Sunday, October 2

Stelco Holdings Inc. Announces Intention to Commence Substantial Issuer Bid


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HAMILTON, Ontario — 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 30,000,000 of its outstanding common shares (the “Shares”) from holders of Shares (the “Shareholders”) for cash at a price of $35.00 per Share (the “Purchase Price”) for an aggregate maximum purchase amount of $1,050,000,000.

The terms of the Offer are identical to those of the Company’s previous substantial issuer bid which commenced on July 27, 2022 and expired on September 12, 2022 (the “July 2022 SIB”). The Company has determined to commence the Offer, in part, because North American peer companies have made public announcements since the expiration of the July 2022 SIB regarding expectations of poor results for the remainder of fiscal 2022, which have collectively driven down share prices in the sector. Accordingly, the Board of Directors considered it appropriate to give Shareholders an opportunity to participate in the Offer on terms identical to the July 2022 SIB.

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The Purchase Price represents a premium of approximately 9.2% over the closing price on the TSX on September 21, 2022. As of September 21, 2022, there were 63,355,691 Shares issued and outstanding. The number of Shares subject to the Offer represents approximately 47.4% of the total number of Shares issued and outstanding as of September 21, 2022. All Shareholders of the Company may tender Shares pursuant to the Offer, subject to the terms set forth in the Offer Documents.

If more than 30,000,000 Shares are validly deposited and not withdrawn, then such deposited Shares will be purchased by the Company on a pro rata basis, except that “odd lot” holders (holders of less than 100 Shares) will not be subject to proration. Shares that are not taken up in connection with the Offer, including Shares not purchased as a result of proration, will be returned to Shareholders that tendered to the Offer.

The Offer will commence on September 22, 2022 and expire at 5:00 p.m. (Toronto time) on October 27, 2022 (the “Expiration Time”), unless withdrawn or extended.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 standard events occur as described in the Offer Documents.

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, including its substantial level of cash on-hand in excess of operating and capital requirements, and the current market price of the Shares.

As disclosed in the Company’s press release dated September 12, 2022, the July 2022 SIB expired without being fully subscribed. Accordingly, the Company continues to have excess cash that is available to be returned to our Shareholders. The Offer provides Stelco with the opportunity to return up to $1.05 billion of capital to Shareholders who elect to tender while at the same time increasing the proportionate share ownership of Shareholders who do not elect to tender. 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.

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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 September 22, 2022 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, as of September 21, 2022, (i) a liquid market for the Shares exists, and (ii) 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. Reference should be made to the complete version of the opinion of BMO Capital Markets, which will be included in the Offer Documents.

The Company has engaged BMO Capital Markets to act as its financial advisor and 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.

This press release is for informational purposes only and does not constitute an offer to buy or the solicitation of offer to sell Shares. The solicitation and the offer to buy Shares will only be made pursuant to the Offer 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]

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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 are subject to certain conditions as will be set out in the Offer Documents.

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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. Further, forward-looking information is subject to known and unknown risks, uncertainties and other factors that may cause actual results, level of activity, performance or achievements to be materially different from those expressed or implied by such forward-looking information, including but not limited to, those described in this press release. Certain assumptions, risks and uncertainties in respect of: the utilization of and access to our production capacity; capital expenditures associated with accessing such production capacity; the ongoing impact of the hostilities in eastern Europe and elsewhere on the international supply chain and economy overall; the impact of COVID-19 on our business and the broader market in which we operate; 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 environmental and 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 and that may cause actual results to differ materially from the forward-looking information disclosed in this press release. Additional information about the risks and uncertainties of the Company’s business and material risk factors or assumptions on which information contained in forward-looking statements is based is provided in the Company’s disclosure materials, including the Company’s most recently filed annual information form and any subsequently-filed interim management’s discussion and analysis, which are available under our profile on SEDAR at www.sedar.com.

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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 is subject to change after such date. Stelco disclaims any intention or obligation or undertaking to update publicly or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by applicable law.

View source version on businesswire.com: https://www.businesswire.com/news/home/20220921006039/en/

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Contacts

For investor enquiries: Paul D. Scherzer, Chief Financial Officer, (905) 577-4432, [email protected]

For media enquiries: Trevor Harris, Vice-President, Corporate Affairs, (905) 577-4447, [email protected]

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