Cleveland-Cliffs Declares Pricing Of Senior Secured Notes
Zacks Investment Research | Mar 03, 2020 10:16PM ET
Cleveland-Cliffs Inc. (NYSE:CLF) has announced the pricing of $725 million total principal amount of senior secured notes due 2026 through an offering, which is exempted from the registration requirements of the Securities Act of 1933. The senior secured notes will carry an annual interest rate of 6.75%. They will be issued at a price of 98.783% of their principal amount.
Following the closure of Cleveland-Cliffs’ merger with AK Steel Holding Corporation (NYSE:AKS) , these notes will be guaranteed by Cleveland-Cliffs’ material fully-owned domestic subsidiaries on a senior secured basis. This also includes AK Steel and its material fully-owned subsidiaries.
The offering of senior secured notes is expected to be completed concurrently with the completion of the merger. However, if the notes offering is consummated before the merger, the gross proceeds will be deposited into an escrow account until the merger is completed.
The offering is expected to close on Mar 13, 2020 and is subject to customary closing conditions.
The notes are also subject to a ‘special mandatory redemption’ according to which the company will be required to redeem the notes at the ‘special mandatory redemption price’. This equals the issue price of the notes along with the accrued yield as well as any accrued and unpaid interest, excluding the date of redemption.
Cleveland-Cliffs plans to use the net proceeds from the offerings to repurchase earlier announced tender offers of AK Steel. This includes any and all outstanding 7.625% senior notes due 2021 and 7.5% senior secured notes due 2023 issued by AK Steel. Cleveland-Cliffs also plans to employ any remaining net proceeds from the offerings to pay any fees and expenses related to the merger and the notes offerings as well as for general corporate purposes.
Cleveland-Cliffs’ shares have plunged 48.5% in the past year compared with the Zacks Investment Research
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