Algoma Steel files preliminary prospectuses and enters into commitment agreement for revolving credit facility.

SAULT STE. MARIE, Ontario--(BUSINESS WIRE)--MAY 24, 1995--Algoma Steel Inc. (TSE:ALG) announced today that it has filed preliminary prospectuses for public offerings of Common Shares in Canada and the United States and First Mortgage Notes in the United States and that it has entered into a commitment agreement for a new revolving credit facility.

The Common Share offering is targeted to raise approximately Cdn. $150 million for Algoma. In addition, up to two million shares will be offered by Algoma's existing employee shareholders. Canadian and U.S. syndicates have been established to manage the Common Share offering.

The Canadian syndicate will be managed by Richardson Greenshields of Canada Limited and Nesbitt Burns Inc. and will also include RBC Dominion Securities Inc., Wood Gundy Inc., Gordon Capital Corporation, ScotiaMcLeod Inc., Midland Walwyn Capital Inc., Toronto Dominion Securities Inc., Levesque Beaubien Geoffrion Inc. and Salomon Brothers Canada Inc. The U.S. equity syndicate will be managed by Salomon Brothers Inc. and BT Securities Corporation.

The First Mortgage Notes to be offered in the United States are expected to aggregate U.S. $275 million with a ten year term and to be secured by a first charge over substantially all of Algoma's fixed assets including Algoma's proposed net thin slab caster and hot strip mill facility. The Note offering will be managed by BT Securities Corporation and Salomon Brothers Inc.

Both public offerings will be marketed during the month of June and are expected to close contemporaneously in early July.

Algoma has also accepted a commitment from BT Bank of Canada, Royal Bank of Canada and Bank of America Canada for the provision of a Cdn. $250 million, five year revolving credit facility that will replace Algoma's existing revolving credit facilities. Execution of definitive documentation for this facility is expected to occur concurrently with completion of the public offerings.

The net proceeds realized by Algoma from the Common Share and Note offerings are expected to be used to settle the previously announced exchange of the Preferred Shares of Algoma's subsidiary, Algoma Finance Corp., and to fund a portion of Algoma's previously announced strategic capital expenditure program.

A registration statement relating to these securities has been filed with the Securities Exchange Commission but has not yet become effective. These securities may not be sold nor may offers to buy be accepted prior to the time the registration statement becomes effective.

This communication shall not constitute an offer to sell or the solicitation of an offer to buy nor shall there be any sale of these securities in any state in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such state.

Written prospectuses for the offerings of Common Shares and First Mortgage Notes in the United States will be available from BT Securities Corporation and Salomon Brothers Inc.

The written prospectus for the offering of Common Shares in Canada will be available from the members of the Canadian syndicate described above.

Algoma Steel Inc., based in Sault Ste. Marie, Ontario, is Canada's third largest integrated steel producer. Revenues are derived primarily from the manufacture and sale of rolled steel products, including hot and cold rolled sheet and plate, seamless tubular products and structural products. Algoma's Common Shares and the Preferred Shares of its subsidiary, Algoma Finance Corp., trade on The Toronto Stock Exchange under the symbols ALG and AFC.PR.A., respectively.

CONTACT: Jim Garner, [phone]