Lakeside Steel aims to price C$7.5 million private placement of shares

Offering conducted through Northern Securities and Northern Financial

By Devika Patel

Knoxville, Tenn., Nov. 30 - Lakeside Steel Inc. announced it will raise C$7.5 million through a private placement of stock. The deal will be conducted by lead agent Northern Securities Inc. and Northern Financial Corp.

The company will sell common shares at a price to be determined in the context of the market.

Proceeds will be used to complete the Alabama and Corpus Christi thermal treatment and end finishing facilities and to ramp up production. The company now has higher working capital requirements as a result of its recent losses and increased wait times at third party processors.

The company also has negotiated a $22.5 million term debt facility with Romspen Investment Corp. The facility has a 15% coupon and a one-year term. Romspen will also receive warrants for 10% of Lakeside Steel's outstanding shares. The three-year warrants will have an exercise price that will be equal to a 20% premium above the price per share of the placement.

Proceeds from the debt facility will repay a $7.5 million term loan.

Settlement of both deals is expected Dec. 23.

"The term debt facility and private placement will provide the company with the remaining capital it requires to complete the construction phase of its U.S. facilities," president and chief operating officer Ron Bedard said in a press release.

"This additional capital will allow the company to complete its vertical integration strategy and provide its customers with fully finished OCTG products."

Based in Welland, Ont., Lakeside Steel makes seamless and welded standard pipe, oil well casing and tubing, line pipe and cold drawn mechanical tubing.

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