Lakeside Steel Inc.
TSX VENTURE : LS

Lakeside Steel Inc.

April 28, 2011 15:35 ET

Lakeside Steel to Expand New US End-Finishing and Heat Treatment Facility Announces $20,020,000 Bought Deal Equity Financing

WELLAND, ONTARIO--(Marketwire - April 28, 2011) -

THIS NEWS RELEASE IS NOT FOR DISTRIBUTION TO U.S. NEWSWIRE SERVICES OR FOR DISSEMINATION IN THE UNITED STATES

Lakeside Steel Inc. (TSX VENTURE:LS) ("Lakeside Steel" or the "Company"), a leading North American producer of OCTG casing and tubing, today announced that it will expand its previously announced new USD $7.5 million state of the art tubular end-finishing and heat treatment facility in Thomasville, Alabama, to add end-finishing and heat treatment processing capabilities for casing products.

On March 23, 2011, Lakeside announced that it is constructing a new tubular end-finishing and heat treatment facility located on a 60 acre site approximately five miles from the Company's new casing mill that is currently being constructed in Thomasville.

The Company announced today that it will expand the new end-finishing facility, at an additional capital cost of approximately USD $10 million, to enable Lakeside to end-finish and heat treat casing products in addition to the previously announced tubular product finishing capabilities. The expansion will enable Lakeside Steel to upgrade casing to high value-added products including L80, N80 and P110 products used in the most demanding onshore drilling applications in North America.

When in operation, Lakeside expects that the expansion will employ approximately 80 people, bringing total employment of the end-finishing and heat treatment facility to approximately 160 people. The facility will be capable of processing 4.5" to 5.5" diameter casing pipe, with a capacity of up to 100,000 tons per year. The expansion project remains subject to customary conditions and the execution and delivery of definitive agreements.

Ron Bedard, President and Chief Operating Officer commented, "The new end-finishing and heat treatment facilities, when online, will provide increased security of supply to our customer base and will significantly enhance the Company's EBITDA margin."

  • $20,020,000 Bought Deal Equity Financing

Lakeside today announced that it has today entered into an agreement with a syndicate of underwriters led by Cormark Securities Inc. and including Northern Securities Inc. and Canaccord Genuity Corp. (collectively, the "Underwriters") pursuant to which the Underwriters have agreed to buy and sell to the public 38,500,000 common shares ("Common Shares") of the Company at a price of $0.52 per Common Share, for gross proceeds to the Company of approximately $20,020,000 (the "Offering"). The Underwriters will also have the option, exercisable in whole or in part at any time up to 30 days after the closing of the Offering, to purchase up to an additional 5,775,000 Common Shares of the Company. In the event that the option is exercised in its entirety, the aggregate gross proceeds of the Offering will be $23,020,000. Closing of the Offering is expected to occur on or about May 19, 2011 and is subject to regulatory approval including that of the TSX Venture Exchange.

The Common Shares to be issued under the Offering will be offered by way of a short form prospectus in all provinces in Canada, except Quebec, and in the United States on a private placement basis pursuant to an exemption from the registration requirements of the United States Securities Act of 1933, as amended, and certain other jurisdictions.

The net proceeds of the Offering will be used to fund the cost of expanding the new heat treatment and end-finishing facility discussed above and for general corporate and working capital purposes.

Northern Securities Inc. ("NSI") is an agent of the Company. The Company is a connected issuer of NSI under applicable securities laws. Northern Financial Corporation ("NFC"), which wholly owns NSI, owns approximately 11.3% of the common shares of Jaguar Financial Corporation ("Jaguar"), which in turn owns approximately 10.3% of the Common Shares. Further, Vic Alboini is the Chairman and Chief Executive Officer of each of the Company and NFC. Mr. Alboini is also the Chairman and Chief Executive Officer of Jaguar and owns approximately 4.7% of the Common Shares. In total, Mr. Alboini owns or has control or direction over approximately 15% of the Common Shares and owns or has control or direction over approximately 22.3% of the common shares of NFC.

This news release does not constitute an offer of securities for sale in the United States. The securities being offered have not been, nor will they be, registered under the Unites States Securities Act of 1933, as amended, and such securities may not be offered or sold within the United States absent U.S. registration or an applicable exemption from U.S. registration requirements.

About Lakeside Steel Inc.

Lakeside Steel is a 2011 TSX Venture Exchange 50 company and the parent company of Lakeside Steel Corporation ("Lakeside"). Lakeside, located in Welland, Ontario, is a diversified steel pipe and tubing manufacturer with a focus on manufacturing and upgrading Oil Country Tubular Goods. Lakeside's list of customers includes large oil and gas end users as well as distributors across North America.

Lakeside Steel also indirectly wholly-owns Lakeside Steel Alabama which will be a diversified steel pipe manufacturer strategically situated in the southern United States on successful completion of the construction of the new facility in Thomasville, Alabama. Construction of the Alabama facility is currently underway.

This press release may contain forward-looking statements with respect to the Company, its operations, strategy, financial performance and condition. These statements generally can be identified by use of forward looking words such as "may", "will", "expect", "estimate", "anticipate", intends", "believe" or "continue" or the negative thereof or similar variations. The actual results and performance of the Company discussed herein could differ materially from those expressed or implied by such statements. Such statements are qualified in their entirety by the inherent risks and uncertainties surrounding future expectations. Important factors that could cause actual results to differ materially from expectations include, among other things, general economic and market factors, competition, changes in government regulations and the factors described under "Risk Factors" in the Management's Discussion and Analysis and Filing Statement of the Company which are available at www.sedar.com. The cautionary statements qualify all forward-looking statements attributable to the Company and persons acting on their behalf. Unless otherwise stated, all forward-looking statements speak only as of the date of this press release and the Company has no obligation to update such statements.

Lakeside Steel was recognized as a TSX Venture 50® company in 2010 and 2011. TSX Venture 50 is a trade-mark of TSX Inc. and is used under license.

Neither TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.

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