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October 2007

U.S. Steel plans to acquire Stelco

U.S. Steel Corporation and Stelco Inc., announced that they entered into a definitive agreement pursuant in which U.S. Steel will acquire Stelco for Canadian $38.50 in cash per share.

U.S. Steel expects the acquisition of Stelco to strengthen its position as a supplier of flat-rolled steel products to the North American market.

Stelco’s Lake Erie Works is an integrated steel plant in North America, and the slabs produced at Stelco’s Lake Erie and Hamilton Works will expand U.S. Steel’s semi-finished steel supply chain capabilities to support finishing facilities for both flat-rolled and tubular products.

After the acquisition, U.S. Steel will have annual raw steel capability of approximately 33 million net tons.

Under the terms of the definitive agreement, U.S. Steel will acquire all of the outstanding shares for Canadian $38.50 for an aggregate value of approximately US $1.1 billion based on approximately 30 million fully diluted shares. As of June 30, 2007, Stelco had approximately US $760 million of net debt on its balance sheet.

U.S. Steel intends to pay for the acquisition and retire the majority of Stelco’s existing debt through a combination of cash on hand, utilization of existing liquidity facilities and proceeds under two new fully committed senior credit facilities totaling $900 million and underwritten by J. P. Morgan Securities and Scotia Capital.

The acquisition will be accomplished as a Plan of Arrangement under Canadian law and is subject to review by United States and Canadian regulatory authorities.