Algoma Steel (ASTL) - 2021 Q4 - Annual Report

Explanatory Note This section details the consummation of the business combination between Algoma Steel Group Inc. and Legato Merger Corp. on October 19, 2021, resulting in approximately US$306 million in proceeds for Algoma - On October 19, 2021, Algoma Steel Group Inc. completed its merger with Legato Merger Corp., with Legato surviving as a wholly-owned subsidiary of Algoma before being dissolved[10][13] - A concurrent PIPE investment raised approximately $100 million from the sale of 10,000,000 shares at $10.00 per share[13] - The combined transactions, after redemptions and expenses, provided approximately US$306 million in proceeds to Algoma[13] - Algoma's Common Shares and Warrants are listed on Nasdaq under symbols "ASTL" and "ASTLW" and on the TSX under "ASTL" and "ASTL.WT"[14] Cautionary Note Regarding Forward-Looking Statements This section warns investors that the report contains forward-looking statements subject to numerous risks and uncertainties, including those related to the merger, steel prices, and the EAF transformation - The report includes forward-looking statements concerning business plans, financial performance, and the effects of the recent merger[15] - Key risks highlighted include failure to realize merger benefits, volatility in steel prices, competition from low-priced imports, and challenges in the planned transformation to EAF steelmaking[16][17] - The company's ability to secure Green Steel Funding, source scrap metal, and manage under-funded pension plans are also cited as significant uncertainties[16][17] - Investors are cautioned not to place undue reliance on these statements, which are subject to risks detailed in the "Risk Factors" section of the Proxy Statement/Prospectus[18] PART I This section provides comprehensive information on the company's corporate structure, key financial data, and public listing details Identity of Directors, Senior Management and Advisers This section identifies the company's leadership and external advisers following the merger, including new board appointments and legal and auditing firms - On October 21, 2021, Mary Anne Bueschkens, Gale Rubenstein, and James Gouin were appointed as new directors to the board[21] - The company's legal advisers are Goodmans LLP and Lawson Lundell LLP for Canadian law, and Paul, Weiss, Rifkind, Wharton & Garrison LLP for U.S. securities law[26] - Deloitte LLP serves as the company's independent registered public accounting firm for the fiscal years ended March 31, 2019, 2020, and 2021[27] Key Information This section provides key financial data and risk factor information, presenting a pro forma combined consolidated capitalization table as of June 30, 2021 Pro Forma Combined Consolidated Capitalization (as of June 30, 2021) | Category | Amount (C$ in millions) | | :--- | :--- | | Cash and cash equivalents | $ 410.1 | | Total indebtedness | 1,760.7 | | Total equity | 324.8 | | Total capitalization | $ 2,085.5 | - Selected historical financial data and risk factors related to the business are not detailed here but are incorporated by reference from the company's Proxy Statement/Prospectus[29][32] Information on the Company This section outlines Algoma's corporate history, business, and structure, confirming its status as a 'foreign private issuer' under SEC regulations - The company is a 'foreign private issuer' and is exempt from certain SEC rules, such as proxy statement regulations and Section 16 'short-swing' profit recovery provisions[34] Organizational Structure | Name | Country of Incorporation | Percentage Ownership | | :--- | :--- | :--- | | Algoma Steel Holdings Inc. | Canada | 100% | | Algoma Steel Intermediate Holdings Inc. | Canada | 100% | | Algoma Steel Inc. | Canada | 100% | | Algoma Docks GP Inc. | Canada | 100% | | Algoma Steel USA Inc. | United States | 100% | | Algoma Docks Limited Partnership | Canada | 100% | - Detailed information on the company's history, business overview, and property is incorporated by reference from the Proxy Statement/Prospectus[33][36][39] Major Shareholders and Related Party Transactions This section details the beneficial ownership of Algoma's common shares as of October 19, 2021, identifying four major shareholders owning more than 5% of the company - Beneficial ownership is based on 112,074,095 Algoma Common Shares outstanding as of October 19, 2021[49] Major Shareholders (5% Holders) | Name of Beneficial Owner | Percentage of Algoma Common Shares | | :--- | :--- | | Bain Capital LP | 12.7% | | Barclays Bank PLC | 10.3% | | Contrarian Capital Management, L.L.C. | 5.4% | | GoldenTree Asset Management LP | 5.1% | - Ownership for key directors and officers includes Michael McQuade (CEO) at 1.1%, Brian Pratt (Director) at 3.6%, Eric S. Rosenfeld (Director) at 1.9%, and David D. Sgro (Director) at 1.1%[52] Financial Information This section states that the company's consolidated financial statements are provided in Item 18 and confirms no material legal proceedings are currently underway - The company's audited consolidated financial statements are incorporated by reference and can be found in Item 18[56] - Algoma is not currently involved in any material legal proceedings[57] The Offer and Listing This section provides details on the public trading of Algoma's securities, including dual listings on Nasdaq and TSX, and warrant exercise terms - Algoma Common Shares and Warrants are dual-listed on the Nasdaq and the Toronto Stock Exchange (TSX)[60][61] - There are 24,179,000 Algoma Warrants outstanding, exercisable 30 days after the merger (November 18, 2021) at an exercise price of $11.50 per share[63] - The company must maintain compliance with Nasdaq listing requirements, including having at least 400 round lot holders for common shares, to avoid delisting[60][64] Additional Information This section covers various corporate and legal matters, including share authorization, Canadian exchange controls, and the company's dividend policy - The company is authorized to issue an unlimited number of common shares and preferred shares, without par value[67] - Algoma has not paid any dividends and has not established a dividend policy, with future payments at the discretion of the board[72] - There are no Canadian laws or regulations restricting the export or import of capital or the remittance of dividends to non-resident shareholders, apart from withholding tax requirements[70] PART II This section of the report is marked as not applicable - Part II of the Form 20-F is not applicable to this filing[78] PART III This section contains the company's financial statements and a comprehensive list of exhibits filed with the report Financial Statements This section serves as the repository for the company's financial statements, incorporating audited consolidated statements and attaching unaudited pro forma statements - The audited consolidated financial statements of Algoma Steel Group Inc. are incorporated by reference to pages F-2 to F-44 of the Proxy Statement/Prospectus filed on September 20, 2021[79] - Unaudited pro forma condensed combined consolidated financial statements for Algoma and Legato Merger Corp. are attached as Exhibit 15.1[79] Exhibits This section lists the exhibits filed with or incorporated by reference into the Form 20-F report, including key corporate and financial documents - Key exhibits include the Agreement and Plan of Merger (4.1), Investor Rights Agreement (4.2), and the Algoma Steel Group Inc. Omnibus Incentive Equity Plan (4.8)[80] - Financial documents filed as exhibits include the Unaudited Pro Forma Condensed Combined Financial Statements (15.1) and consents from auditors Deloitte LLP (15.2) and WithumSmith+Brown, PC (15.3)[80]