Algoma Central buys out partner’s stake in Seaway Marine Transport

Canada’s Algoma Central Corporation is to acquire from Upper Lakes Group Inc.(ULG) its partnership interest in Seaway Marine Transport and the vessels and assets owned by ULG and its affiliates and used by SMT in its Great Lakes -St. Lawrence Waterway dry-bulk freight business.

Under the terms of the transaction, Algoma will acquire eleven vessels currently owned by ULG, consisting of four gearless and seven self-unloading bulk freighters. Algoma will also acquire ULG’s interest in two gearless and two self-unloading bulk freighters that are now owned jointly by Algoma and ULG as well as ULG’s interest in a self-unloader currently under construction at Chengxi Shipyard in China, which is expected to arrive in Canada in July, 2011.

The purchase price under the transaction is $85,000,000 and the transaction is expected to close by the end of March, 2011, subject to customary closing conditions including receipt of all required regulatory approvals.

On December 21, 2010, Algoma announced the signing of an agreement for the purchase of four new maximum St. Lawrence Seaway-sized dry-bulk lake freighters from Nantong Mingde Shipyard in China (“NMD”). The order includes one gearless bulk freighter and three self-unloading vessels. Now, Algoma will acquire a second gearless bulk freighter currently on order by ULG from NMD.  This gearless bulk carrier purchase brings to five the total number of “Equinox Class” lakers ordered by Algoma from NMD. These vessels will be joined in SMT with an additional two new Equinox Class gearless bulk carriers to be purchased by the Canadian Wheat Board (see earlier story)..

“We are extremely pleased to have been able to reach this historic agreement with our longstanding partner, ULG and to welcome the shipboard personnel of the acquired vessels to the Algoma family,” said Greg Wight, President and Chief Executive Officer of Algoma. “Combined with the recent announcement of our significant investment in state of the art new Equinox Class lake freighters, the acquisition of the ULG fleet and the remaining interest in SMT will allow Algoma to enhance its focus on its domestic dry•bulk marine transportation segment and the very important task of fleet renewal. New Equinox Class vessels will provide much needed improvements in operating efficiency and environmental performance. Fleet renewal will allow us to continue our leadership position in domestic dry-bulk transportation and maintain Canadian jobs in this essential sector.”

March 1, 2011