Cleveland-Cliffs Issues $600 Million in Senior Notes to Buy Stelco Via Investing.com
CLEVELAND, OH – Cleveland-Cliffs Inc. (NYSE:), a leading mining and natural resources company, announced the issuance of an additional $600 million in senior secured notes with a yield of 7.000%, due in 2032. A private transaction, exempted from the registration requirements of the Securities Act of 1933, occurred today, with notes not registered under the Securities Act and subject to the provision that they may not be offered or sold without registration or exemption.
The newly issued notes are part of the company's existing series of Senior Guaranteed Notes, originally dated March 18, 2024, with an initial issuance of $825 million. Additional notes are identical to the original except for the date of issue and the amount of issue. Interest on the notes is payable semiannually, with the first payment due on September 15, 2024, and the notes are scheduled to mature on March 15, 2032.
The notes are senior unsecured obligations of Cleveland-Cliffs and will be senior to all future senior unsecured debt, which takes priority over any subordinated debt. They are guaranteed by the company's wholly owned subsidiaries, making them structurally superior to any unsecured debt.
The Company has the option to redeem the notes prior to March 15, 2027, in full payment, and thereafter in decreasing amounts, eventually reaching 100% of their principal amount as of March 15, 2029. In addition, up to 35% of the principal amount of the notes may be redeemed before on March 15, 2027, using the proceeds of the donation.
Cleveland-Cliffs plans to allocate the remaining proceeds from this issuance to partially fund the acquisition of Stelco Holdings Inc., a transaction expected to close in the fourth quarter of 2024. Until the acquisition is completed, the proceeds will be used to pay down the balance of the lending facility based on the company's assets and available cash.
In other recent news, Cleveland-Cliffs, a North American steel producer, has seen a number of jobs. The company won a four-year contract with the United Auto Workers Local 600 for its Dearborn Works, which affects about 1,000 workers.
At the same time, Cleveland-Cliffs announced additional pricing of $600 million in Senior Guaranteed Notes due 2032, intended to finance the upcoming acquisition of Stelco which is expected to be completed in the fourth quarter of 2024.
Additionally, the company reported strong performance for Q2 2024, with adjusted EBITDA of $323 million and a reduction in gross debt of $237 million. The company allocated 35% of its free cash flow to repurchase shares, reflecting its strategic focus on cash-flowing businesses. a lot.
In addition, Cleveland-Cliffs has arranged an additional $500 million aggregate principal amount of senior secured notes due 2032, subject to market and other conditions.
The proceeds from this sale are earmarked to fund a portion of the cash consideration for the acquisition of Stelco Holdings Inc. This is among the latest developments at Cleveland-Cliffs as it continues to navigate the challenges of the steel industry.
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