CLEVELAND - Cleveland-Cliffs Inc. (NYSE:CLF), a prominent North American steel producer, announced its intention to issue a total of $1.6 billion in Senior Guaranteed Notes, divided evenly between notes due in 2029 and 2033. The offering, exempt from the registration requirements of the Securities Act of 1933, is not contingent on the completion of the company's planned acquisition of Stelco Holdings Inc.
The notes, guaranteed by Cleveland-Cliffs’ material wholly-owned domestic subsidiaries, are aimed at financing a portion of the cash consideration for the Stelco Acquisition, which is expected to finalize in the fourth quarter of 2024. If the acquisition does not occur by April 14, 2025, or by an extended deadline of July 14, 2025, the notes will be subject to a special mandatory redemption.
The notes and related guarantees will be available only to qualified institutional buyers and non-U.S. persons outside the United States, complying with Rule 144A and Regulation S under the Securities Act. These securities have not been registered under the Securities Act or any state or foreign securities laws and cannot be sold in the U.S. without registration or an applicable exemption.
Cleveland-Cliffs, headquartered in Cleveland, Ohio, is a vertically integrated steel producer with a focus on value-added products, especially for the automotive industry. It operates from mining iron ore pellets to producing direct reduced iron and processing ferrous scrap, with approximately 28,000 employees across its facilities in the U.S. and Canada.
The forward-looking statements in the press release are subject to various risks and uncertainties that could cause actual results to differ materially from those projected. These include market volatility, industry competition, economic conditions, supply chain disruptions, and regulatory changes, among others.
The company cautions investors not to place undue reliance on these forward-looking statements, which reflect current expectations and are not guarantees of future performance. The completion of the Stelco Acquisition and the related financing through the notes offering are subject to the satisfaction of certain conditions.
This news article is based on a press release statement from Cleveland-Cliffs Inc. and does not constitute an offer to sell or a solicitation of an offer to buy any securities.
In other recent news, Cleveland-Cliffs is set to acquire Stelco Holdings Inc., following the clearance of a significant regulatory hurdle and an overwhelming approval from Stelco's shareholders. The company is also negotiating with the Department of Energy for potential funding to revamp its Middletown Works facility in Ohio, aiming to cut carbon emissions and production costs. Regarding analyst notes, Citi revised its price target for Cleveland-Cliffs, maintaining a Neutral rating, while Seaport Global Securities upgraded the company's stock rating to Buy. Cleveland-Cliffs reported a strong second quarter in 2024, with an adjusted EBITDA of $323 million and a significant net debt reduction. The company also amended its $4.75 billion Asset-Based Lending facility to facilitate the Stelco acquisition. These are the recent developments concerning Cleveland-Cliffs.
InvestingPro Insights
Cleveland-Cliffs Inc.'s (NYSE:CLF) recent announcement of a $1.6 billion Senior Guaranteed Notes offering comes at a time when the company's financial metrics and market performance present a mixed picture. According to InvestingPro data, Cleveland-Cliffs has a market capitalization of $6.08 billion, reflecting its significant presence in the North American steel industry.
The company's revenue for the last twelve months as of Q2 2024 stands at $21.01 billion, although it has experienced a revenue decline of 4.4% over this period. This context adds importance to the company's strategic moves, including the planned acquisition of Stelco Holdings Inc. and the current notes offering.
InvestingPro Tips highlight that management has been aggressively buying back shares, indicating confidence in the company's future prospects. This aligns with the company's proactive approach to growth and market positioning, as evidenced by the Stelco acquisition plans.
However, investors should note that Cleveland-Cliffs is trading at a high earnings multiple, with a P/E ratio of 146.07. This valuation metric suggests that the market has high expectations for future growth, which the company will need to meet to justify its current stock price.
The steel industry's cyclical nature is reflected in Cleveland-Cliffs' recent stock performance. While the company has seen a strong return over the last month with a 13.86% price increase, it has experienced a significant 42.11% decline over the past six months. This volatility underscores the importance of the company's strategic initiatives, including the notes offering, in maintaining investor confidence.
For those interested in a deeper analysis, InvestingPro offers 12 additional tips for Cleveland-Cliffs, providing a more comprehensive view of the company's financial health and market position.
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