Cleveland-Cliffs Inc. (NYSE: CLF) (“Cliffs”) announced today
that it has priced an additional $120 million aggregate principal
amount of Senior Secured Notes due 2026 (the “Additional Notes”) in
an offering (the “Additional Notes Offering”) that is exempt from
the registration requirements of the Securities Act of 1933 (the
“Securities Act”). The Additional Notes will bear interest at an
annual rate of 6.75% and will be issued at a price of 99.250% of
their principal amount.
The Additional Notes will be guaranteed on a senior secured
basis by Cliffs’ material wholly owned domestic subsidiaries
(subject to certain exceptions and permitted liens), and secured by
(i) a first-priority lien on substantially all of Cliffs’ assets
and the assets of the guarantors (other than accounts receivable
and other rights to payment, inventory, as-extracted collateral,
investment property, certain general intangibles and commercial
tort claims, certain mobile equipment, commodities accounts,
deposit accounts, securities accounts and other related assets and
proceeds and products of each of the foregoing (collectively, the
“ABL Collateral”)) and (ii) a second-priority lien on the ABL
Collateral, which is junior to a first-priority lien for the
benefit of the lenders under Cliffs’ senior secured asset-based
credit facility (the “ABL Facility”).
The Additional Notes Offering is expected to close on June 19,
2020, subject to customary closing conditions.
Cliffs intends to use the net proceeds from the Additional Notes
Offering to finance the construction of its hot briquetted iron
(“HBI”) production plant. Pending such use, Cliffs intends to use
the net proceeds from the Additional Notes Offering to temporarily
reduce borrowings under its ABL Facility.
This news release does not constitute an offer to sell or the
solicitation of an offer to buy any securities. The Additional
Notes and related guarantees are being offered only to qualified
institutional buyers in reliance on the exemption from registration
set forth in Rule 144A under the Securities Act, and outside the
United States, to non-U.S. persons in reliance on the exemption
from registration set forth in Regulation S under the Securities
Act. The Additional Notes and the related guarantees have not been
registered under the Securities Act, or the securities laws of any
state or other jurisdiction, and may not be offered or sold in the
United States without registration or an applicable exemption from
the Securities Act and applicable state securities or blue sky laws
and foreign securities laws.
About Cleveland-Cliffs
Founded in 1847,
Cleveland-Cliffs is among the largest vertically integrated
producers of iron ore and steel in North America. With an emphasis
on non-commoditized products, Cliffs is uniquely positioned to
supply both customized iron ore pellets and sophisticated steel
solutions to a quality-focused customer base, with an
industry-leading market share in the automotive industry. A
commitment to environmental sustainability is core to our business
operations and extends to how we partner with stakeholders across
our communities and the steel value chain. Headquartered in
Cleveland, Ohio, Cleveland-Cliffs employs approximately 11,000
people across mining and steel manufacturing operations in the
United States, Canada and Mexico.
Forward-looking Statements
This communication contains certain forward-looking statements
within the meaning of the federal securities laws, including
Section 27A of the Securities Act of 1933, as amended, Section 21E
of the Securities Exchange Act of 1934, as amended, and the safe
harbor provisions of the Private Securities Litigation Reform Act
of 1995. When used in this communication, words such as
“anticipate,” “assume,” “believe,” “build,” “continue,” “create,”
“design,” “estimate,” “expect,” “focus,” “forecast,” “future,”
“goal,” “guidance,” “imply,” “intend,” “look,” “objective,”
“opportunity,” “outlook,” “plan,” “position,” “potential,”
“predict,” “project,” “prospective,” “pursue,” “seek,” “strategy,”
“target,” “work,” “could,” “may,” “should,” “will,” “would” or the
negative of such terms or other variations thereof and words and
terms of similar substance used in connection with any discussion
of future plans, actions or events identify forward-looking
statements with respect to our business, strategy and plans,
expectations relating to the merger (the “Merger”) between Cliffs
and AK Steel Holding Corporation (“AK Steel”) and future financial
condition and performance. 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: the
severe financial hardship, bankruptcy, temporary or permanent shut
downs or operational challenges, due to the ongoing 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; the uncertainty and weaknesses in global economic
conditions, including downward pressure on prices caused by the
COVID-19 pandemic, oversupply of imported products, reduced market
demand and 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, treaties or policies; the uncertainties
associated with the highly competitive and highly cyclical steel
industry and reliance on the demand for steel from the automotive
industry; the continued volatility of steel and iron ore prices and
other trends, which may impact the price-adjustment calculations
under certain of our sales contracts; our ability to successfully
diversify our product mix and add new customers for our Mining and
Pelletizing segment beyond our traditional blast furnace clientele;
our ability to cost-effectively achieve planned production rates or
levels, including at our HBI production plant once construction is
complete, and to resume full operations at certain facilities that
are temporarily idled due to the COVID-19 pandemic; our ability to
successfully identify and consummate any strategic investments or
development projects, including our HBI production plant; the
impact of our steelmaking customers reducing their steel production
due to the COVID-19 pandemic, or increased market share of steel
produced using methods other than those used by our customers, or
increased market share of lighter-weight steel alternatives,
including aluminum; our ability to maintain adequate liquidity, our
level of indebtedness and the availability of capital could limit
cash flow available to fund working capital, planned capital
expenditures, acquisitions and other general corporate purposes or
ongoing needs of our business; our actual economic iron ore
reserves or reductions in current mineral estimates, including
whether any mineralized material qualifies as a reserve; the
outcome of any contractual disputes with our customers, joint
venture partners or significant energy, material or service
providers or any other litigation or arbitration; problems or
uncertainties with sales volume or mix, productivity,
transportation, environmental liabilities, employee-benefit costs
and other risks of the steel and mining industries; impacts of
existing and increasing governmental regulation and related costs
and liabilities, including failure to receive or maintain required
operating and environmental permits, approvals, modifications or
other authorization of, or from, any governmental or regulatory
entity and costs related to implementing improvements to ensure
compliance with regulatory changes; our ability to maintain
appropriate relations with unions and employees; 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; the
events or circumstances that could impair or adversely impact the
viability of a production plant or mine and the carrying value of
associated assets, as well as any resulting impairment charges; the
uncertainties associated with natural disasters, weather
conditions, unanticipated geological conditions, supply or price of
energy, equipment failures, infectious disease outbreaks and other
unexpected events; adverse changes in interest rates, foreign
currency rates and tax laws; the potential existence of significant
deficiencies or material weakness in our internal control over
financial reporting; our ability to realize the anticipated
benefits of the Merger and to successfully integrate the businesses
of AK Steel into our existing businesses, including uncertainties
associated with maintaining relationships with customers, vendors
and employees, as well as realizing the estimated future synergies;
additional debt we assumed or issued in connection with the Merger,
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; changes in
the cost of raw materials and supplies; supply chain disruptions or
poor quality of raw materials or supplies, including scrap, coal,
coke and alloys; disruptions in, or failures of, our information
technology systems, including those related to cybersecurity;
unanticipated costs associated with healthcare, pension and other
postretirement benefits obligations; and other risks described
under the caption “Risk Factors” in Cliffs’ Quarterly Report on
Form 10-Q for the quarterly period ended March 31, 2020 and other
periodic reports filed with the Securities and Exchange
Commission.
Unless expressly stated otherwise, forward-looking statements
are based on the expectations and beliefs of the Cliffs management
team based on information currently available. Forward-looking
statements are subject to inherent risks and uncertainties and are
based on assumptions and estimates that are inherently affected by
the operations and business environment of Cliffs, including
economic, competitive, regulatory and operational risks, many of
which are beyond the control of Cliffs and which are difficult to
predict and may turn out to be wrong. The foregoing list of factors
should not be construed to be exhaustive. There is no assurance
that the actions, events or results of the forward-looking
statements will occur, or, if any of them do, when they will occur
or what effect they will have on the results of operations,
financial condition or cash flows of Cliffs. In view of these
uncertainties, Cliffs cautions that investors should not place
undue reliance on any forward-looking statements. Further, any
forward-looking statement speaks only as of the date on which it is
made, and, except as required by law, Cliffs undertakes no
obligation to update or revise any forward-looking statement to
reflect events or circumstances after the date on which it is made
or to reflect the occurrence of anticipated or unanticipated events
or circumstances.
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version on businesswire.com: https://www.businesswire.com/news/home/20200616005907/en/
Investor Relations: Paul Finan Director, Investor Relations
(216) 694-6544
Media: Patricia Persico Director, Corporate Communications (216)
650-0168
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