A coil of steel is moved by a crane at the Direct Strip Production Complex at Essar Steel Algoma in Sault Ste. Marie, Ont., on Wednesday, March 14, 2018. THE CANADIAN PRESS/Justin Tang

A coil of steel is moved by a crane at the Direct Strip Production Complex at Essar Steel Algoma in Sault Ste. Marie, Ont., on Wednesday, March 14, 2018. THE CANADIAN PRESS/Justin Tang

Steelmaker Algoma Steel to go public in SPAC deal

Agreement with Legato Merger Corp

SAULT STE. MARIE, Ont. — The Canadian parent company of privately held Algoma Steel Inc. has signed a deal to be acquired by a U.S. special purpose acquisition company in a move that will see the Ontario steelmaker become a publicly listed company.

The agreement with Legato Merger Corp., that values Algoma at US$1.3 billion, will see its common shares traded on the Nasdaq Stock Market. Algoma also intends to apply to list on the Toronto Stock Exchange.

Algoma CEO Michael McQuade says the deal will provide the steelmaker with investment capital and an enhanced capital structure.

Under the agreement, Algoma will benefit from US$236 million in Legato’s trust account, while another group of investors has committed to invest an additional US$100 million.

Algoma’s existing shareholders and management team will own 75 million Algoma common shares on a fully diluted basis, with an implied value of $750 million.

They will also be able to receive an additional 37.5 million shares if certain financial targets for 2021 or stock price targets in the five years following closing are achieved.

This report by The Canadian Press was first published May 25, 2021.

Business and Industrial

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