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HAMILTON, ON, May 9 /CNW/ - Stelco Inc. (TSX: STE) announced today that it has completed a US$270 million (Cdn$297 million at closing) funded term loan refinancing with GE Corporate Lending Canada, which was arranged by GE Capital Markets, Inc. Significant market interest for the term loan allowed Stelco to increase the amount of the facility from the US dollar equivalent of Cdn$275 million, as previously announced on April 9, 2007, to US$270 million. The new facility refinances Stelco's Cdn$375 million revolving term loan with a more traditional facility that has significantly lower interest rates and fees. The new facility has a six year term and bears interest at a floating rate equal to a US base rate + 1 % or LIBOR + 3.5%, depending on the nature of the loan instrument incurred. The new term loan is secured by a first priority interest in the fixed assets of Stelco and a second priority interest on the working capital assets. The term loan includes typical covenants, as well as a financial covenant based on achieving a minimum EBITDA threshold for Stelco's Lake Erie Steel business. Subject to certain conditions, the new term loan is prepayable, in part or in whole, at any time without penalty. Stelco paid an underwriting fee in connection with the refinancing.
As previously announced, by completing this refinancing prior to May 11, 2007, Stelco was not required to pay the $11.25 million annual fee otherwise payable under the refinanced facility.
"We are very pleased with the confidence that our lenders have shown in Stelco. The completion of the second phase of our debt refinancing positions us well for the future and we will continue to pursue opportunities to enhance our capital structure," said Rodney Mott, President and Chief Executive Officer.
About Stelco
Stelco is one of Canada's largest steel companies. It is focused on its two Ontario-based integrated steel businesses located in Hamilton and in Nanticoke. These operations produce high quality value-added hot rolled, cold rolled, coated sheet and bar products. To learn more about Stelco and its businesses, please refer to our Web site at www.stelco.com.
About GE Corporate Lending
With $14 billion in assets, GE Corporate Lending is one of North America's largest providers of asset-based, cash flow, structured finance and other financial solutions for mid-size and large companies.
CAUTION REGARDING FORWARD-LOOKING INFORMATION
This press release contains "forward-looking information" that is based on Stelco's expectations, estimates and projections as of the date of this press release or as of the date which such information is identified to be given. This forward-looking information includes, among other things, factors relating to the business, financial position, operations and prospects of Stelco, including the anticipated benefits of Stelco's new loan arrangements. Often, but not always, forward-looking information can be identified by the use of words and phrases such as "plans", "expects" or "does not expect", "is expected", "budget", "scheduled", "estimates", "forecasts", "intends", "anticipates" or "does not anticipate", or "believes", or variations of such words and phrases or states that certain actions, events or results "may", "could", "would", "might" or "will" be taken, occur or be achieved. Forward-looking information involves known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of Stelco to be materially different from any future results, performance or achievements expressed or implied by the forward-looking information. Actual results, performance and achievements may differ, and may differ materially, from those expressed or implied by the forward-looking information contained herein. Such forward-looking information is based on a number of assumptions which may prove to be incorrect, including the continued satisfaction of covenants and other requirements in Stelco's new loan arrangements. While Stelco anticipates that subsequent events and developments may cause Stelco's views to change, Stelco specifically disclaims any obligation to update this forward-looking information. This forward-looking information should not be relied upon as representing Stelco's views as of any date subsequent to the date of this press release.
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