Item 1.01
|
Entry into a Material Definitive Agreement
.
|
Senior Notes Offering
On August 9, 2017, AK Steel Corporation (AK Steel), the wholly-owned subsidiary of AK Steel Holding Corporation (AK Holding),
completed the public offering of $280.0 million aggregate principal amount of its 6.375% Senior Notes due 2025 (the Notes). The Notes are governed by an indenture, dated as of May 11, 2010 (the Base Indenture), among AK
Steel, as issuer, AK Holding, as guarantor, and U.S. Bank National Association, as trustee, as supplemented by an eighth supplemental indenture, dated as of August 9, 2017 (the Eighth Supplemental Indenture, together with the Base
Indenture, the Indenture), among AK Steel, as issuer, AK Holding, AK Tube LLC, AK Steel Properties, Inc. and Mountain State Carbon, LLC, as guarantors (AK Holding, AK Tube LLC, AK Steel Properties, Inc. and Mountain State Carbon, LLC,
collectively, the Guarantors), and U.S. Bank National Association, as trustee. A copy of the Eighth Supplemental Indenture is filed as Exhibit 4.1 hereto and incorporated by reference herein.
The Notes were sold in a public offering pursuant to an amended Registration Statement on
Form S-3
(File
No. 333-
210785) (the Registration Statement) and a related prospectus and prospectus supplement filed with the Securities and Exchange Commission and were issued pursuant to an underwriting
agreement (the Underwriting Agreement), dated as of August 2, 2017, among AK Steel, the Guarantors and Wells Fargo Securities, LLC, Deutsche Bank Securities Inc. and Goldman Sachs & Co. LLC, as representatives of the
several underwriters named therein (the Underwriters), and are fully and unconditionally guaranteed by the Guarantors.
The Notes bear
interest payable semiannually in cash in arrears on April 15 and October 15 of each year, commencing on October 15, 2017. The Indenture provides that the Notes are redeemable at AK Steels option, in whole or in part, at any time
on or after October 15, 2020, at a redemption price equal to 100% of the principal amount of the Notes plus a make-whole premium. AK Steel may redeem the Notes beginning on October 15, 2020, at the redemption price (expressed
as a percentage of principal amount) set forth below, plus accrued and unpaid interest to the redemption date, if redeemed during the twelve-month period commencing on October 15 of the years indicated below:
|
|
|
|
|
Year
|
|
Redemption
Price
|
|
2020
|
|
|
103.188
|
%
|
2021
|
|
|
101.594
|
%
|
2022 and thereafter
|
|
|
100.000
|
%
|
In addition, at any time prior to October 15, 2020, AK Steel may redeem up to 35% of the principal amount of the Notes
(including any additional Notes) with the net cash proceeds of one or more sales of AK Holdings common stock (to the extent the proceeds are contributed to AK Steel as equity) at a redemption price (expressed as a percentage of principal
amount) of 106.375%, plus accrued and unpaid interest to the redemption date; provided that at least 65% of the aggregate principal amount of Notes originally issued remains outstanding after such redemption.
The Indenture also contains certain covenants which restrict AK Steel and its restricted subsidiaries ability to create liens on its and their assets;
incur subsidiary debt; engage in sale/leaseback transactions; and engage in a consolidation, merger or sale of assets.
AK Steel expects the net proceeds
from the issuance and sale of the Notes will be approximately $275.8 million after deducting the underwriting discounts and commissions. AK Steel intends to use the net proceeds from this offering, together with cash on hand and/or borrowings under
its revolving credit facility, to pay the consideration for its previously announced concurrent cash tender offer (the Cash Tender Offer) of its 8.375% Senior Notes due 2022 (the Old Notes), including accrued and unpaid
interest, and estimated offering expenses payable by AK Steel. If any Old Notes remain outstanding following the completion of the Cash Tender Offer, AK Steel intends to use the proceeds, together with cash on hand and/or borrowing under its
revolving credit facility, to redeem such Old Notes in accordance with the terms of the Old Notes and the applicable indenture.
The foregoing description
does not constitute a complete summary of the Indenture and is qualified by reference in its entirety to the full text of the Indenture. A copy of the Eighth Supplemental Indenture is filed as Exhibit 4.1 to this Current Report on
Form 8-K
and is incorporated herein by reference.