Cleveland-Cliffs Begins Exchange Offers For AK Steel Buyout
Zacks Investment Research | Jan 14, 2020 08:04PM ET
Cleveland-Cliffs Inc. (NYSE:CLF) announced that it has started offers to exchange any and all outstanding 7% senior notes due 2027 and 6.375% senior notes due 2025 issued by AK Steel Holding Corporation’s fully-owned subsidiary — AK Steel Corporation. The exchange involves the same total principal amount of new notes to be issued by Cleveland-Cliffs. The move is in relation to the anticipated acquisition of AK Steel by Cleveland-Cliffs.
AK Steel is soliciting consents in conjunction with the afore-mentioned exchange offers for adopting some proposed amendments to each of the indentures governing the existing senior notes of AK Steel. This will eliminate some of the covenants, events of default and restrictive provisions from such indentures.
Moreover, the companies are making the exchange offers and consent solicitations pursuant to the terms of and subject to the conditions set forth in the offering memorandum and consent solicitation statement dated Jan 14, 2020.
For each $1,000 principal amount of earlier mentioned existing AK Steel senior notes, validly tendered on Feb 12, 2020 (referred to as the "Expiration Date") and not validly withdrawn, eligible holders of these notes will receive the applicable exchange consideration.
Cleveland-Cliffs and AK Steel expects the settlement date to be two business days after the Expiration Date. Moreover, the parties expect that the Expiration Date may be extended to coincide with the date of the consummation of the merger.
The exchange offers and consent solicitations are conditional upon the consummation of the pending acquisition of AK Steel by Cleveland-Cliffs pursuant to the Agreement and Plan of Merger dated Dec 2, 2019. Per the agreement, Cleveland-Cliffs’ direct fully-owned subsidiary — Pepper Merger Sub Inc (referred to as ‘Merger Sub’) — will merge with and into AK Steel. Following this, AK Steel will survive the merger as a fully-owned subsidiary of Cleveland-Cliffs.
Cleveland-Cliffs’ shares have lost 9.3% in the past year against the Zacks Investment Research
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