Filed by Algoma Steel Group Inc.
Pursuant to Rule 425 under the Securities Act of 1933
and deemed filed pursuant to Rule 14a-12
under the Securities Exchange Act of 1934
Form F-4 File No.: 333-257732
Subject Company: Legato Merger Corp.
(Commission File No. 001-39906)
MEDIA RELEASE
August 19, 2021
Algoma Steel Inc. Announces Strong First Quarter
Results;
Parent Company Expected to Become Public in 2021
SAULT STE. MARIE, ONTARIO (August 19, 2021)
– Today Algoma Steel Inc. (the “Company”) reported strong first quarter results for the fiscal quarter ended June 30,
2021, setting the stage for its parent company, Algoma Steel Group Inc. (“Algoma”) to become a public company later in 2021.
Unless otherwise specified, all amounts are in Canadian dollars.
In the first quarter of fiscal 2022, the Company
earned a net income of $214 million, up from $114 million in the prior quarter and a $43 million loss in Q1 fiscal 2021.
The Company’s strong financial performance
is primarily attributable to an improvement in shipment volume, strong steel demand and improved selling prices.
Shipments for the first quarter increased by
47% to 610,000 tons, compared to 416,000 tons in Q1 fiscal 2021, culminating in steel revenue of $765 million, up 124% from $423 million
in the first quarter of fiscal 2021 and from $633 million in the prior year quarter.
The strong demand and realized pricing, as
well as the Company’s focus on cost containment, contributed to $281 million of Adjusted EBITDA for the first quarter, up from $167
million in the prior quarter and $21 million in Q1 fiscal 2021. As described below, Adjusted EBITDA is a non-GAAP/IFRS measure of profitability
that management uses as an indicator of the operational health of the business.
The Company’s Chief Executive Officer
Michael McQuade remarked on the Company’s first quarter performance, “We believe that our ongoing focus on keeping our employees
safe and developing a culture of continuous improvement, coupled with a steady stream of strategic investments in our operating facilities,
improves our position across the steel cycle. The extended strength we see in the steel market positions us favorably for our pending
return to public markets. In addition, last month’s announcement of the Government of Canada’s anticipated $420 million in
support for our proposed transition to electric arc furnace (“EAF”) technology, together with up to US$306 million of new
equity capital that may be provided by our merger with Legato Merger Corp. (“Legato”, NASDAQ: LEGO, LEGOU, LEGOW), is expected
to make our sustainability transformation possible.”
Algoma
Steel Inc. |
105 West Street, Sault Ste. Marie,
ON, Canada P6A 7B4 | T:
705-945-2351 F: 705-945-2203 | algoma.com
YOUR
PARTNER IN STEEL. SINCE 1901
Cautionary Information About Forward-Looking
Statements
This news release contains
forward-looking statements within the meaning of applicable securities legislation. These forward-looking statements generally are identified
by the words “believe,” “project,” “expect,” “anticipate,” “estimate,” “intend,”
“strategy,” “future,” “opportunity,” “plan,” “pipeline,” “may,”
“should,” “will,” “would,” “will be,” “will continue,” “will likely
result,” and similar expressions. Forward-looking statements are predictions, projections and other statements about future events
that are based on current expectations and assumptions. Many factors could cause actual future events to differ materially from the forward-looking
statements in this document, including but not limited to: the risk that the anticipated benefits of the Government of Canada’s
funding, which is subject to the negotiation of definitive documentation, will fail to materialize as planned or at all; the risk that
the benefits of the proposed merger with Legato (the “transaction”), including the amount of proceeds provided thereby, may
not be realized; the risk that the transaction may not be completed in a timely manner or at all; the failure to satisfy the conditions
to the consummation of the transaction, including the failure of Legato’s stockholders to approve and adopt the merger agreement
or the failure of Legato to satisfy the minimum cash condition following redemptions by its stockholders; the inability to complete the
concurrent private placement in connection with the transaction; the occurrence of any event, change or other circumstance that could
give rise to the termination of the merger agreement; the outcome of any legal proceedings that may be initiated following announcement
of the transaction; the effect of the announcement or pendency of the transaction on Algoma’s business relationships, operating
results and business generally; risks that the proposed transaction could disrupt current plans and operations of Algoma; the risks associated
with the steel industry generally; the ability of Algoma to implement and realize its business plans, including Algoma’s ability
to transform to EAF steelmaking; the risk of downturns and a changing regulatory landscape in Algoma’s highly competitive and cyclical
industry; and changes in general economic conditions, including as a result of the COVID-19 pandemic. The foregoing list of factors is
not exhaustive and readers should also consider the other risks and uncertainties set forth in the section entitled “Risk Factors”
and “Cautionary Note Regarding Forward-Looking Statements” in Legato’s final prospectus dated January 19, 2021 relating
to its initial public offering (the “Legato Final Prospectus”) and in subsequent filings with the Securities and Exchange
Commission (the “SEC”), including the amended proxy statement/prospectus described below, filed by Algoma and Legato in connection
with the transaction. Forward-looking statements speak only as of the date they are made. Readers are cautioned not to put undue reliance
on forward-looking statements, and Algoma and Legato assume no obligation and do not intend to update or revise these forward-looking
statements, whether as a result of new information, future events, or otherwise.
Additional Information
and Where to Find It
This news release is
not a proxy statement or solicitation of a proxy, consent or authorization with respect to any securities or in respect of the transaction
and does not constitute an offer to sell, buy or exchange or the solicitation of an offer to sell, buy or exchange any securities or the
solicitation of any vote or approval in any jurisdiction, nor shall there be any sale, purchase, or exchange of securities or solicitation
of any vote or approval in any jurisdiction in contravention of applicable law.
In connection with the proposed transaction between Algoma and Legato, Algoma
has filed with the SEC a registration statement on Form F-4 which includes its prospectus as well as Legato’s preliminary proxy
statement (as amended, the “Preliminary Proxy Statement/Prospectus”). Legato plans to mail the definitive Proxy Statement/Prospectus
to its stockholders in connection with the transaction once available. INVESTORS AND SECURITYHOLDERS OF LEGATO ARE URGED TO READ THE PROXY
STATEMENT/PROSPECTUS AND OTHER RELEVANT DOCUMENTS FILED OR TO BE FILED WITH THE SEC CAREFULLY WHEN THEY BECOME AVAILABLE BECAUSE THEY
WILL CONTAIN IMPORTANT
Algoma
Steel Inc. |
105 West Street, Sault Ste. Marie,
ON, Canada P6A 7B4 | T:
705-945-2351 F: 705-945-2203 | algoma.com
YOUR
PARTNER IN STEEL. SINCE 1901
INFORMATION ABOUT ALGOMA,
LEGATO, THE TRANSACTION AND RELATED MATTERS. Investors and security holders will be able to obtain free copies of the Preliminary Proxy
Statement/Prospectus and other documents filed with the SEC by Algoma and Legato through the website maintained by the SEC at www.sec.gov.
In addition, investors and securityholders may obtain free copies of the documents filed with the SEC on Legato’s website at https://legatomerger.com
or by directing a written request to Legato at 777 Third Avenue, 37th Floor, New York, NY 10017 or by contacting Algoma by email to brenda.stenta@algoma.com.
Participants in
the Solicitation
Legato, Algoma and
certain of their respective directors, executive officers and employees may be considered to be participants in the solicitation of proxies
in connection with the transaction. Information regarding the persons who may, under the rules of the SEC, be deemed participants in the
solicitation of the stockholders of Legato in connection with the transaction, including a description of their respective direct or indirect
interests, by security holdings or otherwise, will be included in the Proxy Statement/Prospectus described above. Additional information
regarding Legato’s directors and executive officers can also be found in the Legato Final Prospectus. These documents are available
free of charge as described above.
Presentation of Financial Information
The Company’s financial statements have
been prepared in accordance with International Financial Reporting Standards as issued by the International Accounting Standards Board
(“IFRS”). IFRS differs in certain material respects from U.S. generally accepted accounting principles (“U.S. GAAP”).
As such, the Company’s financial statements are not comparable to the financial statements of U.S. companies prepared in accordance
with U.S. GAAP.
Non-IFRS Financial
Measures
Adjusted EBITDA refers to net (loss) income
before amortization of property, plant, equipment and amortization of intangible assets, finance costs, interest on pension and other
post-employment benefit obligations, income taxes, restructuring costs, impairment reserve, foreign exchange loss (gain), finance income,
carbon tax, share based compensation related to performance share units and business combination adjustments. Adjusted EBITDA is not
intended to represent cash flow from operations, as defined by IFRS, and should not be considered as an alternative to net earnings,
cash flow from operations, or any other measure of performance prescribed by IFRS. Adjusted EBITDA may not be comparable to Adjusted
EBITDA as defined and used by other companies. We consider Adjusted EBITDA to be a meaningful measure that can be useful in measuring
our operating performance and our ability to expand our business and provide management and investors with additional information for
comparison of our operating results across different time periods.
About Algoma Steel Inc.
Based
in Sault Ste. Marie, Ontario, Canada, Algoma is a fully integrated producer of hot and cold rolled steel products including sheet and
plate. With a current raw steel production capacity of an estimated 2.8 million tons per year, Algoma’s size and diverse capabilities
enable it to deliver responsive, customer-driven product solutions straight from the ladle to direct applications in the automotive,
construction, energy, defense, and
Algoma
Steel Inc. |
105 West Street, Sault Ste. Marie,
ON, Canada P6A 7B4 | T:
705-945-2351 F: 705-945-2203 | algoma.com
YOUR
PARTNER IN STEEL. SINCE 1901
manufacturing sectors. Algoma is a key supplier
of steel products to customers in Canada and Midwest USA and is the only producer of plate steel products in Canada. The Company’s
mill is one of the lowest cost producers of hot rolled sheet steel (HRC) in North America owing in part to its state-of-the-art Direct
Strip Production Complex (“DSPC”), which is the newest thin slab caster in North America with direct coupling to a basic oxygen
furnace (BOF) melt shop.
Algoma has achieved several meaningful improvements
over the last several years that are expected to result in enhanced long-term profitability for the business. Algoma has upgraded its
DSPC facility and recently installed its No. 2 Ladle Metallurgy Furnace. Additionally, the Company has cost cutting initiatives underway
and is in the process of modernizing its plate mill facilities.
Today Algoma is returning to its roots as
a customer-focused, entrepreneurial company with the courage and growing capability to meet the industry’s challenges head-on. It
is investing in its people and processes, optimizing and modernizing so that it might continue to be your partner in steel.
For more information, please contact:
Brenda Stenta
Manager Communications & Branding
Algoma Steel Inc.
Phone: +1.705.206.1022
E-mail: brenda.stenta@algoma.com
Algoma
Steel Inc. |
105 West Street, Sault Ste. Marie,
ON, Canada P6A 7B4 | T:
705-945-2351 F: 705-945-2203 | algoma.com
YOUR
PARTNER IN STEEL. SINCE 1901
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