NEWS RELEASE

ESSAR STEEL ALGOMA

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Essar Steel Algoma Moves for Purchase Offer Approval

SAULT STE. MARIE – Essar Steel Algoma Inc. (“Essar Steel Algoma” or the “Company”) announced today that it has entered into an asset purchase agreement (“APA”) for the sale of substantially all of the Company’s assets to a consortium of bidders formed by KPS Capital Partners, LP (“KPS”) and the Company’s prepetition term lenders.

The Company is serving a motion today with the Ontario Superior Court of Justice seeking approval of the APA.

KPS is a leading private equity firm in the manufacturing sector, with a track record for transforming businesses into vibrant independent companies.

The consortium bid includes cash consideration, a credit bid equivalent to the term loan, and the assumption of certain liabilities.

In addition to the court approval process, closing the transaction is subject to a number of conditions relating to employee and benefit matters including pension plans and collective agreements, capital projects, and environmental matters. The transaction is also subject to customary regulatory approvals.

“We are pleased that we have reached this point in the CCAA process and look forward to exiting. The new company formed by the consortium will securely position New Algoma with a capital structure to sustain all phases of the steel cycle," said Kalyan Ghosh, President and CEO of Essar Steel Algoma. “We are also well within the timeline set out in our restructuring plan.”

Upon court approval of the sale, the parties will work to satisfy the conditions as set out in the Asset Purchase Agreement. The transaction is slated to close on or before August 31, 2016. In the interim it remains business as usual at Essar Steel Algoma.

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