Canadian steelmaker Stelco Inc (TSX: STLC) said a syndicate of underwriters has agreed to buy up to 9.2 million of the company’s common shares from selling shareholders.
The secondary offering is expected to generate more than $208 million in proceeds, including the greenshoe option.
As part of the deal, U.S. private equity firm Bedrock Industries Group, Stelco’s majority investor, will distribute a portion of its interest to affiliates of Lindsay Goldberg, a Bedrock partner.
Following the offering’s close, Bedrock’s stake in the company will be reduced to about 63.1 percent.
Hamilton, Ontario-based Stelco went public last year, raising $230 million.
Stelco Holdings Inc. Announces Pricing of Secondary Equity Offering
HAMILTON, ON, Sept. 5, 2018 /CNW/ – Stelco Holdings Inc. (“Stelco” or the “Company”) (TSX: STLC) announced today that, in connection with the secondary equity offering announced September 4, 2018, a syndicate of underwriters led by Goldman Sachs Canada Inc. and BMO Capital Markets, as lead joint bookrunners, and including Credit Suisse Securities (Canada), Inc., J.P. Morgan Securities Canada Inc., and Morgan Stanley Canada Limited, as joint bookrunners, and National Bank Financial Inc. and Oppenheimer & Co. Inc., as co-managers (collectively, the “Underwriters”) have agreed to buy 8,000,000 common shares of the Company (the “Common Shares”) from LG Bedrock Holdings LP (“Lindsay Goldberg”) and Foundation Industries Group LLC (“DC LLC”, and collectively with Lindsay Goldberg, the “Selling Shareholders”) at a price of $22.65 per Common Share for aggregate gross proceeds of $181,200,000 to the Selling Shareholders (the “Offering”).
The Selling Shareholders have granted the Underwriters an option, exercisable at the same price for a period of 30 days following the closing of the Offering, to purchase up to an additional 1,200,000 Common Shares to cover over-allotments, if any, and for consequent market stabilization purposes, for additional gross proceeds of up to $27,180,000 to the Selling Shareholders. The Offering is expected to close on or about September 18, 2018 and is subject to certain conditions, including receipt of all necessary regulatory approvals.
Bedrock Industries B.V. (“Bedrock”) currently holds 65,283,887 Common Shares, representing 73.5% of the issued and outstanding Common Shares. Neither of the Selling Shareholders currently have a direct interest in any Common Shares. Prior to the closing of the Offering, Bedrock and its affiliates will complete a series of distributions in kind that will result in the transfer of the Offered Shares to the Selling Shareholders. No later than immediately prior to the closing of the Offering, the Selling Shareholders will hold all of the Offered Shares such that Lindsay Goldberg will hold 7,750,307 Common Shares, representing approximately 8.7% of the issued and outstanding Common Shares, and DC LLC will hold 249,693 Common Shares, representing approximately 0.3% of the issued and outstanding Common Shares. Following the closing of the Offering (assuming no exercise of the over-allotment option), Bedrock will hold 57,283,887 Common Shares, representing approximately 64.5% of the issued and outstanding Common Shares. The net proceeds of the Offering will be paid directly to the Selling Shareholders. The Company will not receive any proceeds from the Offering. Alan Kestenbaum, the Executive Chairman and CEO of the Company, is not a Selling Shareholder and will not receive any proceeds from the Offering.
Stelco will shortly file an amended and restated preliminary short form prospectus with the securities commissions in each of the provinces and territories of Canada, to reflect the terms of the Offering.
The Common Shares will be offered in each of the provinces and territories of Canada pursuant to the Company’s amended and restated preliminary short form prospectus. The amended and restated preliminary short form prospectus is still subject to completion or amendment. There will not be any sale or any acceptance of an offer to buy the Common Shares until a receipt for the final short form prospectus has been issued. The Common Shares may also be offered by way of private placement in the United States, and subject to applicable law, jurisdictions outside of Canada.
The securities offered have not been registered under the U.S. Securities Act of 1933, as amended, and may not be offered or sold in the United States absent registration or an applicable exemption from the registration requirements. This press release shall not constitute an offer to sell or the solicitation of an offer to buy nor shall there be any sale of the securities in any jurisdiction in which such offer, solicitation or sale would be unlawful.
Stelco is a low cost, integrated and independent steelmaker with one of the newest and most technologically advanced integrated steelmaking facilities in North America. Stelco produces flat-rolled value-added steels, including premium-quality coated, cold-rolled and hot-rolled steel products. With first-rate gauge, crown, and shape control, as well as reliable uniformity of mechanical properties, our steel products are supplied to customers in the construction, automotive and energy industries across Canada and the United States as well as to a variety of steel services centres, which are regional distributers of steel products.
For further information: For investor enquiries: Don Newman, Chief Financial Officer, 905.528.2511, firstname.lastname@example.org; For media enquiries: Trevor Harris, Vice-President, Corporate Affairs, 905.577.4447, email@example.com