Essar Steel Algoma sets roadshow for $625 million two-part offering of secured notes

By Paul A. Harris

Portland, Ore., Oct. 20 – Essar Steel Algoma Inc. plans to start a roadshow on Tuesday for a $625 million offering of secured notes in two tranches, according to a market source.

The Rule 144A and Regulation S for life deal includes $350 million of five-year senior secured notes (Ba3/B+), which come with two years of call protection, and $275 million of seven-year junior secured notes (B3/B-), which come with three years of call protection.

Deutsche Bank Securities Inc. is the left bookrunner. Goldman Sachs & Co. and Jefferies LLC are the joint bookrunners. Imperial Capital and Canaccord are the co-managers.

The notes in both tranches feature 40% equity clawbacks during the non-call periods and 101% poison puts.

The notes are expected to price in the middle part of the Oct. 27 week, in conjunction with the concurrent $350 million term loan.

The Sault Ste. Marie, Ont.-based manufacturer of hot and cold rolled steel products plans to use the proceeds to refinance debt and for general corporate purposes.

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