Algoma Steel extends credit agreement

Algoma Steel Group Inc. has increased the size of its senior secured asset-based revolving credit facility (ABL credit facility) from $250 million to $300 million and has extended the term of the ABL credit facility to May 2028.

The Ontario-based steel producer, which is in the process of converting its blast furnace/basic oxygen complex into a scrap-fed electric arc furnace (EAF) mill, says the interest rate on the ABL credit facility will be based on the Secured Overnight Financing Rate (SOFR) plus a credit spread adjustment of 10 basis points plus an applicable margin, which will vary depending on usage.

“With this new ABL credit facility, we have strengthened our liquidity, extended the maturity out five years and increased our financial flexibility," says Rajat Marwah, chief financial officer at Algoma. "The financial terms reflect Algoma’s prudent financing strategy and strength of our business and cash flow profile through market cycles.

“We remain laser-focused on creating and delivering long-term shareholder value as we execute our transition to electric arc steelmaking to become one of North America’s leading providers of green steel.”

With the closing of the transaction, Algoma says it has approximately $260 million of unused availability on the ABL credit facility with existing usage primarily related to letters of credit. The ABL credit facility can be used to fund working capital needs, general corporate purposes and strategic growth initiatives, according to the steelmaker.

Wells Fargo Capital Finance Corp. Canada is acting as the administrative agent, joined by Bank of Montreal as joint lead arranger and joint bookrunner. Toronto-based Goodmans LLP represented Algoma in the transaction.