Cleveland-Cliffs boosts, prices $850M of senior notes due '34

Cleveland-Cliffs boosts, prices $850M of senior notes due '34

Cleveland-Cliffs Inc. (CLF), a leading North America-based steel producer, has announced its intention to offer $850 million in senior unsecured guaranteed notes due in 2034. This move is part of the company's broader strategy to manage its debt and improve its financial position.

The company plans to use the proceeds, along with existing liquidity, to redeem all of its outstanding 5.875% senior guaranteed notes due in 2027, 7.00% senior guaranteed notes due in 2027, and AK Steel 7.00% senior notes due in 2027. This debt restructuring aims to streamline the company's debt profile and reduce interest expenses [1].

Cleveland-Cliffs operates with a significant debt burden, with a total debt of $7.75 billion and a market capitalization of $5.32 billion. Despite these challenges, the company maintains a healthy current ratio of 2.04, indicating its ability to meet its short-term obligations [2].

The new notes will be guaranteed on a senior unsecured basis by Cleveland-Cliffs' material direct and indirect wholly-owned domestic subsidiaries, excluding certain subsidiaries. The offering is exempt from Securities Act registration requirements and will be available only to qualified institutional buyers under Rule 144A and to non-U.S. persons under Regulation S [1].

The steel producer, which focuses on value-added sheet products for the automotive industry, has been navigating a dynamic environment with recent developments such as tariffs on certain steel products and multiyear fixed-price contracts with U.S. automakers. These contracts are expected to provide stability in revenue for the company over the next few years [2].

The recent announcements from Cleveland-Cliffs reflect the company's efforts to manage its debt and improve its financial position, despite the challenges posed by the volatile steel market and the ongoing impact of the COVID-19 pandemic.

References:
[1] https://www.nasdaq.com/articles/cleveland-cliffs-offer-600-mln-senior-unsecured-notes-due-2034
[2] https://www.investing.com/news/company-news/clevelandcliffs-to-offer-600-million-in-senior-notes-to-refinance-debt-93CH-4221457