Item 1.01. Entry into a Material Definitive Agreement.
Senior Secured Notes Offering
On May 29, 2020, United States Steel Corporation (the “Company”)
consummated the previously disclosed sale of $1,056,357,000 aggregate principal amount of its 12.000% Senior Secured Notes due
2025 (the “Senior Secured Notes”) in a private offering made in the United States to persons reasonably believed to
be “qualified institutional buyers” pursuant to Rule 144A under the Securities Act of 1933, as amended (the “Securities
Act”), and outside the United States to non-U.S. persons pursuant to Regulation S under the Securities Act.
Indenture
The Senior Secured Notes were issued pursuant
to an indenture, dated as of May 29, 2020 (the “Indenture”), among the Company, the guarantors named therein (the “Guarantors”),
and U.S. Bank National Association, as trustee and notes collateral agent. A copy of the Indenture is being filed as Exhibit 4.1
hereto and is incorporated herein by reference.
The Senior Secured Notes were issued by
the Company at an initial offering price of 94.665% of the principal amount. The Senior Secured Notes mature on June 1, 2025. The
Senior Secured Notes bear interest at a rate of 12.000% per annum. Interest on the Senior Secured Notes is computed on the basis
of a 360-day year composed of twelve 30-day months and is payable semi-annually on June 1 and December 1 of each year, beginning
on December 1, 2020.
The Senior Secured Notes will be fully
and unconditionally guaranteed on a senior secured basis by all of the Company’s existing and future direct and indirect
subsidiaries, other than certain “excluded subsidiaries.” Additionally, the notes and the note guarantees will be secured
by first-priority liens, subject to permitted liens, on substantially all of the Company’s and the Guarantors assets, other
than certain “excluded assets.”
On or after June 1, 2022, the Company may
redeem all or a part of the Senior Secured Notes at the redemption prices set forth in the Indenture, plus accrued and unpaid interest,
if any, to the applicable redemption date. In addition, at any time prior to June 1, 2022, the Company may redeem some or all of
the Senior Secured Notes at any time at a redemption price equal to 100% of the principal amount of the Senior Secured Notes redeemed,
plus accrued and unpaid interest, if any, to the redemption date, plus a “make-whole” premium. At any time prior to
June 1, 2022, the Company may also redeem up to 35% of the aggregate principal amount of Senior Secured Notes, using the proceeds
of certain equity offerings, at a redemption price of 112% of the principal amount thereof, plus accrued and unpaid interest, if
any, to the redemption date. In addition, during the 180-day period after the issuance date of the Senior Secured Notes, the Company
may, on any one or more occasions, redeem up to 35% of the original aggregate principal amount of the Senior Secured Notes with
the net cash proceeds of any loan received under a credit facility entered into pursuant to any laws, rules or regulations of the
United States (or its agencies and instrumentalities) promulgated under the Coronavirus Aid, Relief and Economic Security Act or
similar legislation, at a redemption price of 103% of the principal amount thereof, plus accrued and unpaid interest, if any, to
the redemption date.
If the Company experiences specified change
of control events, the Company must offer to repurchase the Senior Secured Notes at a repurchase price equal to 101% of the principal
amount of the Senior Secured Notes repurchased, plus accrued and unpaid interest, if any, to the repurchase date.
If the Company sells assets under specified
circumstances, the Company must offer to repurchase the Senior Secured Notes at a repurchase price equal to 100% of the principal
amount of the Senior Secured Notes repurchased, plus accrued and unpaid interest, if any, to the repurchase date.
The Indenture contains covenants that,
among other things, restrict the ability of the Company to:
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enter into sale and leaseback transactions; and
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consolidate, merge or sell all or substantially all of the Company’s assets.
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These covenants are subject to a number
of important limitations and exceptions set forth in the Indenture.
The Indenture provides for customary events
of default. In the case of an event of default arising from specified events of bankruptcy or insolvency, all outstanding Senior
Secured Notes will become due and payable immediately without further action or notice. If any other event of default under the
Indenture occurs or is continuing, the trustee or holders of at least 25% in aggregate principal amount of the then outstanding
Senior Secured Notes may declare all the Senior Secured Notes to be due and payable immediately. If the Senior Secured Notes become
due and payable prior to their stated maturity, including upon acceleration, the applicable make-whole or redemption price premium,
as the case may be, shall be due and payable as if the Senior Secured Notes had been redeemed on that date.
Collateral Agreement
The Company and the Guarantors’ obligations
in respect of the Senior Secured Notes have been secured by certain property and assets pursuant to a collateral agreement (the
“Collateral Agreement”) among the Company, the Guarantors, and U.S. Bank National Association, as collateral agent.
A copy of the Collateral Agreement is being filed as Exhibit 10.1 hereto and is incorporated herein by reference.
The Senior Secured Notes and the related
guarantees will be secured by first-priority liens, subject to permitted liens, on substantially all of the Company’s and
its subsidiary guarantors’ assets (other than the ABL Collateral (as defined in the Collateral Agreement) and certain other
excluded assets), including property, plant and equipment, intangibles and capital stock of certain of the Company’s subsidiaries
(which, in the case of foreign subsidiaries and foreign subsidiary holding companies, will be limited to 65% of the voting stock
of such subsidiaries) now owned or acquired in the future by the Company and its subsidiary guarantors.
The Senior Secured Notes have not been,
and will not be, registered under the Securities Act or any state securities laws, and may not be offered or sold in the United
States without registration or an applicable exemption from registration requirements.
This report shall not constitute an offer
to sell or the solicitation of an offer to buy, nor shall there be any sale of, the Shares, the Senior Secured Notes, or any other
security of the Company, in any jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration
or qualification under the securities laws of any such jurisdiction.