December 22, 2021 and expire at 11:59 p.m. (Eastern time) on January 26, 2022 (the "Expiration Time"), unless withdrawn or extended. The Offer will not be conditional upon any minimum number of Shares being tendered. The Offer will, however, be subject to other conditions and the Company will reserve the right, subject to applicable laws, to withdraw or amend the Offer, if, at any time prior to the payment of deposited Shares, certain events occur.

The closing price of the Shares on the TSX on December 20, 2021, the last full trading day prior to the Company's announcement of its intention to make the Offer, was $37.68.

The Board of Directors of the Company believes that the Offer is a prudent use of the Company's financial resources given the Company's business profile and assets, the current market price of the Shares and the Company's ongoing cash requirements. The Board of Directors of the Company also believes the Offer will provide Shareholders with the option to access liquidity with respect to their Shares that may not otherwise be available on the TSX. The Offer provides Stelco with the opportunity to return up to $250,000,000 of capital to Shareholders who elect to tender while at the same time increasing the proportionate share ownership of Shareholders who elect not to tender.

Details of the Offer, including instructions for tendering Shares to the Offer and the factors considered by the Board of Directors in making its decision to approve the Offer, will be included in the formal offer to purchase and issuer bid circular and other related documents (the "Offer Documents"), which are expected to be mailed to Shareholders, filed with applicable Canadian Securities Administrators and made available free of charge on or about December 22, 2021 on SEDAR at www.sedar.com. Shareholders should carefully read the Offer Documents prior to making a decision with respect to the Offer.

The Board of Directors of the Company has obtained a liquidity opinion from BMO Nesbitt Burns Inc. ("BMO Capital Markets") to the effect that, based on and subject to the qualifications, assumptions and limitations stated in such opinion, a liquid market for the Shares exists as of December 20, 2021, and that it is reasonable to conclude that, following the completion of the Offer in accordance with its terms, there will be a market for the holders of Shares who do not tender to the Offer that is not materially less liquid than the market that existed at the time of the making of the Offer. A copy of the opinion of BMO Capital Markets will be included in the Offer Documents.

The Company has further engaged BMO Capital Markets to act as its dealer manager in connection with the Offer. The Company has also engaged Computershare Investor Services Inc. ("Computershare") to act as depositary for the Offer.

The Board of Directors of the Company has approved the Offer. However, none of the Company, its Board of Directors, BMO Capital Markets or Computershare makes any recommendation to any Shareholder as to whether to deposit or refrain from depositing Shares under the Offer. Shareholders are urged to evaluate carefully all information in the Offer, consult their own financial, legal, investment and tax advisors and make their own decisions as to whether to deposit Shares under the Offer, and, if so, how many Shares to deposit and at what price(s).

This press release is for informational purposes only and does not constitute an offer to buy or the solicitation of an offer to sell Shares. The solicitation and the offer to buy Shares will only be made pursuant to the formal offer to purchase, the issuer bid circular and other related documents.

Any questions or requests for information regarding the Offer should be directed to Computershare, as the depositary, at: [email protected], or BMO Capital Markets, as the dealer manager, at: [email protected].

About Stelco

Stelco is a low cost, integrated and independent steelmaker with one of the newest and most technologically advanced integrated steelmaking facilities in North America. Stelco produces flat-rolled value-added steels, including premium-quality coated, cold-rolled and hot-rolled sheet products, as well as pig iron and metallurgical coke. With first-rate gauge, crown, and shape control, as well as uniform through-coil mechanical properties, our steel products are supplied to customers in the construction, automotive, energy, appliance, and pipe and tube industries across Canada and the United States as well as to a variety of steel service centres, which are distributors of steel products. At Stelco, we understand the importance of our business reflecting the communities we serve and are committed to diversity and inclusion as a core part of our workplace culture, in part, through active participation in the BlackNorth Initiative.

Forward-Looking Information

This press release contains "forward-looking information" within the meaning of applicable Canadian securities laws. Forward-looking information may relate to our future outlook and anticipated events or results and may include information regarding our financial position, business strategy, growth strategy, budgets, operations, financial results, taxes, dividend policy, plans and objectives. Particularly, information regarding our expectations of future results, performance, achievements, prospects or opportunities is forward-looking information. In some cases, forward-looking information can be identified by the use of forward-looking terminology such as "plans", "targets", "expects" or "does not expect", "is expected", "an opportunity exists", "budget", "scheduled", "estimates", "outlook", "forecasts", "projection", "prospects", "strategy", "intends", "anticipates", "does not anticipate", "believes", or variations of such words and phrases or state that certain actions, events or results "may", "could", "would", "might", "will", "will be taken", "occur" or "be achieved". In addition, any statements that refer to expectations, intentions, projections or other characterizations of future events or circumstances contain forward-looking information. Statements containing forward-looking information are not historical facts but instead represent management's expectations, estimates and projections regarding future events or circumstances. These statements include, without limitation, statements regarding the Company's intentions and expectations with respect to the Offer, the terms and conditions of the Offer, the number and aggregate dollar amount of Shares to be purchased for cancellation under the Offer, the expected expiration date of the Offer and purchases thereunder and the effects and benefits of purchases under the Offer. Purchases made under the Offer are not guaranteed and may be suspended at the discretion of the Board of Directors.

Undue reliance should not be placed on forward-looking information. The forward-looking information in this press release is based on our opinions, estimates and assumptions in light of our experience and perception of historical trends, current conditions and expected future developments, as well as other factors that we currently believe are appropriate and reasonable in the circumstances. Despite a careful process to prepare and review the forward-looking information, there can be no assurance that the underlying opinions, estimates and assumptions will prove to be correct. Certain assumptions in respect of: the utilization of and access to our production capacity; capital expenditures associated with accessing such production capacity; the impact of COVID-19 on our business and the broader market in which we operate; the market's ability to recover from COVID-19; upgrades to our facilities and equipment; our research and development activities associated with advanced steel grades; our ability to source raw materials and other inputs; our ability to supply to new customers and markets; our ability to effectively manage costs; our ability to attract and retain key personnel and skilled labour; our ability to obtain and maintain existing financing on acceptable terms; currency exchange and interest rates; the impact of competition; changes in laws, rules, and regulations, including international trade regulations; and growth in steel markets and industry trends are material factors made in preparing the forward-looking information and management's expectations contained in this press release.

There can be no assurance that such information will prove to be accurate, as actual results and future events could differ materially from those anticipated in such information. Accordingly, readers should not place undue reliance on forward looking information, which speaks only as of the date made. The forward-looking information contained in this press release represents our expectations as of the date of this news release and are subject to change after such date. Stelco disclaims any intention or obligation or undertaking to update publicly or revise any forward-looking statements, whether written or oral, whether as a result of new information, future events or otherwise, except as required by law.

SOURCE Stelco

For investor enquiries: Paul D. Scherzer, Chief Financial Officer, [phone], [email protected]; For media enquiries: Trevor Harris, Vice-President, Corporate Affairs, [phone], [email protected]

Related Links

https://www.stelco.com/