Cleveland-Cliffs Completes Redemption of All Outstanding Preferred Shares with $1.2 Billion in Cash, Reducing Diluted Share Count by 10%
July 28 2021 - 1:00AM
Business Wire
Cleveland-Cliffs Inc. (NYSE: CLF) announced today that it
has completed the redemption of the entirety of its outstanding
Series B Participating Redeemable Preferred Stock held by an
affiliate of ArcelorMittal S.A. for approximately $1.2 billion, or
$21.18 per common share for the equivalent of approximately 58
million common shares. The redemption was completed with existing
liquidity. The elimination of the preferred shares from
Cleveland-Cliffs’ capital structure reduces the Company’s diluted
share count by 10% on a pro-forma basis.
Lourenco Goncalves, Cleveland-Cliffs’ Chairman, President, and
CEO, said: “Given the strength of our business fundamentals and
where our common shares have been trading, the buyback of the
preferred shares at an attractive price was a no-brainer, highly
accretive deal for our shareholders. We actually believe this
transaction is even better than a common share buyback, because we
acquired the entire tranche at a 20-day VWAP without making any
noise in the market. The buyback is done, and the total cash spent
is less than the free cash flow we expect to generate this
quarter.”
About Cleveland-Cliffs Inc.
Cleveland-Cliffs is the largest flat-rolled steel producer in
North America. Founded in 1847 as a mine operator, Cliffs also is
the largest manufacturer of iron ore pellets in North America. The
Company is vertically integrated from mined raw materials and
direct reduced iron to primary steelmaking and downstream
finishing, stamping, tooling, and tubing. The Company serves a
diverse range of markets due to its comprehensive offering of
flat-rolled steel products and is the largest supplier of steel to
the automotive industry in North America. Headquartered in
Cleveland, Ohio, Cleveland-Cliffs employs approximately 25,000
people across its mining, steel and downstream manufacturing
operations in the United States and Canada. For more information,
visit www.clevelandcliffs.com.
Forward-Looking Statements
This release contains statements that constitute
"forward-looking statements" within the meaning of the federal
securities laws. All statements other than historical facts,
including, without limitation, statements regarding our current
expectations, estimates and projections about our industry or our
businesses, are forward-looking statements. We caution investors
that any forward-looking statements are subject to risks and
uncertainties that may cause actual results and future trends to
differ materially from those matters expressed in or implied by
such forward-looking statements. Investors are cautioned not to
place undue reliance on forward-looking statements. Among the risks
and uncertainties that could cause actual results to differ from
those described in forward-looking statements are the following:
disruptions to our operations relating to the COVID-19 pandemic,
including the heightened risk that a significant portion of our
workforce or on-site contractors may suffer illness or otherwise be
unable to perform their ordinary work functions; continued
volatility of steel and iron ore market prices, which directly and
indirectly impact the prices of the products that we sell to our
customers; uncertainties associated with the highly competitive and
cyclical steel industry and our reliance on the demand for steel
from the automotive industry, which has been experiencing a trend
toward light weighting that could result in lower steel volumes
being consumed; potential weaknesses and uncertainties in global
economic conditions, excess global steelmaking capacity, oversupply
of iron ore, prevalence of steel imports and reduced market demand,
including as a result of the COVID-19 pandemic; severe financial
hardship, bankruptcy, temporary or permanent shutdowns or
operational challenges, due to the COVID-19 pandemic or otherwise,
of one or more of our major customers, including customers in the
automotive market, key suppliers or contractors, which, among other
adverse effects, could lead to reduced demand for our products,
increased difficulty collecting receivables, and customers and/or
suppliers asserting force majeure or other reasons for not
performing their contractual obligations to us; our ability to
reduce our indebtedness or return capital to shareholders within
the expected timeframes or at all, depending on market and other
conditions; risks related to U.S. government actions with respect
to Section 232 of the Trade Expansion Act (as amended by the Trade
Act of 1974), the United States-Mexico-Canada Agreement and/or
other trade agreements, tariffs, treaties or policies, as well as
the uncertainty of obtaining and maintaining effective antidumping
and countervailing duty orders to counteract the harmful effects of
unfairly traded imports; impacts of existing and increasing
governmental regulation, including climate change and other
environmental regulation that may be proposed under the Biden
Administration, and related costs and liabilities, including
failure to receive or maintain required operating and environmental
permits, approvals, modifications or other authorizations of, or
from, any governmental or regulatory authority and costs related to
implementing improvements to ensure compliance with regulatory
changes, including potential financial assurance requirements;
potential impacts to the environment or exposure to hazardous
substances resulting from our operations; our ability to maintain
adequate liquidity, our level of indebtedness and the availability
of capital could limit cash flow necessary to fund working capital,
planned capital expenditures, acquisitions, and other general
corporate purposes or ongoing needs of our business; adverse
changes in credit ratings, interest rates, foreign currency rates
and tax laws; limitations on our ability to realize some or all of
our deferred tax assets, including our net operating loss
carryforwards; our ability to realize the anticipated synergies and
benefits of our acquisitions of AK Steel and ArcelorMittal USA and
to successfully integrate the businesses of AK Steel and
ArcelorMittal USA into our existing businesses, including
uncertainties associated with maintaining relationships with
customers, vendors and employees; additional debt we assumed,
incurred or issued in connection with the acquisitions of AK Steel
and ArcelorMittal USA, as well as additional debt we incurred in
connection with enhancing our liquidity during the COVID-19
pandemic, may negatively impact our credit profile and limit our
financial flexibility; known and unknown liabilities we assumed in
connection with the acquisitions of AK Steel and ArcelorMittal USA,
including significant environmental, pension and other
postretirement benefits (“OPEB”) obligations; the ability of our
customers, joint venture partners and third-party service providers
to meet their obligations to us on a timely basis or at all; supply
chain disruptions or changes in the cost or quality of energy
sources or critical raw materials and supplies, including iron ore,
industrial gases, graphite electrodes, scrap, chrome, zinc, coke
and coal; liabilities and costs arising in connection with any
business decisions to temporarily idle or permanently close a mine
or production facility, which could adversely impact the carrying
value of associated assets and give rise to impairment charges or
closure and reclamation obligations, as well as uncertainties
associated with restarting any previously idled mine or production
facility; problems or disruptions associated with transporting
products to our customers, moving products internally among our
facilities or suppliers transporting raw materials to us;
uncertainties associated with natural or human-caused disasters,
adverse weather conditions, unanticipated geological conditions,
critical equipment failures, infectious disease outbreaks, tailings
dam failures and other unexpected events; our level of
self-insurance and our ability to obtain sufficient third-party
insurance to adequately cover potential adverse events and business
risks; disruptions in, or failures of, our information technology
systems, including those related to cybersecurity; our ability to
successfully identify and consummate any strategic investments or
development projects, cost-effectively achieve planned production
rates or levels, and diversify our product mix and add new
customers; our actual economic iron ore and coal reserves or
reductions in current mineral estimates, including whether we are
able to replace depleted reserves with additional mineral bodies to
support the long-term viability of our operations; the outcome of
any contractual disputes with our customers, joint venture
partners, lessors, or significant energy, raw material or service
providers, or any other litigation or arbitration; our ability to
maintain our social license to operate with our stakeholders,
including by fostering a strong reputation and consistent
operational and safety track record; our ability to maintain
satisfactory labor relations with unions and employees;
availability of workers to fill critical operational positions and
potential labor shortages caused by the COVID-19 pandemic, as well
as our ability to attract, hire, develop and retain key personnel;
unanticipated or higher costs associated with pension and OPEB
obligations resulting from changes in the value of plan assets or
contribution increases required for unfunded obligations; and
potential significant deficiencies or material weaknesses in our
internal control over financial reporting.
For additional factors affecting the business of Cliffs, refer
to Part I – Item 1A. Risk Factors of our Annual Report on Form 10-K
for the year ended December 31, 2020, and other filings with the
SEC.
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version on businesswire.com: https://www.businesswire.com/news/home/20210727006218/en/
MEDIA CONTACT: Patricia Persico Director, Corporate
Communications (216) 694-5316
INVESTOR CONTACT: Paul Finan Vice President, Investor
Relations (216) 694-6544
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