Paulson & Co. Inc., which holds (directly and indirectly) 19.0% of the outstanding shares of Algoma Steel, asserted the right of Algoma shareholders to requisition a special meeting, elect directors and consider company business as provided by Ontario law.

In response to the United Steelworkers of America's legal action seeking to deprive Algoma shareholders of a meeting, Michael Waldorf, Vice President of Paulson, said "Shareholders in a Canadian company have the right to a meeting, to replace directors that are not acting to increase shareholder value, and to advise the board on important matters such as the best use of corporate assets. As Algoma has publicly acknowledged, our firm Paulson & Co. Inc. has submitted a legal requisition for a special shareholder meeting. Canadian courts have consistently supported shareholders in exercising such rights. We expect the company to comply with its obligations and a shareholder meeting to be held promptly."

"Despite efforts by the union to mischaracterize Paulson's proposal, our previously announced recapitalization plan merely returns Algoma's excess capital to shareholders. Our firm intends to be a substantial Algoma shareholder both before and after any transaction that a new board of directors may approve. We are and will remain very interested in the short-term and long-term financial health of the company, and we look forward to Algoma's continued prosperity. Even after excess capital is returned to shareholders, Algoma will have the ability to fully fund necessary capital expenditures and to meet pension and health care obligations to employees. We recognize Algoma's importance to the Sault Ste. Marie community and will support the company's efforts on behalf of the community."

The company comments that, with $11.27 of cash per share (equal to 46.9% of today's closing share price), Algoma has the highest percentage of cash per share of any North American publicly traded steel company. Algoma's percentage of cash per share exceeds that of Dofasco (5.0%) and Ipsco (17.5%). The company says that, even after excess capital is returned to shareholders, Algoma will continue to have one of the industry's lowest debt ratios, with net debt to consensus estimated 2006 EBITDA of only 0.6x. For comparison, it listed the leverage ratios of selected North American steel companies (see table).

Paulson further comments that, given Algoma's high quality steel plant assets and low market valuation, the company should have a board of directors that is capable, experienced, responsive to shareholder concerns and willing to take the steps necessary to increase shareholder value. Paulson & Co. Inc. intends to announce its new slate of directors shortly.