Algoma Steel obtains $200 million revolver

By Sara Rosenberg

New York, Sept. 3 - Algoma Steel Inc. closed on a new $200 million secured revolver due Sept. 3, 2007. Bank of America led the four-bank syndicate.

The revolver carries an interest rate of Prime plus 175 basis points for the next six months, approximately 75 basis points lower than the existing facility.

Furthermore, the company is not subject to any financial covenants unless unused availability falls below $50 million.

Security for the loan is inventory and receivables.

Proceeds will be used for general corporate purposes.

This new loan replaces the company's existing $180 million credit facility that was set to expire in December 2003.

"We appreciate the confidence that our banking syndicate has shown in the future of Algoma. This is another important step in creating shareholder value and stability by reducing the risk profile of Algoma," said Denis Turcotte, president and chief executive officer, in a news release.

"A number of actions have been undertaken in 2003 to strengthen Algoma's longer-term competitive and financial position. In addition to this new banking facility, the workforce has been reduced by 450 people (600 planned reduction by year-end), the blast furnace reline has been deferred until 2008, and working capital was reduced substantially through the first half of the year."

Algoma is a Sault Ste. Marie, Ont. integrated steel producer.

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