- Companies receive necessary consents to effect the proposed
amendments to the AK Steel indentures
Cleveland-Cliffs Inc. (NYSE: CLF) (“Cliffs”) and AK Steel
Holding Corporation (NYSE: AKS) (“AK Steel”) today announced that,
in connection with the previously announced exchange offers (each,
an “Exchange Offer” and, collectively, the “Exchange Offers”) by
Cliffs and consent solicitations (each, a “Consent Solicitation”
and, collectively, the “Consent Solicitations”) by AK Steel
Corporation, a wholly owned subsidiary of AK Steel, the requisite
consents have been received to adopt the proposed amendments (the
“Amendments”) to the indentures (the "AK Steel Indentures")
governing the 6.375% Senior Notes due 2025 and 7.00% Senior Notes
due 2027 (collectively, the “AK Steel Notes”) issued by AK Steel
Corporation. As a result, AK Steel Corporation and the trustee
under the AK Steel Indentures (the “AK Steel Trustee”) will
promptly execute supplemental indentures to the AK Steel Indentures
to effect the Amendments. As previously announced, Cliffs and AK
Steel have entered into an Agreement and Plan of Merger (the
“Merger Agreement”) providing for, among other things and subject
to the satisfaction or waiver (to the extent lawful) of certain
conditions, the merger of a subsidiary of Cliffs with and into AK
Steel, with AK Steel surviving as a wholly owned subsidiary of
Cliffs (the "Merger").
The Amendments will not become operative unless and until the
following conditions are satisfied or otherwise waived, if
applicable, by Cliffs or AK Steel Corporation: (i) Cliffs delivers
to The Depository Trust Company for the Eligible Holders (as
defined below) of applicable AK Steel Notes the aggregate amount to
be paid to such Eligible Holders as consent payments, upon the
terms and subject to the conditions set forth in the offering
memorandum and consent solicitation statement, dated January 14,
2020 (as amended to date, the “Offering Memorandum and Consent
Solicitation Statement”) in respect of the consents validly
delivered and not revoked thereunder, and Cliffs or AK Steel
Corporation notifies the AK Steel Trustee in writing that such
delivery has been made, which condition cannot be waived by Cliffs
or AK Steel Corporation, (ii) the AK Steel Notes that are validly
tendered (and not validly withdrawn) in the Exchange Offers have
been accepted for exchange by Cliffs in accordance with the terms
of the Offering Memorandum and Consent Solicitation Statement and
(iii) the other conditions to the Consent Solicitations, including
the consummation of the Merger, have been satisfied.
The consent results are based on (i) early tenders in the
Exchange Offers, which tenders are deemed also to constitute the
delivery of consents in the Consent Solicitations made by AK Steel
Corporation to adopt the Amendments and (ii) deliveries of consents
in the Consent Solicitations (without tendering the corresponding
AK Steel Notes in the Exchange Offers).
As of 5:00 p.m., New York City time, on January 28, 2020 (the
“Early Participation Date” for the Exchange Offers and the Consent
Solicitations), (i) the principal amounts of AK Steel Notes set
forth in the table below had been validly tendered and not validly
withdrawn (and consents thereby deemed validly given and not
validly revoked) in the Exchange Offers and (ii) consents in
respect of the principal amounts of AK Steel Notes set forth in the
table below had been validly delivered (without tendering the
corresponding AK Steel Notes in the Exchange Offers) and not
validly revoked in the Consent Solicitations. For each $1,000
principal amount of AK Steel Notes validly tendered and not validly
withdrawn or with respect to which consents had been validly
delivered and not validly revoked at or prior to the Early
Participation Date, holders of AK Steel Notes will be eligible to
receive a consent payment of $2.50 in cash (the “Consent Payment”),
subject to the terms contained in the Offering Memorandum and
Consent Solicitation Statement. Because each Exchange Offer and
Consent Solicitation is subject to the satisfaction of, among other
things, the consummation of the Merger, Eligible Holders of AK
Steel Notes will not receive the Consent Payment unless the Merger
is consummated.
Title of Series/CUSIP Number
of AK Steel Notes
Aggregate Principal Amount
Outstanding
AK Steel Notes Tendered at
Early Participation Date
Consents Delivered at Early
Participation Date
Total Consents
Delivered
Principal Amount
Principal Amount
Percentage
6.375% Senior Notes due 2025 /
001546AV2
$270,232,000
$234,768,000
$500,000
87.06%
7.00% Senior Notes due 2027 /
001546AU4
$391,632,000
$334,754,000
$340,000
85.56%
Tendered AK Steel Notes may be withdrawn at any time prior to
the Expiration Date (as defined below). However, a valid withdrawal
of tendered AK Steel Notes after the Early Participation Date will
not constitute a revocation of any previously delivered consents in
respect of those notes and such consents will continue to be deemed
delivered.
Cliffs and AK Steel Corporation are making the Exchange Offers
and Consent Solicitations pursuant to the terms of and subject to
the conditions set forth in the Offering Memorandum and Consent
Solicitation Statement. The terms of the Exchange Offers and
Consent Solicitations remain as set forth in the Offering
Memorandum and Consent Solicitation Statement.
The Exchange Offers will expire at 12:01 a.m., New York City
time, on February 12, 2020, unless such date is extended (the
“Expiration Date”). Cliffs and AK Steel Corporation currently
expect that the Expiration Date will be extended to coincide with
the date of the consummation of the Merger. The settlement date is
expected to be one business day after the Expiration Date. Cliffs
and AK Steel Corporation reserve the right to terminate, withdraw,
amend or extend the Exchange Offers and Consent Solicitations as
described in the Offering Memorandum and Consent Solicitation
Statement.
The Offering Memorandum and Consent Solicitation Statement and
other documents relating to the Exchange Offers and Consent
Solicitations have been and will only be distributed to Eligible
Holders of AK Steel Notes who complete and return an eligibility
form confirming that they are either (a) a “Qualified Institutional
Buyer” as that term is defined in Rule 144A under the Securities
Act of 1933, as amended, or (b) a person that is outside the
“United States” and is (i) not a “U.S. person,” as those terms are
defined in Rule 902 under the Securities Act of 1933, as amended,
and (ii) a “non-U.S. qualified offeree” (as defined in the Offering
Memorandum and Consent Solicitation Statement) (such holders, the
“Eligible Holders”). Holders of AK Steel Notes who desire to obtain
and complete an eligibility form should either visit the website
for this purpose at http://www.gbsc-usa.com/eligibility/cliffs or
call Global Bondholder Services Corporation, the Information Agent
and Exchange Agent for the Exchange Offers and Consent
Solicitations at (866) 924-2200 (toll-free) or (212) 430-3774
(collect for banks and brokers).
The new 6.375% Senior Notes
due October 15, 2025 and the new 7.00% Senior Notes due March 15,
2027 to be issued by Cliffs in the Exchange Offers (collectively,
the “Cliffs Notes”) have not been and will not be registered under
the Securities Act of 1933, as amended, or any state securities
laws. Therefore, the Cliffs Notes may not be offered or sold in the
United States absent registration or an applicable exemption from
the registration requirements of the Securities Act of 1933, as
amended, and any applicable state securities laws.
About Cleveland-Cliffs
Founded in 1847, Cliffs is the
largest and oldest independent iron ore mining company in the
United States. Cliffs is a major supplier of iron ore pellets to
the North American steel industry from its mines and pellet plants
located in Michigan and Minnesota. In 2020, Cliffs expects to be
the sole producer of hot briquetted iron (HBI) in the Great Lakes
region with the development of its first production plant in
Toledo, Ohio. Driven by the core values of safety, social,
environmental and capital stewardship, Cliffs’ employees endeavor
to provide all stakeholders with operating and financial
transparency.
About AK Steel
AK Steel is a leading producer of flat-rolled carbon, stainless
and electrical steel products, primarily for the automotive,
infrastructure and manufacturing, including electrical power, and
distributors and converters markets. Through its subsidiaries, the
company also provides customer solutions with carbon and stainless
steel tubing products, hot- and cold-stamped components, and die
design and tooling. Headquartered in West Chester, Ohio (Greater
Cincinnati), the company has approximately 9,500 employees at
manufacturing operations in the United States, Canada and Mexico,
and facilities in Western Europe.
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,” “would,” “will” or the
negative of such terms or other variations thereof and words and
terms of similar substance may identify forward-looking statements,
including statements with respect to the businesses, strategies and
plans of AK Steel and Cliffs, their expectations relating to the
Merger, including the expected benefits of the proposed Merger and
the anticipated completion of the proposed Merger or the timing
thereof, and their respective future financial condition and
performance and expectations, estimates and projections about
Cliffs’ or AK Steel’s respective industries or businesses. Cliffs
and AK Steel 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 risk that the
Merger Agreement may be terminated in accordance with its terms and
that the Merger may not be completed; the possibility that Cliffs
shareholders may not approve the Merger Agreement and the
transactions contemplated by the Merger Agreement, including the
issuance of Cliffs common shares in connection with the Merger; the
possibility that AK Steel stockholders may not adopt the Merger
Agreement; the risk that the parties may not be able to satisfy any
or all of the conditions to the completion of the Merger in a
timely manner or at all; the risk that governmental agencies may
require Cliffs to agree to certain restrictions on the combined
company’s business in order to obtain the required regulatory
approvals for the Merger, which may negatively impact the combined
company’s results of operations; the risk that the Merger may be
less accretive than expected, or may be dilutive, to Cliffs’
earnings per share, which may negatively affect the market price of
Cliffs common shares; the possibility that Cliffs and AK Steel will
incur significant transaction and other costs in connection with
the Merger, which may be in excess of those anticipated by Cliffs
or AK Steel; the risk that the financing transactions to be
undertaken in connection with the Merger have a negative impact on
the combined company’s credit profile or financial condition; the
risk that Cliffs may fail to realize the benefits expected from the
Merger; the risk that the combined company may be unable to achieve
anticipated synergies or that it may take longer than expected to
achieve those synergies; the risk that any announcements relating
to, or the completion of, the Merger could have adverse effects on
the market price of Cliffs common shares; the risk related to any
unforeseen liability and future capital expenditure of AK Steel or
Cliffs; the risk that litigation relating to the Merger may be
brought against Cliffs, AK Steel or their respective directors; the
risks related to Cliffs’ ability to issue new senior notes or
obtain a new revolving credit facility in connection with the
Merger on favorable terms, if at all; the risk that the Merger and
its announcement or completion could have an adverse effect on the
ability of Cliffs and AK Steel to retain customers, retain and hire
key personnel and/or maintain relationships with their suppliers
and business partners; and the risk of any changes in general
economic, market or business conditions, or changes in the economic
or financial condition of Cliffs and AK Steel. Other risks to
Cliffs and AK Steel and factors that may present significant
additional obstacles to the realization of forward-looking
statements or that could have a material adverse effect on Cliffs’
and AK Steel’s respective financial condition, operating results,
credit rating, liquidity and businesses generally are described
under the caption “Risk Factors” in Cliffs’ and AK Steel’s
respective Annual Reports on Form 10-K for the year ended December
31, 2018 and other periodic reports filed with the Securities and
Exchange Commission (the “SEC”) as well as in the Registration
Statement (as defined below).
Unless expressly stated otherwise, forward-looking statements
are based on the expectations and beliefs of the respective
management teams of Cliffs and AK Steel 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 respective operations
and business environments of Cliffs and AK Steel, including
economic, competitive, regulatory and operational risks, many of
which are beyond the control of Cliffs and AK Steel 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 or AK
Steel. In view of these uncertainties, Cliffs and AK Steel caution
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 and AK Steel undertake 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.
Additional Information and Where to Find
It
In connection with the proposed Merger, on January 8, 2020,
Cliffs filed with the SEC a registration statement on Form S-4
(File No. 333-235855) (as it may be amended and supplemented from
time to time, the “Registration Statement”) that includes a joint
proxy statement of Cliffs and AK Steel and also constitutes a
prospectus of Cliffs. Cliffs and AK Steel may also file other
documents with the SEC regarding the proposed Merger. This
communication is not a substitute for the Registration Statement or
any other such document that Cliffs or AK Steel may file with the
SEC. INVESTORS AND SECURITY HOLDERS ARE URGED TO READ THE
REGISTRATION STATEMENT, THE JOINT PROXY STATEMENT/PROSPECTUS AND
ANY OTHER RELEVANT DOCUMENTS THAT ARE FILED OR WILL BE FILED WITH
THE SEC, AS WELL AS ANY AMENDMENTS OR SUPPLEMENTS TO THESE
DOCUMENTS, CAREFULLY AND IN THEIR ENTIRETY BECAUSE THEY CONTAIN OR
WILL CONTAIN IMPORTANT INFORMATION ABOUT THE PROPOSED TRANSACTION
AND RELATED MATTERS. The definitive joint proxy
statement/prospectus will be mailed to shareholders of Cliffs and
stockholders of AK Steel. Investors and securityholders may obtain
copies of the Registration Statement and the other documents filed
with the SEC free of charge at the SEC’s website, www.sec.gov.
Documents filed with the SEC by Cliffs are also available from
Cliffs free of charge at its website, www.clevelandcliffs.com, or
by contacting Cliffs’ Investor Relations at 216.694.6544. Documents
filed with the SEC by AK Steel are also available from AK Steel
free of charge at its website, www.aksteel.com, or by contacting AK
Steel’s Investor Relations at 513.425.5215.
Participants in the Solicitation Regarding
the Proposed Merger
Cliffs and AK Steel and certain of their respective directors
and executive officers may be deemed to be participants in the
solicitation of proxies in respect of the proposed Merger.
Information regarding Cliffs’ directors and officers, including a
description of their direct or indirect interests, by security
holdings or otherwise, is set forth in the proxy statement for
Cliffs’ 2019 annual meeting of shareholders, as filed with the SEC
on Schedule 14A on March 12, 2019. Information concerning AK
Steel’s directors and executive officers, including a description
of their direct or indirect interests, by security holdings or
otherwise, is set forth in the proxy statement for AK Steel’s 2019
annual meeting of stockholders, as filed with the SEC on Schedule
14A on April 10, 2019. Additional information regarding the
interests of these participants are included in the joint proxy
statement/prospectus that forms part of the Registration Statement
initially filed with the SEC on January 8, 2020, as well as other
relevant materials filed with the SEC when such materials become
available. Free copies of these documents may be obtained from the
sources indicated above.
No Offer or Solicitation
This communication is not intended to and does not constitute an
offer to sell or purchase, or the solicitation of an offer to sell
or purchase, or the solicitation of any vote of approval or the
solicitation of tenders or consents with respect to any security.
No offer, solicitation, purchase or sale will be made in any
jurisdiction in which such an offer, solicitation, or sale would be
unlawful prior to registration or qualification under the
securities laws of any such jurisdiction. No offer of securities
shall be made except by means of a prospectus meeting the
requirements of Section 10 of the Securities Act of 1933, as
amended. In the case of the Exchange Offers and Consent
Solicitations, the Exchange Offers and Consent Solicitations are
being made solely pursuant to the Offering Memorandum and Consent
Solicitation Statement and only to such persons and in such
jurisdictions as is permitted under applicable law.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20200129005234/en/
Cleveland-Cliffs Investor Relations: Paul Finan Director,
Investor Relations (216) 694-6544 Media: Patricia Persico Director,
Corporate Communications (216) 650-0168 AK Steel Investor
Relations: Douglas O. Mitterholzer General Manager, Investor
Relations (513) 425-5215 Media: Lisa H. Jester Corporate Manager,
Communications and Public Relations (513) 425-2510
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