Date Closed

June 5, 2018

Lead Office

Toronto

Value

114.00 Million CAD

On June 5, 2018, Stelco Inc. ("Stelco") announced that it has completed the C$114 million acquisition of lands beneficially owned by Legacy Lands Limited Partnership (the "Land Vehicle") on which Stelco conducts its operations in Hamilton (approximately 760 acres) and Nanticoke, Ontario (approximately 2300 acres) (collectively, the "Lands"). The purchase will be financed with a 25-year, 8% per annum mortgage note issued to the Land Vehicle, and the quarterly note payments will be distributed by the Land Vehicle to fund various pension and other post-employment benefit commitments ("OPEBs") for Stelco retirees.

Pursuant to the Land acquisition, existing lease arrangements between Stelco and the Land Vehicle were terminated and the associated rental payments have been cancelled. In addition, Stelco has entered into an amended OPEB funding agreement that reduced Stelco's exposure to future variable funding requirements (including future excess free cash flow contributions) and provided the independent employee life and health trusts established as part of Stelco's CCAA reorganization, with a fixed funding commitment by Stelco.

The Land acquisition will provide Stelco the flexibility to utilize the Lands for its existing operations and the ability to grow its core business. The amended OPEB funding agreement will offer cost savings to Stelco, and directly benefit its retirees and employees.

Stelco is a steel company based in Hamilton, Ont., and is a significant economic player for the City of Hamilton and the Canadian steel industry. Stelco emerged from CCAA proceedings in June 2017, and was purchased by Bedrock Industries, a private equity firm focused on owning and operating metals, mining and natural resources assets and companies.

McCarthy Tétrault LLP advised Stelco with a team led by James Gage that included Trevor Courtis (Bankruptcy and Restructuring), Tzen-Yi Goh, Isabel Henkelman, and Christine Wong (Real Property and Planning).