CLEVELAND, OH - Cleveland-Cliffs Inc. (NYSE:CLF), a leading mining and natural resources company, has announced the issuance of an additional $600 million in senior guaranteed notes with a 7.000% yield, due 2032. The private transaction, exempt from the registration requirements of the Securities Act of 1933, took place today, with the notes not being registered under the Securities Act and subject to the condition that they may not be offered or sold without registration or an exemption.
The newly issued notes are part of the company's existing 7.000% Senior Guaranteed Notes series, initially established on March 18, 2024, with an initial issuance of $825 million. The additional notes are identical to the initial ones except for the date of issuance and issue price. Interest on the notes is payable semi-annually, with the first payment due on September 15, 2024, and the notes are set to mature on March 15, 2032.
The notes are unsecured senior obligations of Cleveland-Cliffs and will rank equally with all future unsecured senior indebtedness, taking precedence over any subordinated debt. They are guaranteed by the company's significant wholly-owned domestic subsidiaries, making them structurally senior to any unguaranteed indebtedness.
The company has the option to redeem the notes before March 15, 2027, at a make-whole premium, and thereafter at decreasing rates, ultimately reaching 100% of their principal amount starting March 15, 2029. Additionally, up to 35% of the notes can be redeemed before March 15, 2027, using equity offering proceeds.
Cleveland-Cliffs plans to allocate the net 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 finalized, the proceeds will be used to pay off the balance of the company's asset-based lending facility and supplement cash on hand.
In other recent news, Cleveland-Cliffs, a North American steel producer, has seen a flurry of activity. The company has secured a four-year labor contract with United Auto Workers Local 600 for its Dearborn Works operations, affecting approximately 1,000 employees.
Concurrently, Cleveland-Cliffs has announced the pricing of an additional $600 million in Senior Guaranteed Notes due 2032, aiming to finance the upcoming acquisition of Stelco which is expected to finalize in the fourth quarter of 2024.
Additionally, the company has reported a robust Q2 2024 performance, with an adjusted EBITDA of $323 million and a substantial net debt reduction of $237 million. The company has allocated 35% of its free cash flow for share buybacks, demonstrating a strategic focus on high-margin businesses.
Moreover, Cleveland-Cliffs has planned an additional $500 million aggregate principal amount of Senior Guaranteed Notes due 2032, subject to market and other conditions.
The proceeds from this sale are earmarked to finance a portion of the cash consideration for the acquisition of Stelco Holdings Inc. These are among the recent developments at Cleveland-Cliffs as it continues to navigate the complexities of the steel industry.
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