Algoma Steel Completes $500 Million Government Financing Transaction

Rhea-AI Summary

Algoma Steel (NASDAQ: ASTL; TSX: ASTL) completed a $500 million government financing on Nov 17, 2025.

The package comprises $400 million from Canada Enterprise Emergency Funding Corporation (including an $80 million secured tranche) and $100 million from the Province of Ontario (including a $20 million secured tranche). Algoma issued 6.77 million common share purchase warrants exercisable at $11.08 per share for a 10-year term, vesting with unsecured draws. The company said the seven-year facilities strengthen the balance sheet and provide liquidity to advance its Electric Arc Furnace (EAF) transformation and near-term operational milestones.

Positive

• $500M total financing completed
• $400M from CEEFC including $80M secured tranche
• $100M from Ontario including $20M secured tranche
• 6.77M warrants issued to government lenders

Negative

• Issued warrants create potential shareholder dilution
• Secured tranches ($100M combined) may encumber assets

Insights

Capital-structure & strategic finance analyst

Algoma secured $500 million in government-backed financing to support its EAF transition and near-term liquidity.

These facilities provide immediate liquidity through a $400 million tranche from CEEFC and $100 million from Ontario, including secured portions of $80 million and $20 million respectively, and issuance of 6.77 million warrants exercisable at $11.08 for ten years. The company intends to draw the secured tranche first to support operations and transformation milestones; the financing therefore strengthens the balance sheet and increases short-term cash flexibility.

Key dependencies and risks include the timing and size of subsequent draws (which determine warrant vesting and dilution), the conditions attached to the secured tranches, and execution of the Electric Arc Furnace (EAF) transition that the financing is meant to support. The warrants create potential future equity dilution if exercised; their vesting is tied to unsecured draws, so additional borrowing could accelerate dilution. Monitoring covenant terms and draw conditions will clarify leverage and refinancing risk.

Watch near term: the company’s draw schedule and any disclosed covenant details, the pace of EAF conversion milestones, and any public updates on near-term liquidity use over the next 6–18 months. Also track warrant vesting triggers and any communications on restructuring capital allocation, since those directly affect shareholder dilution and capital flexibility.

$400 million from the Canada Enterprise Emergency Funding Corporation (CEEFC) and $100 million from the Province of Ontario strengthening Algoma’s balance sheet as the Company advances its EAF transition

SAULT STE. MARIE, Ontario, Nov. 17, 2025 (GLOBE NEWSWIRE) -- Algoma Steel Group Inc. (NASDAQ: ASTL; TSX: ASTL) (“Algoma” or “the Company”), a leading Canadian producer of hot and cold rolled steel sheet and plate products, today announced that it has completed its $500 million financing transaction with the Governments of Canada and Ontario, consistent with the binding term sheets announced on September 29, 2025.

The financing includes $400 million (including an $80 million secured tranche) from the Canada Enterprise Emergency Funding Corporation (“CEEFC”), a subsidiary of Canada Development Investment Corporation (CDEV), and $100 million (including a $20 million secured tranche) from the Province of Ontario (“Ontario”). Algoma has issued 6.77 million common share purchase warrants to CEEFC and Ontario proportionately, with each warrant being exercisable for one common share of Algoma at an exercise price of $11.08 for a 10-year term, vesting proportionately as unsecured draws are made under each of the CEEFC and Ontario facilities.

These seven-year facilities strengthen Algoma’s balance sheet, providing enhanced financial flexibility as the Company advances its Electric Arc Furnace (“EAF”) transformation and pursues opportunities to strengthen and diversify its business.

“Completing this financing reinforces our strong partnership with both levels of government and supports our ability to navigate current market conditions as we complete our EAF transition,” said Michael Garcia, Chief Executive Officer. “This support provides Algoma with long-term financial flexibility. We are grateful for the government’s confidence in Algoma’s future as a low-carbon steel producer.”

“Finalizing these facilities marks another key milestone in executing our financial strategy,” added Rajat Marwah, President and Chief Financial Officer. “In line with the previously announced terms, the new funding allows us to remain focused on operational efficiency, cash generation, and our plate-first commercial strategy.”

The Company expects to draw from the secured tranche first, providing immediate liquidity to support operations and near-term transformation milestones. These financings underscore the continued alignment between government and industry partners to enable a resilient, globally competitive Canadian steel sector that supports domestic supply chains and industrial decarbonization objectives.

Cautionary Statement Regarding Forward-Looking Statements

This news release contains “forward-looking information” under applicable Canadian securities legislation and “forward-looking statements” within the meaning of the U.S. Private Securities Litigation Reform Act of 1995 (collectively, “forward-looking statements”), including statements regarding the financing and its expected benefits, including the Company’s liquidity and long-term financial flexibility, Algoma’s future performance and position, Algoma’s transformation to modernize its plate mill and adopt EAF technology, and Algoma’s journey to become one of North America’s leading producers of green steel, deliver greater value, and offer North America the comfort of a secure steel supply and a sustainable future. These forward- looking statements generally are identified by the words “believe,” “project,” “expect,” “anticipate,” “estimate,” “intend,” “strategy,” “future,” “opportunity,” “plan,” “design,” “pipeline,” “may,” “should,” “will,” “would,” “will be,” “will continue,” “will likely result,” and similar expressions. Forward-looking statements are predictions, projections and other statements about future events that are based on current expectations and assumptions. Many factors could cause actual future events to differ materially from the forward-looking statements in this document. Readers should consider the risks and uncertainties set forth in the section entitled “Risk Factors” and “Cautionary Note Regarding Forward-Looking Information” in Algoma’s annual information form, filed by Algoma with the Ontario Securities Commission (the “OSC”) (available under the company’s SEDAR+ profile at www.sedar.com) and with the SEC (available at www.sec.gov) as part of its annual report on Form 40-F, as well as in Algoma’s quarterly and current reports filed with the OSC and SEC. Forward-looking statements speak only as of the date they are made. Readers are cautioned not to put undue reliance on forward-looking statements, and Algoma assumes no obligation and does not intend to update or revise these forward-looking statements, whether as a result of new information, future events, or otherwise.

About Algoma Steel Group Inc.

Based in Sault Ste. Marie, Ontario, Algoma is a leading Canadian producer of high-quality plate and sheet steel products, proudly supporting critical sectors including energy, defense, automotive, shipbuilding, and infrastructure. Guided by a purpose to build better lives and a greener future, Algoma is shaping the next generation of sustainable steelmaking in Canada.

With the transition to electric arc furnace (EAF) steelmaking and a modernized plate mill, Algoma is redefining how steel is made in Canada. Powered by Ontario’s clean electricity grid, this transformation represents one of the largest industrial decarbonization initiatives in North America and is expected to reduce carbon emissions by approximately 70% once fully transitioned. These advancements provide stability for continued investment in diversification projects aligned with Canada’s evolving needs.

This new chapter also introduces Volta™, the brand for all steel produced through Algoma’s EAF technology. Volta delivers the same trusted performance customers rely on, with significantly lower emissions—produced safely, sustainably, and proudly in Canada.

Building on more than a century of steelmaking expertise, Algoma continues to invest in its people, processes, and technologies to strengthen domestic supply chains and deliver responsible, Canadian-made steel that helps build a better tomorrow.

For more information, please contact:

Michael Moraca
Vice President - Corporate Development and Treasurer
Algoma Steel Group Inc.
Phone: 705.945.3300
E-mail: IR@algoma.com

FAQ

What exactly did Algoma announce on Nov 17, 2025 regarding ASTL financing?

Algoma completed a $500 million financing: $400M from CEEFC (incl. $80M secured) and $100M from Ontario (incl. $20M secured).

How many warrants did Algoma issue and what is the ASTL strike price?

Algoma issued 6.77 million common share purchase warrants exercisable at $11.08 per share for a 10-year term.

How will the Nov 17, 2025 financing affect Algoma's liquidity and EAF transition?

The company said the facilities strengthen the balance sheet and provide liquidity to support near-term EAF transformation milestones.

Which portions of the ASTL financing are secured and drawn first?

The financing includes secured tranches of $80M (CEEFC) and $20M (Ontario); the company expects to draw the secured tranche first for immediate liquidity.

Do the ASTL warrants vest immediately and when do they vest?

Warrants vest proportionately as unsecured draws are made under each government facility, not all at closing.