Stelco Holdings Inc.

January 24, 2022

Decision

Multilateral Instrument 11-102 Passport System and National Policy 11-203 Process for Exemptive Relief Applications in Multiple Jurisdictions -- Exemption from the extension take up requirements in subsection 2.32(4) of National Instrument 62-104 Take-Over Bids and Issuer Bids -- an issuer conducting an issuer bid by way of a modified Dutch auction procedure -- issuer may wish to extend the bid if it is undersubscribed and the market price of the shares at the time is not greater than the range of proposed prices under the bid -- requires relief from the requirement not to extend its issuer bid if all terms and conditions are met unless the issuer first takes up all securities validly deposited and not withdrawn under the issuer bid as all tenders need to be known in order to calculate the purchase price per share -- requested relief granted, subject to conditions.

Applicable Legislative Provisions

National Instrument 62-104 Take-Over Bids and Issuer Bids, ss. 2.32(4) and 6.1.

January 24, 2022

IN THE MATTER OF THE SECURITIES LEGISLATION OF ONTARIO (the "Jurisdiction") AND IN THE MATTER OF THE PROCESS FOR EXEMPTIVE RELIEF APPLICATIONS IN MULTIPLE JURISDICTIONS AND IN THE MATTER OF STELCO HOLDINGS INC. (the "Filer")

DECISION

Background

The principal regulator in the Jurisdiction has received an application from the Filer for a decision under the securities legislation of the Jurisdiction of the principal regulator (the "Legislation") that, in connection with the proposed purchase by the Filer of a portion of its issued and outstanding common shares (the "Shares") pursuant to an issuer bid commenced on December 22, 2021 (the "Offer"), the Filer be exempt from the requirement set out in subsection 2.32(4) of National Instrument 62-104 Take-Over Bids and Issuer Bids ("NI 62-104") that the Offer not be extended if all the terms and conditions of the Offer have been complied with or waived, unless the Filer first takes up all Shares deposited under the Offer and not withdrawn (the "Exemption Sought").

Under the Process for Exemptive Relief Applications in Multiple Jurisdictions (for a passport application):

(a) the Ontario Securities Commission is the principal regulator for this application; and

(b) the Filer has provided notice that subsection 4.7(1) of Multilateral Instrument 11-102 Passport System ("MI 11-102") is intended to be relied upon in British Columbia, Alberta, Saskatchewan, Manitoba, Québec, Nova Scotia, New Brunswick, Newfoundland and Labrador, Prince Edward Island, the Northwest Territories, Nunavut, and the Yukon Territory.

Interpretation

Terms defined in National Instrument 14-101 Definitions and MI 11-102 have the same meaning if used in this decision, unless otherwise defined.

Representations

This decision is based on the following facts represented by the Filer:

1. The Filer is a corporation validly existing under the Canada Business Corporations Act and is in good standing.

2. The head office of the Filer is located at 386 Wilcox Street, Hamilton, Ontario L8L 8K5.

3. The Filer is a reporting issuer in each of the provinces and territories of Canada and the Shares are listed for trading on the Toronto Stock Exchange (the "TSX") under the symbol "STLC". The Filer is not in default of any requirement of the securities legislation in any of the jurisdictions in which it is a reporting issuer.

4. The Filer's authorized share capital consists of (i) an unlimited number of Shares and (ii) an unlimited number of preference shares, issuable in series. As of close of business on December 20, 2021, there were 77,315,265 Shares issued and outstanding and no preference shares issued and outstanding.

5. On December 20, 2021, the last full trading day prior to the date the Filer announced its intention to make the Offer, the closing price of the Shares on the TSX was $37.68 per Share. Based on such closing price, the Shares had an aggregate market value of approximately $2,913,239,186.

6. On December 22, 2021, the Filer commenced the Offer. The issuer bid circular dated December 21, 2021 prepared and sent by the Filer in connection with the Offer (the "Circular") specifies that the Filer proposes to purchase, by way of a modified "Dutch auction" procedure in the manner described therein and below, up to $250,000,000 of the issued and outstanding Shares at a purchase price of not less than $31.00 and not more than $37.00 per Share (the "Price Range of Shares").

7. Pursuant to subsection 2.8(b) of NI 62-104, the Filer also made the Offer to each holder of convertible securities that, before the expiry of the deposit period of the Offer, are convertible into Shares. Such convertible securities may, at the option of the holder, be converted for Shares in accordance with the terms of such convertible securities prior to the expiry of the deposit period of the Offer. Shares issued upon the conversion of the convertible securities may be tendered to the Offer in accordance with the terms of the Offer.

8. The Filer will fund the purchase of Shares pursuant to the Offer, together with all related fees and expenses of the Offer, from available cash on hand.

9. Holders of Shares (collectively, the "Shareholders") wishing to tender to the Offer will be able to do so:

(a) by making auction tenders pursuant to which they agree to sell a specified number of Shares (subject to proration) to the Filer at a specified price per Share (an "Auction Price") within the Price Range of Shares in increments of $0.25 per Share (each, an "Auction Tender"); and/or

(b) by making purchase price tenders in which the tendering Shareholders do not specify a price per Share, but rather agree to have a specified number of Shares (subject to proration) purchased at the Purchase Price per Share (as defined below) to be determined by the Auction Tenders (each, a "Purchase Price Tender").

10. Shareholders may make both Auction Tenders and Purchase Price Tenders, but not in respect of the same Shares. Shareholders may also make multiple Auction Tenders at different Auction Prices but not in respect of the same Shares (i.e., Shareholders may tender different Shares at different prices, but cannot tender the same Shares at different prices) and must complete a separate letter of transmittal (and, if applicable, a notice of guaranteed delivery) for each Auction Price. Shareholders making Auction Tenders or Purchase Price Tenders may tender less than all of their Shares to the Offer.

11. Shareholders who tender Shares without making a valid Auction Tender or Purchase Price Tender will be deemed to have made a Purchase Price Tender.

12. Any Shareholder that owns fewer than 100 Shares (an "Odd-Lot Holder") and tenders all of their Shares pursuant to an Auction Tender at or below the Purchase Price or pursuant to a Purchase Price Tender, will be considered to have made an "Odd-Lot Tender".

13. The Filer will determine a single purchase price payable per Share (the "Purchase Price") by taking into account the number of Shares deposited pursuant to Auction Tenders and Purchase Price Tenders and the Auction Prices specified by Shareholders depositing Shares pursuant to Auction Tenders. For the purpose of determining the Purchase Price, Shares deposited pursuant to a Purchase Price Tender will be deemed to have been deposited at a price of $31.00 per Share (which is the minimum price per Share under the Offer). The Purchase Price will be the lowest price per Share that enables the Filer to purchase the maximum number of Shares validly deposited and not withdrawn pursuant to the Offer having an aggregate Purchase Price not to exceed $250,000,000.

14. If the aggregate Purchase Price for Shares validly deposited and not withdrawn pursuant to Auction Tenders at Auction Prices at or below the Purchase Price and Purchase Price Tenders would result in an aggregate Purchase Price in excess of $250,000,000, then such deposited Shares will be purchased as follows:

(a) first, the Filer will purchase all Shares tendered at or below the Purchase Price by Odd-Lot Holders at the Purchase Price; and

(b) second, the Filer will purchase Shares at the Purchase Price on a pro rata basis according to the number of Shares deposited or deemed to be deposited at a price equal to or less than the Purchase Price by the depositing Shareholders, less the number of Shares purchased from Odd-Lot Holders. All Auction Tenders and Purchase Price Tenders will be subject to adjustment to avoid the purchase of fractional Shares.

15. All Shares purchased by the Filer pursuant to the Offer (including Shares tendered at Auction Prices below the Purchase Price) will be purchased at the Purchase Price and payable in cash. All payments to Shareholders will be subject to deduction of applicable withholding taxes.

16. Shares validly deposited by a Shareholder pursuant to an Auction Tender will not be purchased by the Filer pursuant to the Offer if the Auction Price per Share specified by the Shareholder is greater than the Purchase Price.

17. All Shares tendered to the Offer and not taken up will be returned to the appropriate Shareholders.

18. Assuming the Offer is fully subscribed:

(a) if the Purchase Price is determined to be $31.00, being the minimum Purchase Price under the Offer, the number of Shares that will be purchased by the Filer is 8,064,516, representing approximately 10.4% of the Filer's issued and outstanding Shares as at December 20, 2021; and

(b) if the Purchase Price is determined to be $37.00, being the maximum Purchase Price under the Offer, the number of Shares that will be purchased by the Filer is 6,756,756, representing approximately 8.7% of the Filer's issued and outstanding Shares as at December 20, 2021.

19. Shareholders who do not accept the Offer will continue to hold the same number of Shares held before the Offer and their proportionate Share ownership will increase following completion of the Offer, subject to the number of Shares purchased under the Offer.

20. As of December 21, 2021, to the knowledge of the Filer and its directors and officers, after reasonable inquiry, no director or officer of the Filer, no insider of the Filer, no associate or affiliate of the Filer or of an insider of the Filer, and no person or company acting jointly or in concert with the Filer has indicated any present intention to deposit any of such person's or company's Shares pursuant to the Offer.

21. The Offer is scheduled to expire at 11:59 p.m. (Toronto time) on January 26, 2022 (the "Expiration Date").

22. The Filer may wish to extend the Offer if all the terms and conditions of the Offer have been complied with or waived by the Filer by the Expiration Date but the aggregate Purchase Price for Shares validly tendered pursuant to Auction Tenders and Purchase Price Tenders is less than $250,000,000.

23. The Filer will not extend the Offer if, at the time the decision to extend the Offer is made or implemented, the market price of the Shares on the TSX is greater than any of the prices within the Price Range of Shares.

24. Pursuant to subsection 2.32(4) of NI 62-104, an issuer may not extend an issuer bid if all the terms and conditions of the issuer bid have been complied with or waived unless the issuer first takes up all the securities deposited and not withdrawn under the issuer bid.

25. As the determination of the Purchase Price requires that all Auction Prices and the number of Shares deposited pursuant to both Auction Tenders and Purchase Price Tenders be known and taken into account, the Filer will be unable to take up the Shares deposited and not withdrawn under the Offer as of the Expiration Date prior to extending the Offer because the Purchase Price will not and cannot be known as additional Auction Tenders and Purchase Price Tenders may be made during the extension period that will impact the calculation of the Purchase Price. Accordingly, the Exemption Sought is required in connection with an extension of the Offer to enable the Filer to make a final determination regarding the Purchase Price, taking into account all Shares tendered prior to the Expiration Date and those tendered during any extension period.

26. Shares deposited pursuant to the Offer, including those deposited prior to the Expiration Date, may be withdrawn by the Shareholder at any time during any extension period.

27. The Filer is relying on the exemption from the formal valuation requirements applicable to issuer bids under Multilateral Instrument 61-101 Protection of Minority Security Holders in Special Transactions ("MI 61-101") set out in subsection 3.4(b) of MI 61-101 (the "Liquid Market Exemption").

28. There was a "liquid market" for the Shares, as such term is defined in MI 61-101, at the time the Offer was made because:

(a) there is a published market for the Shares (i.e., the TSX);

(b) the requirements of the test set out in paragraph 1.2(1)(a) of MI 61-101 is satisfied (the "Liquid Market Test"); and

(c) the board of directors of the Filer obtained, on a voluntary basis, an opinion (the "Liquidity Opinion") from BMO Nesbitt Burns Inc., its dealer manager in connection with the Offer, that a liquid market for the Shares exists as of December 20, 2021, and that it is reasonable to conclude that, following the completion of the Offer, there will be a market for holders of the Shares who do not tender to the Offer that is not materially less liquid than the market that existed at the time of the making of the Offer. A copy of the Liquidity Opinion was included in the Circular.

29. Based on the maximum number of Shares that may be purchased under the Offer, the satisfaction of the Liquid Market Test, and the Liquidity Opinion, the board of directors of the Filer determined that it is reasonable to conclude that, following the completion of the Offer in accordance with its terms, there will be a market for holders of the Shares who do not tender to the Offer that is not materially less liquid than the market that existed at the time of the making of the Offer.

30. The board of directors of the Filer has determined that the Offer is in the best interests of the Filer and believes that the Offer is an advisable use of the Filer's financial resources given its ongoing cash requirements and borrowing costs.

31. The Circular:

(a) discloses the mechanics for the take-up of, and payment for, Shares as described herein;

(b) explains that, by tendering Shares at the lowest price in the Price Range of Shares under an Auction Tender or by making a Purchase Price Tender, a Shareholder can reasonably expect that the Shares so tendered will be purchased at the Purchase Price, subject to proration and other terms of the Offer as specified herein;

(c) discloses that the Filer has applied for the Exemption Sought;

(d) discloses the manner in which an extension of the Offer will be communicated to Shareholders;

(e) discloses that Shares deposited pursuant to the Offer may be withdrawn at any time prior to the expiry of the Offer;

(f) discloses the facts supporting the Filer's reliance on the Liquid Market Exemption, including the Liquidity Opinion; and

(g) includes the disclosure prescribed by applicable securities laws with respect to issuer bids.

Decision

The principal regulator is satisfied that the decision meets the test set out in the Legislation for the principal regulator to make the decision.

The decision of the principal regulator under the Legislation is that the Exemption Sought is granted provided that:

(a) the Filer takes up and pays for Shares deposited pursuant to the Offer and not withdrawn, in each case, in the manner described above and as set out in the Circular; and

(b) the Filer is eligible to rely on the Liquid Market Exemption.

"David Mendicino"

Manager, Office of Mergers & Acquisitions

Ontario Securities Commission