Algoma Steel Secures C$500 Million Liquidity Support from Governments of Canada and Ontario
Rhea-AI Summary
Algoma Steel (NASDAQ: ASTL) has secured C$500 million in liquidity support from Canadian governments, including C$400 million from the federal government and C$100 million from Ontario. The financing comes as a response to challenging market conditions caused by 50% U.S. tariffs on Canadian steel.
The seven-year facilities include a C$100 million third lien secured tranche and a C$400 million unsecured tranche with warrant issuance. Interest rates start at CORRA + 200 bps for three years, increasing by 200 bps annually thereafter. The company will issue 6.77 million warrants at C$11.08 per share with a 10-year term.
In response to market conditions, Algoma will exit blast furnace and coke oven operations while accelerating its transition to Electric Arc Furnace steelmaking, with expected project costs of C$987 million. The company will focus on plate and select coil products primarily for the Canadian market.
Positive
- Secured C$500 million in government liquidity support to maintain operations
- Strategic transition to more efficient Electric Arc Furnace steelmaking
- Focus on high-demand domestic Canadian market products
- Government backing demonstrates confidence in company's critical role in Canadian industrial base
Negative
- U.S. market effectively closed due to 50% tariffs on Canadian steel
- Forced exit from blast furnace and coke oven operations
- EAF project costs increased to C$987 million
- Restrictions on capital distributions under new loan facilities
News Market Reaction
On the day this news was published, ASTL gained 3.54%, reflecting a moderate positive market reaction. Argus tracked a peak move of +9.9% during that session. Argus tracked a trough of -17.1% from its starting point during tracking. Our momentum scanner triggered 61 alerts that day, indicating high trading interest and price volatility. This price movement added approximately $16M to the company's valuation, bringing the market cap to $477M at that time. Trading volume was above average at 1.7x the daily average, suggesting increased trading activity.
Data tracked by StockTitan Argus on the day of publication.
SAULT STE. MARIE, Ontario, Sept. 29, 2025 (GLOBE NEWSWIRE) -- Algoma Steel Group Inc. (“Algoma” or the “Company”) (NASDAQ: ASTL; TSX: ASTL) today announced the execution of binding term sheets to secure C
Today, the Honourable Patty Hajdu, Minister of Jobs and Families and Minister responsible for the Federal Economic Development Agency for Northern Ontario, on behalf of the Honourable François-Philippe Champagne, Minister of Finance and National Revenue, alongside Will Bouma, Parliamentary Assistant to the Minister of Northern Economic Development and Growth for Ontario, and Bill Rosenberg, Member of Provincial Parliament for Algoma—Manitoulin, will join Algoma CEO, Michael Garcia, and CFO, Rajat Marwah, along with senior management team members and workers at the plant for the announcement.
“On behalf of Algoma, I would like to thank Prime Minister Carney, Premier Ford and their governments for their steadfast support of our Company and the Canadian steel industry,” said Mr. Garcia. “The ongoing imposition of a
Loan Facilities
The Facilities will be provided proportionately by the federal and provincial governments as follows:
- C
$100 million – Third lien secured tranche, ranking junior to Algoma’s existing first lien revolving facility and second lien secured notes; and - C
$400 million – Unsecured tranche, subject to the issuance of 6.77 million common share purchase warrants, with each warrant being exercisable for one common share of Algoma at an exercise price of C$11.08 for a 10-year term, vesting proportionately as unsecured draws are made.
The Facilities will have a seven-year term, with interest at CORRA + 200 bps for three years, stepping up by 200 bps each year thereafter.
The exercise price of the warrants is equivalent to the volume-weighted average trading price of Algoma’s common shares on the TSX from the completion of its going-public transaction in October 2021 through November 1, 2024, which was prior to the U.S. Administration’s announcement of its intention to impose new tariffs on Canadian steel. The warrants align the governmental support for Algoma with the Company’s long-term value creation strategy and its ongoing transformation and long-term growth trajectory.
The Facilities will include customary positive and negative covenants, including a restriction on capital distributions. Algoma’s access to the Facilities is subject to several conditions, including the completion of definitive loan documentation and the receipt of all necessary approvals under the Company’s first lien revolving facility.
Operational Adjustments in Response to Market Conditions
Alongside securing this financing, Algoma is adjusting production to better align with prevailing demand and market dynamics. The continuation of Section 232 tariffs has effectively closed the U.S. market to Canadian steel, undermining Algoma’s cross-border business model and requiring the Company to focus on products with reliable domestic demand.
The tariffs have made continued operation of the Company’s blast furnace and coke ovens unsustainable. Accordingly, Algoma will begin to exit these primary operations as it accelerates its transition to Electric Arc Furnace (“EAF”) steelmaking. The Company now expects that the final aggregate cost of completion of the EAF project will be approximately C
- supply Canadian industries with high-quality as-rolled and heat-treated plate;
- provide stability for continued investment in diversification projects aligned with Canada’s evolving needs; and
- reinforce Algoma’s role in supporting Canada’s infrastructure, manufacturing, defense, and nation-building priorities.
“The government’s financial support underscores their recognition of Algoma’s critical role in Canada’s industrial base, and demonstrates their willingness to provide direct support for our Company through this transition,” said Mr. Garcia.
“By combining essential liquidity with targeted support for our transition to EAF steelmaking, this support allows us to move forward with confidence — aligning operations with market realities, advancing the EAF strategy, and safeguarding Algoma’s future,” said Mr. Marwah.
About Algoma Steel Group Inc.
Based in Sault Ste. Marie, Ontario, Canada, Algoma is a fully integrated producer of hot and cold rolled steel products including sheet and plate. Driven by a purpose to build better lives and a greener future, Algoma is positioned to deliver responsive, customer-driven product solutions to applications in the automotive, construction, energy, defense, and manufacturing sectors. Algoma is a key supplier of steel products to customers in North America and is the only producer of discrete plate products in Canada. Its state-of-the-art Direct Strip Production Complex (“DSPC”) is one of the lowest-cost producers of hot rolled sheet steel (“HRC”) in North America.
Algoma is on a transformation journey, modernizing its plate mill and adopting electric arc technology that builds on the strong principles of recycling and environmental stewardship to significantly lower carbon emissions. Today Algoma is investing in its people and processes, working safely, as a team to become one of North America's leading producers of green steel.
As a founding industry in their community, Algoma is drawing on the best of its rich steelmaking tradition to deliver greater value, offering North America the comfort of a secure steel supply and a sustainable future.
Forward-Looking Statements
This news release contains “forward-looking statements” under applicable Canadian securities laws and “forward-looking information” within the meaning of the U.S. Private Securities Litigation Reform Act of 1995. Forward-looking statements relate to future events or future performance and reflect the Company’s current expectations and assumptions. Forward-looking statements can often be identified by words such as “anticipate,” “expect,” “intend,” “plan,” “believe,” “seek,” “estimate,” “target,” “project,” “may,” “should,” “will,” “forecast,” “outlook,” “potential,” or other similar expressions. In particular, this release contains forward-looking information regarding the anticipated government financing, including its size, structure, terms, and the expected impact on Algoma’s financial position, operations, and strategic initiatives, the anticipated continued and future impacts of U.S. tariffs on Algoma, completion and cost of Algoma’s EAF project, the anticipated impact of Algoma’s operating adjustments, the anticipated impact of Algoma’s EAF project, resulting reduction in carbon emissions following completion of the EAF project, Algoma’s future as a leading producer of green steel, transformation journey, ability to deliver greater and long-term value, and Algoma’s ability to offer North America a secure steel supply and a sustainable future, and investment in its people, and processes.
These forward-looking statements are subject to a number of known and unknown risks, uncertainties, and assumptions that could cause actual results or events to differ materially from current expectations. Such risks and uncertainties include, but are not limited to, the Company’s ability to enter into definitive documentation on the terms described or at all; the Company’s ability to meet the conditions precedent to funding; potential changes in government policy; general economic and market conditions; ongoing trade actions and tariffs; the risks described in Algoma’s filings with the U.S. Securities and Exchange Commission and Canadian securities regulators; and other factors not currently contemplated, including those that may be beyond the Company’s control.
Readers are cautioned not to place undue reliance on forward-looking statements. Algoma undertakes no obligation to update or revise any forward-looking statements, whether as a result of new information, future events, or otherwise, except as required by applicable law.
For more information, please contact:
Communications contact:
Laura Devoni
Vice President - Human Resources and Corporate Affairs
Phone: 705.255.1202
E-mail: communications@algoma.com
Investor contact:
Michael Moraca
Vice President - Corporate Development and Treasurer
Phone: 705.945.3300
E-mail: IR@algoma.com
FAQ
What is the total amount of financial support Algoma Steel (ASTL) received from Canadian governments?
How will the U.S. tariffs impact Algoma Steel's operations?
What are the terms of Algoma Steel's new government loan facilities?
How much will Algoma Steel's Electric Arc Furnace (EAF) project cost?
What products will Algoma Steel focus on after its operational adjustments?
