Algoma Steel purchased by US-based SPAC firm

The Canadian parent company of privately held Algoma Steel Inc., which operates an integrated steelmaking complex with basic oxygen furnaces (BOFs) in Sault Ste. Marie, Ontario, says it has entered into a definitive merger agreement with New York-based Legato Merger Corp., a special purpose acquisition company (SPAC) listed on the NASDAQ exchange.

The two companies have jointly announced the arrangement, which they say will result in Algoma becoming a publicly listed company with its common shares traded on the NASDAQ exchange. Algoma says it also intends to list its common shares on the Toronto Stock Exchange.

“The proposed transaction will provide Algoma with investment capital and an enhanced capital structure to support further transformative investments that are expected to drive improved financial performance and sustainable returns through the steel pricing cycle,” says Michael McQuade, CEO of Algoma.

He adds, “We continue to evaluate our strategic options, including the potential for a substantial investment in electric arc furnace [EAF] steelmaking.”

Eric Rosenfeld, Legato chief SPAC officer, says, “We believe Algoma’s transformation and potential investments will allow Legato stockholders to participate in a significant value creation opportunity. We are excited to partner with Algoma’s management team, which has an impressive track record of implementing cost savings and operational upgrades over the last few years.”

Legato says its board of directors has approved the merger agreement and resolved to recommend that Legato stockholders approve and adopt the merger agreement and the transaction. Algoma has received both shareholder approval and board of director approval for the merger agreement, according to the news release issued by the two companies.

The transaction is expected to close in the third quarter of 2021, subject to the approval of Legato stockholders and other customary conditions, including approvals from the NASDAQ and Toronto stock exchanges.

On its website, Algoma describes itself as “a fully integrated steel producer with a raw steel production capacity of approximately 2.8 million tons per year.”