Attachment B: Please refer to additional notes and sources of information at the conclusion of this attachment

SITUATION REVIEW AND ASSESSMENT: Essar Algoma Steel Inc., the Restructuring Process Pursuant to Companies’ Creditors Arrangement Act (CCAA) and in the Context of the State of the & Canada/US Steel Sector – 2015 I. INTRODUCTION: The purpose of this document is to provide background information, specific details and context surrounding the ESAI’s CCAA proceedings, implications for the company by extension, the community. A request by the city counselor to provide this information in summary form was requested two weeks ago. At a time there was a series of involving activities related to the CCAA process that were evolving. Information associated CCAA is only current as of this date. Since is a process the information specifically referencing CCAA is only current as of the date of this document. II. BACKGROUND (1) : Essar Steel Algoma Inc. (ESAI) and a group of associated North American companies: o Essar Tech Algoma Inc.; o Essar Steel Algoma (Alberta) ULC; o Cannelton Iron Co.; and, o Essar Steel Algoma Inc. USA are in the CCAA proceedings as the ‘Applicants’. This is a group of indirectly held subsidiaries of Essar Global Fund Limited (the ‘Fundor or ‘EGFL’), an investment fund managed by its exclusive investment manager, Essar Capital Ltd. (‘ECL’). Algoma Holdings B.V. is a Dutch private limited liability company, not an operating company. Its sole asset is the shares of Algoma, which are located in certificated form at Algoma’s offices in Sault Ste. Marie, Ontario. Holdings is a guarantor of all of the Credit Facilities and not one of the Applicants. Algoma Steel Inc. was founded in 1901 as Algoma Steel located in Sault Ste. Marie Ontario. It is a fully integrated steel producer and it derives its revenues primarily from the manufacture and sale of hot and cold rolled steel products including sheet and plate. Essar Steel Holdings Limited acquired the company in June 2007, establishing Essar Steel Algoma Inc. (“ESAI” also referred to as “Algoma or the “Company” in this briefing) and the associated group of companies. Its products are sold to customers in the automotive, light manufacturing, construction, shipbuilding, energy, mining and steel distribution industries. The company has become Canada’s second largest fully integrated steel company and has been a leader in innovation, as one of the first North American plants to utilize the basic oxygen steelmaking process in the 1940’s, to developing state of the art production facilities such as the

Direct Strip Production Complex (“DSPC”) in the 1990’s. ESAI is one of three fully integrated steel mills in Canada that supports the domestic economy with primary steel production capacity. Steel manufacturing is critical to the health of the Canadian economy. II. A. Key Statistics: Operations:  

Algoma produced an average of 220,000 tons of steel per month, which amounts to approximately 2.5 million tons of steel per year. Algoma experienced a capacity utilization rate of approximately 85% during its 2015 fiscal year (prior to the termination of the Cliffs contract), as compared to the North American industry average of about 75%. (This superior capacity utilization is attributable to Algoma’s integrated operations and wide range of production machinery and equipment. ESAI is able to adjust its product mix between sheet and plate products depending on market conditions, allowing Algoma to optimize its product mix in different markets and based on different customer demands.)



Algoma’s costs of steel production can be approximately segmented as follows: Inputs

Percent of Cost of Production

Raw materials

62%

Employment costs

17%

Energy costs

9%

Other costs

12%

Economic Benefits: 

ESAI contributes $1.236 billion to Ontario's GDP.



ESAI contributes $7.3 Million annually in municipal taxes and $120 Million in direct local spending which supports approximately 670 local suppliers.



Supports 8,500 retired individuals with spending currently of $84.5 Million in annual pension payments and benefits.



According ESAI court documents submitted on November 9, approximately 54,000 people in Sault Ste. Marie (or 69% of the city’s total population of approximately 78,000) directly or indirectly depend on Essar Steel Algoma Inc. if affected household members and retirees were taken into consideration.

Employment: 

Second largest private sector employer in Northern Ontario and accounts for an additional approximately 4,800 jobs in the region (including indirect and induced)



Largest private-sector employer (2800 employees) in Sault Ste. Marie; with an estimated annual payroll of over $360M



The health of the local economy is intricately tied to ESAI as it employs approximately 7% of the region’s total workforce.



ESAI’s indirect employment of 9500 persons represents 29% of the Sault Ste. Marie workforce.

II.B. Essar Steel Algoma Inc. and CCAA The (ESAI related) Applicants announced on Monday, November 9, 2015 that they had sought protection under the Companies’ Creditors Arrangement Act (CCAA) before the Ontario Superior Court of Justice in order to strengthen its financial health and solidify ESAI’s long-term business prospects. ESAI secured a USD $200 million debtor in-possession (DIP) financing facility from a syndicate of lenders to provide adequate liquidity to operate while it restructures its debt. The Court has appointed Ernst & Young Inc. (a leading management consulting, business advisory and accounting firm) to act as Monitor(2). Evercore Group L.L.C., Weil Gotshal & Manges LLP and Stikeman Elliott LLP represent the company as financial advisor and outside US & Canadian legal counsel, respectively. II.B.1. ESAI Extenuating Circumstances leading to CCAA & Response The Cleveland Cliffs Iron Company, Cliffs Mining Company and Northshore Mining Company (collectively, “Cliffs”) announced late Tuesday, Oct. 6, 2015 that it was ending sales of (iron ore) taconite pellets to ESAI. Cliffs said in a news release that the decision to terminate the purchase agreement with ESAI “was made as a result of Essar Algoma's multiple and material breaches under the agreement.” It purported to terminate Algoma’s long- term iron ore pellet supply agreement (as amended, the “Cliffs Contract”) and immediately ceased delivering iron ore to Algoma. Iron ore is the principal input for the manufacture of steel. Cliffs’ actions have had a number of immediate significant detrimental effects on Algoma and Algoma’s stakeholders, including: 1. ESAI was been forced to reduce production, resulting in approximately 100 full time employees being laid off; 2. The reduced production resulted in a material decrease in Algoma’s revenues at a time that ESAI could least afford it; 3. ESAI was forced to seek supply of iron ore from alternative suppliers at a materially higher price than Algoma was entitled to purchase ore under the Cliffs Contract in order to continue producing at even a reduced level; and, 4. ESAI ‘s ability to build inventory in advance of winter and the freezing of the Great Lakes (Algoma’s principal method of receiving inventory) has been seriously compromised; Consequently, ESAI was forced to seek creditor protection on an emergency basis.

In addition to the issues caused by Cliffs’ purported termination of the Cliffs Contract and Cliffs’ refusal to supply iron ore, the Applicants face other significant financial issues, including: 1. Steel prices have continued to decrease to their lowest levels in six years resulting in reduced profit margins; 2. On October 8, 2015 and October 13, 2015, Standard & Poor’s and Moody’s (respectively) downgraded ESAI’s credit rating; 3. On October 15, 2015, ESAI breached a borrowing base covenant contained in its Term Loan. This resulted in an immediate Event of Default under the Term Loan and a crossdefault under its ABL (asset based lending agreement); 4. On November 16, 2015, mandatory interest payments on the Term Loan and the Senior Secured Notes (3) in the aggregate amount of approximately US$25 million come due. Algoma is unable to make these payments; 5. The public dispute with Cliffs and concerns about Algoma’s credit-worthiness have negatively impacted Algoma’s relationships with customers, suppliers and creditors; and 6. Algoma faces significant pension and other retiree and employment benefit obligations. As a result of Cliffs’ actions and the other financial issues that the Applicants are facing the Applicants are unable to meet their ongoing payment obligations. Despite significant efforts to do so, ESAI has been unable to successfully restructure its operations and capital structure outside of formal insolvency proceedings and is now insolvent. Without the protection of the CCAA and the other relief available thereunder, Algoma would be forced to shut-down operations, which would have been extremely detrimental to ESAI’s employees, suppliers, lenders, customers as well as the community, Province and Canada. CCAA protection will allow ESAI to obtain the necessary supply of inventory, stabilize operations, and give the Applicants the time required to consult with their stakeholders regarding a restructuring. The Applicants are also commencing ancillary insolvency proceedings (the “Chapter 15 Proceedings”) under Chapter 15 of Title 11 of the United States Code (the “Bankruptcy Code”) in the United States Bankruptcy Court for the District of Delaware (the “U.S. Court”). II.B.2. ESAI-CCAA: Restructuring Implications and Impacts: ESAI Financial Challenges and Responses Algoma has experienced a number of challenges over the past few years, which together have negatively impacted its financial performance. These challenges can be classified as operational, pension-related and financing-related. After significant efforts, including the Restructuring last year, Algoma believed it had resolved these issues. However, continuing adverse economic conditions and the actions of Cliffs threaten the continued viability of Algoma as a going concern. Currently ESAI and associated companies supported through $200 million DIP financing based on court approved allocations monitored by court-appointed monitor - E&Y. To date, the Applicants have received US$50 million of the total US$200 million available under the DIP

Facility, less certain fees and charges payable under the DIP Agreement. On November 16, 2016 the Applicants were approved by the Court to access to an additional US$75 million. Operations: Algoma has completed substantial improvements to its operations and cost structure over the past several years. Since 2007, Algoma has reduced its operating expenses by 30% and headcount expenses by 25%. Over the same period of time, employee productivity has increased by 21%. Furthermore, in Fiscal 2015, Algoma has achieved cost savings of $12 per ton of steel produced. Notwithstanding these significant efforts, Algoma’s financial performance remains volatile due principally to the decrease in the price of steel and, to a lesser extent, fluctuations in the pricing of its raw materials. As noted above, the price of steel is at a six year low. Iron ore makes up a significant component of Algoma’s cost of goods sold. Cliffs has historically been the exclusive supplier of iron ore pellets to Algoma, and until recently pricing under the Cliffs Contract has been significantly above the market price. As a result of the purported termination of the Cliffs Contract and Cliffs’ refusal to supply at anything approaching market prices, Algoma has been forced to scale back production. The decrease in production has had a negative impact on Algoma’s profitability and its ability to purchase additional supply and otherwise meet its obligations as they come due. Algoma has secured some alternative supply but it is at prices in excess of the price at which Algoma is entitled to purchase iron ore pellets under the Cliffs Contract, and the alternative supply is inadequate to meet all of Algoma’s needs until spring. Operational Impacts:  



 

Reduced production due to market conditions and the resulting reduction in revenues; Inability to stockpile sufficient all raw materials for the winter months due to Cliffs’ dispute, sourcing of iron or at a premium, and the associated costs of bringing in raw materials via rail instead of ship; If Algoma is unable to stockpile sufficient raw materials at its facility, it will be forced to idle and eventually shut down its steel-making and other equipment. In particular, the coke ovens that Algoma uses to transform coal into coke must be continuously fed with coal in order to maintain their internal temperature. If the interior of a coke oven falls below its optimal temperature range, the coke oven may suffer damage that could take several million dollars and several months’ time to repair. If a sufficient number of Algoma’s coke oven is shut down due to lack of coal, Algoma will have insufficient coke to operate its blast furnace, which must also be shut down. negatively impacted relationships with customers and suppliers due to insolvency and CCAA proceedings; limited financial capacity duty CCAA and limited DIP financing - will restrict operational capacity;

Pensions Algoma sponsors the Pension Plans, which cover approximately 8,630 current and former employees and their spouses. Due to, among other factors, the low interest rates prevailing since 2008, as at November 2012 Algoma was incurring pension obligations of approximately $2 million per month for current service cost and $6 million per month in special payments. As of August 1, 2012, the wind up deficit for the Defined Benefit Pension Plans was approximately $641 million. In response to the substantial financial obligations related to the Defined Benefit Pension Plans, in December 2012 Algoma sought and received emergency short-term pension relief from the Ontario Government to enable Algoma to negotiate a longer-term solution to its pension funding issues. Pursuant to Ontario Regulation 202/02 to the Ontario Pension Benefits Act, R.S.O. 1990, c. P.8 (the “Pension Regulation”) Algoma is permitted to fund the Defined Benefit Pension Plans based on a fixed schedule (special payment plan) through to March 31, 2017. Ontario and ESAI expected that any remaining deficit existing in the Defined Benefit Pension Plans as of April 2017 would have been be fully funded by no later than March 2024. The Applicants are now insolvent. They have negotiated DIP financing to fund the CCAA proceedings but were unable to obtain adequate financing to fund the special payments due to be paid to the Defined Benefit Pension Plans each month. Algoma will continue to make normal cost contributions. Consequently, the Applicants intend to return to Court to seek an order suspending special payments required for the Defined Benefit Pension Plans. According to documents submitted by ESAI, as of September 30, 2015 pension liabilities and associated benefits totaled approximately $750 million. Pensions represent a significant source of revenue for Sault Ste. Marie citizens and the economy overall Employees: Additional layoffs are expected. The number of layoffs is dependent on market will and the number of orders on the books. II.B.2. ESAI-CCAA: Restructuring Next Steps and Considerations:  February 1, 2016: Algoma required two develop and obtain Court Order approving a broad sale and investment solicitation (SISP) process seeking potential sales and investments in the Applicant. o Any purchase offer must have sufficient funds to repay all outstanding amounts including the VIP facilities secured loans satisfactory to the secured range young convert surely among the white banks are the weight of lenders  March 1, 2016, deadline to launch the SISP;  May 15, 2016, deadline for final offers under SISP, with no extensions beyond June 1st, 2016  August 31, 2016 closing of any sale transaction or implementation of any plan shall take place

II. Review of the Current State of North American Steel Industry II.A Introduction The follow is a summary of a presentation made by Mark Parker, Principal Partner, Metal Strategies and Professor of Marketing and International Business at Niagara University. The presentation was made two weeks ago at a conference on the Great lakes seaway attended Essar Ports and SSMEDC staff. It focuses on a number of critical issues: STEEL DEMAND INDICATORS ARE MIXED SURPLUS STEEL CAPACITY WORLDWIDE PROFITABILITY CONCERNS DOWNSIZING IN IRON ORE

   

The following are a series of chart that describe the current state of the industry: U.S APPARENT CONSUMPTION (MILLIONS TONS) 12,000 11,000 10,000 9,000 8,000 7,000 6,000

Time U.S. & CANADA STEEL – FINAL USER 2014 MARKET SHARE 6%

3%

13%

Construction 38%

Auto and related Energy Industrial Equip Non-energy pipe and tube

17%

Other

23%

Jul-15

Apr-15

Jan-15

Oct-14

Jul-14

Apr-14

Jan-14

Oct-13

Jul-13

Apr-13

Jan-13

Oct-12

Jul-12

Apr-12

Jan-12

Oct-11

Jul-11

Apr-11

Jan-11

Oct-10

Jul-10

Apr-10

Jan-10

5,000

FINAL USER CONSUMPTION GROWTH – 2015

2015 % Growth

20.0% 10.0% 0.0% -10.0% -20.0% -30.0% -40.0% -50.0% -60.0% Construction

Auto and related

Energy

Industrial Equip Non-energy pipe and tube

Other

PRICE OF HOT ROLLED STEEL SHEET ($/TON) $950 $850 $750 $650 $550 $450 $350

Time

DRIVERS OF DECLINING PRICES  WEAK DEMAND  IMPORT COMPETITION  SURPLUS CAPACITY WORLDWIDE o China operating at half its 1.2bn capacity Could, in theory, supply virtually all demand outside its borders

Oct-15

Jul-15

Apr-15

Jan-15

Oct-14

Jul-14

Apr-14

Jan-14

Oct-13

Jul-13

Apr-13

Jan-13

Oct-12

Jul-12

Apr-12

Jan-12

Oct-11

Jul-11

Apr-11

Jan-11

Oct-10

Jul-10

Apr-10

Jan-10

$250

TOP TEN GLOBAL STEEL PRODUCERS

RANK IN 2014 1 2 3 4 5 6 7 8 9 10



TONNAGE (MILLION)

COMPANY ArcelorMittal Nippon Steel/MI Hebei Steel Group Baosteel Group POSCO Shagang Group Ansteel Group Wuhan Steel Group JFE Steel Corporation Shougang Group

98.0 49.3 47.1 43.3 41.4 35.3 34.3 33.1 31.4 30.8

TOTAL OF 444m tonnes – 27% world production

PRICE OF SCRAP ($/TON) $550 $500 $450 $400 $350 $300 $250 $200 $150

Time

Oct-15

Jul-15

Apr-15

Jan-15

Oct-14

Jul-14

Apr-14

Jan-14

Oct-13

Jul-13

Apr-13

Jan-13

Oct-12

Jul-12

Apr-12

Jan-12

Oct-11

Jul-11

Apr-11

Jan-11

Oct-10

Jul-10

Apr-10

Jan-10

$100

CLIFF U.S. PELLET IRON ORE PRICE ($/GROSS TON) $130.00 $120.00 $110.00 $100.00 $90.00 $80.00 $70.00 $60.00 $50.00

Time

SPREAD METAL MARGIN ($/TON) $450 $400 $350 $300 $250 $200 $150 $100

Time

Oct-15

Jul-15

Apr-15

Jan-15

Oct-14

Jul-14

Apr-14

Jan-14

Oct-13

Jul-13

Apr-13

Jan-13

Oct-12

Jul-12

Apr-12

Jan-12

Oct-11

Jul-11

Apr-11

Jan-11

Oct-10

Jul-10

Apr-10

Jan-10

$50

US STEEL COMPANY EARNINGS

Steel Earnings ($ millions) 50

0

-50

-100

-150

-200

-250

-300

USX

Nucor

AK Steel

Q2 2014

US FINISHED CONSUMPTION (MILLIONS TONS) 146.0 126.0 106.0 86.0 66.0 46.0 26.0 6.0 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020

Years

CANADA FINISHED CONSUMPTION (MILLIONS TONS) 20.0 18.0 16.0 14.0 12.0 10.0 8.0 6.0 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020

Years NORTH AMERICAN IRON ORE CONSUMPTION (MILLIONS TONS) 80.0 75.0 70.0 65.0 60.0 55.0 50.0 45.0 40.0 35.0 30.0 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019

Years

IRON ORE DEVELOPMENTS  Cliffs Challenges o $7bn write down on 8m ton Bloom Lake Operation o Closure of 5m ton Wabush Operation o Cancellation of 10 Year Contract with Algoma  US Steel idles Keetac mine and pellet plant  4m ton start up Magnetation filed for bankruptcy  Canadian juniors not receiving financing

Notes: 1.

Affidavit of Rajat Marwah, CFO, ESAI (Sworn November 9, 2015) http://documentcentre.eycan.com/eycm_library/Essar%20Steel%20Algoma%20Inc/English/CCAA%20Proceedings/Mo tion%20Materials/001.%20Initial%20Hearing/Initial%20Application%20Record/Essar%20Steel%20Algoma%20Inc.%20( Re)%20-%20Unsworn%20Affidavit%20of%20Rajat%20Marwah.pdf

2.

The Monitor is usually an independent firm of accountants appointed by the Court. These accountants are normally insolvency specialists. The Monitor's role is to oversee the operations of the Debtor to ensure they are operating in compliance with the Court Orders and to report to the Court as and when required. The Monitor is also responsible for distributing and reviewing creditors' Proofs of Claims, forming an independent opinion on the provisions of the Plan and on the alternatives for the creditors (in the event the Plan is not approved by either the creditors or the Court) and chairing the meeting of creditors. However, as the Monitor is not managing or running the Debtor's operations. It is unable to provide any assurance as to whether the debtor has sufficient funds to meet all its post-filing debts.

3.

Senior Secured Notes: A debt security, or bond, that takes precedence over other unsecured notes and must be repaid in the event of bankruptcy.

4.

All of the Applicants are indirectly-held subsidiaries of Essar Global Fund Limited (the “Fund”).

Attachment C: Please refer to additional notes and sources of information at the conclusion of this attachment

Current Status of the Community and Government Response I. Introduction The purpose of this section is to provide some a context and propose a course of action with associated outcomes that will support the community and region in its response this ESAI/CCAA situation. Please refer to table a for a summary of his action plan. I.B. Background Essar Steel Algoma Inc: Locally elected members of federal and provincial parliament, the City, Sault Ste. Marie Economic Development Corporation, federal and provincial regional development agencies and other government departments have been aware of and have been monitoring the ESAI’s operational and financial situation for a number of years and have had regular engagement with the Company. A number of initiatives have been undertaken leading up to the current CCAA situation to support the company with its financial challenges, including assistance in helping it manage its pension & tax obligations, capital expansion/modernization plans and financial restructuring efforts. This has enabled the stakeholders to better equipped to consider the prepared for a range of contingencies. As has been mentioned in Attachment A, the Province of Ontario with the support of the company and its employees had made arrangements to enable the company to better address its approximately $600,000 unfunded pension liability. More recently, the City of Sault Ste. Marie, the Canada through Industry Canada-FedNor and the province through the Northern Ontario Heritage Fund Corp. NOHFC supported the Essar in $5.3 million joint effort to design and development of the Port of Algoma, to reduce operating costs and to provide transportation infrastructure supporting the diversification of regional economy. The City of Sault Ste. Marie has provided accommodations for Port of Algoma staff and SSMEDC staff work very closely with Essar ports staff on a daily basis to develop, promote the competitive benefits of this port facility. And in July 2015, the governments of Ontario and Canada provided $60 million in funding support for a major $240 million modernization and expansion program to make ESAI more competitive and sustainable in a tough global steel market. This federal and provincial support came at a time when ESAI was completing a financial restructuring process and the market forecast for far more positive. In spite of the current CCAA process, both the federal and provincial governments remain positive and hopeful. The following is current federal and provincial messaging regarding ESAI:

 

 

On November 9, 2015, Essar Steel Algoma filed for protection under the Companies’ Creditors Arrangement Act (CCAA). Essar Steel Algoma is a key part of Ontario’s steel and manufacturing sectors as well as an important employer and contributor to the economies of Sault Ste. Marie and Northern Ontario. The steel industry is currently challenged with tremendous overcapacity, slowing demand, falling prices and intense competition. We are hopeful that the company and creditors can reach a positive resolution to the restructuring that provides the best outcome for employees, retirees, suppliers, customers and all affected parties.

II. Current Status City and SSMEDC officials met prior to the ESAI CCAA announcement in anticipation of it. On date representatives from ESAI, the City, SSMEDC, a select group of provincial and federal organizations met to develop a better understanding of ESAI’s situation, CCAA implications and how best to approach the situation. In follow-up, the SSMEDC established an informal “ESAI/CCAA Community Response Team” on behalf of the community to commence the process of developing a strategy and response to offset and mitigate the impacts associated with the restructuring of the largest private-sector company in the community and the second-largest in Northern Ontario. The response team includes representation from local not-for-profit economic development and employment organizations, the City of Sault Ste. Marie, MNDM/NOHFC FedNor, Sault Ste. Marie Chamber of Commerce. Table A: Name Mike Ward Don McConnell Helen Mulc Christine Kucher Jane Karhi Tracey Forsyth Pam McRae Linda Ryan Jonathan Coulman Monica Dale Shelley Barich Judy Montague Dan Friyia

Title Advisor, Mayor's Office Planning Director Assistant Deputy Minister Northern Development Officer Manager, Programs and Strategic Initiatives Community Economic Development Officer FedNor Initiatives Officer Director Executive Director President General Manager Service Delivery Manager Executive Director

Tom Vair Tom Dodds Dan Hollingsworth

Executive Director CEO Executive Director

Organization City of Sault Ste. Marie City of Sault Ste. Marie MNDM MNDM FedNor FedNor FedNor Employment Solutions Algoma Workforce Investment Corp. SSM Chamber of Commerce SSM Chamber of Commerce MTCU Communty Development Corp. of SSM and Area SSMIC SSMEDC SSMEDC

ESAI/CCAA Community Response Team (‘Response Team’) Action Plan The community response team is meeting on Friday, November 26, 2015 to discuss a number of matters in response to the situation with a view to supporting the community, region, employees and the industry. The Response Team will be considering a framework that will include short, medium and longterm actions and outcomes, targeting the following areas: The the the yeah sweetie thanks  Affected Employees (e.g. workers who may be laid off either temporarily and permanently) including for example support in the following areas: o E.I: expediting the process o Access to employment programs and services o Training and transition support o Canada-Ontario Job Grant (the Job Grant) o One-on-one job search service o Job matching, placement and incentives o Employer services  Organizations including small and medium-size businesses (SME) who may be Unsecured Creditors and significantly affected by ESAI’s CCAA action including for example support in the following areas*: o To enhance and expand business retention and expansion (BRIE) efforts currently undertaken and coordinated by the SSMEDC through additional outreach and engagement of local SMEs; o To enhance current efforts to identify and develop local business development opportunities, promoting them areas outside of the region province and country to attract investment, and promote new partnerships, joint ventures and business relationships; o To undertake a CDC/SSMEDC Business Planning initiative focused on:  An proposed conditional grant incentive program to encourage SMEs in Sault Ste. Marie and area:  to explore and develop new markets products and services that will diversify their operations and sources of revenue;  to develop and expand there exportable goods and services two new markets outside the region and country; and,  to be entrepreneurial, creative and innovative in the development and commercialization of ideas o Municipal tax relief, interest penalty deferral; o Meet with local financial institutions to identify and assess options to assist affected SMEs with existing or outstanding debt loads associated with ESAI/CCAA * Note: The SSMEDC has been in discussions with AWIC and BDO to undertake an assessment of the extent of the impact of ESAI’s CCAA action on local SMB unsecured creditors.



Employee and Retiree Pensions that may be affected by the restructuring process and the fact the company has at the time of announcing CCAA, an unfunded pension liability, including for example support in the following areas; o support and promote efforts to protect steel plant employees and retirees pensions, to insure that they are un affected by the restructuring process and are protected in the eventual CCAA Plan of Arrangement;



Enhanced Community Economic and Business Development and Diversification Efforts to facilitate the transition and respond to impacts resulting from the restructuring of on of Northern Ontario’s major private-sector employer at a time when the community and region face high unemployment, and the transition of its lottery and gaming sector as a result of Ontario's lottery and gaming modernization plan; o Expedite and support the development and implementation of a community – based strategic economic development plan led by the Sault Ste. Marie Corporation (see attached);



Promoting the strategic importance of integrated steel production capacity in Canada and Ontario, identifying and addressing the current challenges faced by this sector in partnership with business and trade associations, labor, provincial and federal governments and other affected steel based manufacturing communities to advocate on behalf of the industry, affected secondary sectors and manufacturers as well affected regions, communities on the development appropriate sustainability strategies for this industry. o Develop an action plan designed to engage key stakeholders

Please find attached a summary of actions and outcomes to be discussed.