Stelco — Regulatory Filings 2021

Aug 19, 2021

FORM 51-102F3

Material Change Report

Item 1 Name and Address of Company

Stelco Holdings Inc. (“ Stelco ” or the “ Company ”) 386 Wilcox Street Hamilton, Ontario L8L 8K5

Item 2 Date of Material Change

August 13, 2021.

Item 3 News Release

News releases relating to the material change were disseminated through the facilities of Cision on August 13, 2021 and were subsequently filed on the System for Electronic Document Analysis and Retrieval (“ SEDAR ”).

Item 4 Summary of Material Change

On August 13, 2021, Stelco repurchased 11,398,024 common shares (“ Common Shares ”) in the capital of the Company (the “ Share Repurchase Transaction ”) from LG Bedrock Holdings LP (“ LG Bedrock ” or the “ Selling Shareholder ”) at a price of $34.93 per common share, for gross proceeds to the Selling Shareholder of approximately $398 million. As a result of the Share Repurchase Transaction, the Selling Shareholder’s ownership in the Company was reduced from 19,052,235 Common Shares to 7,654,211 Common Shares (representing a decrease from approximately 21.5% to approximately 9.9% of the issued and outstanding Common Shares after giving effect to the Share Repurchase Transaction). Upon completion of the Share Repurchase Transaction, the 11,398,024 Common Shares repurchased by the Company were cancelled.

Item 5 Full Description of Material Change

5.1- Full Description of Material Change

Overview

On August 13, 2021, Stelco and the Selling Shareholder entered into a definitive share purchase agreement (the “ Share Purchase Agreement ”) setting forth the terms of the Share Repurchase Transaction. The Share Repurchase Transaction was completed later in the day on August 13, 2021. Pursuant to the Share Purchase Agreement, Stelco repurchased for cancellation 11,398,024 Common Shares from LG Bedrock at a price of $34.93 per Common Share (representing a discount of approximately 26% to the closing price of the Common Shares on August 12, 2021), for gross proceeds to the Selling Shareholder of approximately $398 million. The Company funded the Share Repurchase Transaction with cash on hand. Upon completion of the Share Repurchase Transaction, the 11,398,024 Common Shares repurchased by the Company were cancelled. In addition, prior to the Share Repurchase Transaction, the stated capital account in respect of the Common Shares was increased by the amount

of approximately $995 million.

Formal Valuation and Minority Approval Exemptions

Prior to the Share Repurchase Transaction, LG Bedrock was Stelco’s largest shareholder, owning 19,052,235 Common Shares, which represented approximately 21.5% of the issued and outstanding Common Shares prior to giving effect to the Share Repurchase Transaction. Accordingly, the Share Repurchase Transaction constituted a “related party transaction” for purposes of Multilateral Instrument 61-101 – Protection of Minority Security Holders in Special Transactions (“ MI 61-101 ”).

Stelco relied on exemptions from the formal valuation and minority approval requirements of MI 61-101 in respect of the Share Repurchase Transaction contained in sections 5.5(a) and 5.7(1)(a) of MI 61-101, as the fair market value of the consideration paid by Stelco pursuant to the Share Repurchase Transaction did not exceed 25 per cent of the market capitalization of Stelco.

Special Committee and Board Review Process

The Share Repurchase Transaction was overseen by a Special Committee of the Board of Directors of the Company comprised of independent directors Michael Mueller (Chair), Monty Baker, Heather Ross (Lead Director) and Daryl Wilson (the “ Special Committee ”). The Special Committee retained Stikeman Elliott LLP as its independent legal counsel and RBC Capital Markets as its independent financial advisor. The Special Committee undertook a deliberate and full consideration of the Share Repurchase Transaction and various alternatives related thereto, meeting several times both in camera and with its independent advisors. In addition, RBC Capital Markets provided an opinion to the Special Committee and the Board of Directors of the Company (the “ Board ”) stating that, subject to the assumptions, limitations and qualifications to be set out in the fairness opinion, as of August 12, 2021, the consideration to be paid under the Share Repurchase Transaction is fair, from a financial point of view, to the Company.

Upon the recommendation of the Special Committee that, among other things, the Share Repurchase Transaction was in the best interests of the Company, the Board (other than interested directors who abstained from voting) unanimously approved the Share Repurchase Transaction.

In making its recommendation and in approving the Share Repurchase Transaction, as applicable, the Special Committee and the Board considered a number of factors, including the following:

• Improved Market Liquidity and Capital Markets Profile . The Share Repurchase Transaction will reduce the Company’s outstanding share count by approximately 13% without reducing any of the shares currently in the public float and available to investors, ensuring the same level of liquidity on a share count basis while significantly increasing the percentage of shares held by the public. Furthermore, the Share Repurchase Transaction is expected to eliminate the perceived overhang of the Selling Shareholder’s stock in the market. The Company expects that over time this transaction will result in a more diversified shareholder base and improved liquidity in its stock.

• Compelling Use of Capital . The Company believes that the Share Repurchase

Transaction represents a compelling opportunity to deploy cash generated from operations at a significant discount to the market price of the Company’s stock. The Company believes that the Share Repurchase Transaction will have a meaningfully positive impact on Stelco’s per share financial metrics.

• Fairness Opinion . RBC Capital Markets’ opinion that, subject to the assumptions, limitations and qualifications to be set out in the fairness opinion, as of August 12, 2021, the consideration to be paid under the Share Repurchase Transaction is fair, from a financial point of view, to the Company.

The foregoing discussion of the information and factors considered by the Special Committee and the Board is not intended to be exhaustive. In view of the variety of factors considered by the Special Committee and the Board, neither the Special Committee nor the Board found it practicable to, and did not, quantify or otherwise assign any relative or specific weights to the specific factors considered in reaching its determination and recommendations. In addition, individual members of the Special Committee and Board may have given differing weights to different factors. After considering such material factors, and various other factors and risks, the Special Committee was unanimous in its recommendation to the Board and the Board (other than interested directors who abstained from voting) was unanimous in its determination to approve the Share Repurchase Transaction.

Effect on LG Bedrock’s Share Ownership

As a result of the Share Repurchase Transaction, the Selling Shareholder’s ownership in the Company was reduced from 19,052,235 Common Shares to 7,654,211 Common Shares (representing a decrease from approximately 21.5% to approximately 9.9% of the issued and outstanding Common Shares after giving effect to the Share Repurchase Transaction).

As a result of LG Bedrock’s holdings decreasing to below 10% of the issued and outstanding common shares, LG Bedrock ceased to have any nomination rights or preemptive rights pursuant to the investor rights agreement between the Company and LG Bedrock, among others (the “ Investor Rights Agreement ”). However, each of LG Bedrock’s current representatives on the Board will continue to serve as directors of the Company, subject to the Board’s ordinary course director assessment and succession processes. LG Bedrock continues to have registration rights under the Investor Rights Agreement.

Summary of the Share Purchase Agreement

The Share Purchase Agreement contains customary terms and conditions for a transaction of this type and has been filed on SEDAR and is available under Stelco’s issuer profile at www.sedar.com.

Lock-Up of the Selling Shareholder

The Share Purchase Agreement also provides that LG Bedrock will not, directly or indirectly, without the prior written consent of the Board, acting reasonably, sell, offer to sell, grant any option, right or warrant for the sale of, or otherwise lend, transfer, assign or dispose of (including, without limitation, by making any short sale, engaging in any hedging, monetization or derivative transaction or entering into any swap or other arrangement that transfers to another, in whole or in part, any of the economic consequences of ownership of Common Shares or securities convertible or

exchangeable into Common Shares, whether or not cash settled), in a public offering or by way of private placement or otherwise, any Common Shares or any securities convertible, exchangeable or exercisable into Common Shares, secure or pledge any Common Shares or any securities convertible or exchangeable into Common Shares, or agree to or announce any intention to do any of the foregoing, for a period ending on August 13, 2022, subject to certain specific exceptions.

5.2 - Disclosure for Restructuring Transactions

Not applicable.

Item 6 Reliance on subsection 7.1(2) of National Instrument 51-102

Not applicable.

Item 7 Omitted Information

No significant facts remain confidential in, and no information has been omitted from, this material change report.

Item 8 Executive Officer

Further information regarding the matters described in this report may be obtained from Paul Simon, General Counsel, who is knowledgeable about the details of the material change and may be contacted at 905-577-4434.

Item 9 Date of Report August 19, 2021