Jan. 10, 2006 — Algoma Steel Inc. announced that the Ontario Superior Court of Justice has rejected Paulson & Co.’s application to change the date for the Algoma shareholder meeting to consider the resolutions requisitioned by U.S.-based hedge-fund Paulson. The date of the meeting remains March 22.
Algoma's Board initially called the shareholders' meeting for March 22 in response to Paulson's requisition. Paulson is seeking to replace the majority of Algoma's Board of Directors and have a new board consider substantial distributions of Algoma's capital.
The Algoma Board chose March 22 for the meeting to allow time for Algoma to seek a ruling from the Canadian Revenue Agency clarifying the tax consequences to Algoma and its shareholders in the novel structure proposed by Paulson. Paulson had asked the Ontario Court to rule that the meeting be held February 22.
Ben Duster, Chairman of Algoma's Board of Directors, stated, "We are pleased that Algoma's shareholders will be able to vote on Paulson's proposals with the necessary information. Aside from the general issue as to the impact on Algoma and its prospects of the significant cash distribution Paulson has proposed during an uncertain time in the steel industry, there is a particular risk in implementing a novel tax restructuring without clarity on the tax consequences for Algoma and its shareholders. The Court's ruling helps ensure that Algoma's shareholders will have the information they reasonably require to form a reasoned judgment on the business to be considered at the requisitioned meeting."
Mr. Duster also stated, "Since Algoma emerged from creditor protection in January 2002, its Board and management have been focused on shareholder value and have delivered results. We have stated several times that this Board is mindful of our obligation to shareholders to maximize value, and we have acted on that obligation. In addition to the ongoing optimization of the existing operation, since February 2005, we have been actively exploring a number of opportunities, including possible mergers, a sale of the company, and other business combinations. We are continuing our efforts in this regard."
Algoma also noted that shipments had been higher than expected in the fourth quarter at 582,000 tons. This compares to guidance of 540,000 to 550,000 tons as provided in the third quarter conference call. The increase reflects strong demand conditions and higher production levels, including a monthly and quarterly record on the Direct Strip Production Complex (DSPC). Production on the DSPC was 167,600 tons in November, which compares to the previous monthly record of 153,500 tons. Production was 465,000 tons for the quarter, exceeding the previous record of 427,000 tons realized in the fourth quarter of 2004.
Algoma also announced that redemption of the 11% Notes was completed on January 3, 2006 with a cash outlay of approximately $153 million ($132 million U.S.).
Algoma Steel is an integrated steel producer based in Sault Ste. Marie, Ont. Revenues are derived primarily from the manufacture and sale of rolled steel products including hot and cold rolled steel and plate.