Cliffs Comments on Bankruptcy Filing by Rouge
October 27 2003 - 4:00PM
PR Newswire (US)
Cliffs Comments on Bankruptcy Filing by Rouge CLEVELAND, Oct. 27
/PRNewswire-FirstCall/ -- Cleveland-Cliffs Inc today commented on
the bankruptcy filing by Rouge Industries, Inc. Rouge Industries,
Inc. (Rouge), a significant pellet sales customer of Cliffs, filed
for Chapter 11 bankruptcy protection on October 23, 2003, and
announced that it had reached agreement on a non-binding letter of
intent to sell substantially all of its assets to OAO Severstal,
Russia's second largest steel producer. Rouge also announced that,
subject to Bankruptcy Court approval, it had secured a commitment
for a $150 million debtor-in-possession credit facility, which will
provide Rouge up to $35 million of incremental liquidity during the
period required to complete the sale. Rouge indicated that it will
continue to manufacture and ship steel products and provide
uninterrupted service to its customers during the bankruptcy
process. Cliffs sold 1.4 million tons of pellets to Rouge in 2002
and 2.1 million tons in 2003 through October 23rd. At the time of
Rouge's filing, Cliffs had no trade receivable exposure to Rouge;
however, Cliffs has a $10 million secured loan to Rouge with a
final maturity in 2007. As of September 30, 2003, the loan had a
balance of $11.1 million including accrued interest. Cliffs' sales
contract with Rouge provides that the Company will be the sole
supplier of pellets to Rouge through 2012, with minimum annual
obligations through 2007. At this time, the long-term impact of the
announced sale and bankruptcy filing on Cliffs' sales contract with
Rouge is unknown; however, it is anticipated that Cliffs will
continue to sell pellets to Rouge in the near- term.
Cleveland-Cliffs is the largest supplier of iron ore pellets to the
North American steel industry. The Company operates five iron ore
mines located in Michigan, Minnesota and Eastern Canada. References
in this news release to "Cliffs" and "Company" include subsidiaries
and affiliates as appropriate in the context. This news release
contains predictive statements that are intended to be made as
"forward-looking" within the safe harbor protections of the Private
Securities Litigation Reform Act of 1995. Although the Company
believes that its forward-looking statements are based on
reasonable assumptions, such statements are subject to risks and
uncertainties. Actual results may differ materially from such
statements for a variety of factors; such as: the expectations for
pellet sales, mine operations and financial results in 2003 may
differ significantly from actual results because of changes in
demand for iron ore pellets by North American integrated steel
producers due to changes in steel utilization rates, operational
factors, electric furnace production or imports of semi-finished
steel or pig iron; changes in financial condition of the Company's
partners and/or customers; rejection of major contracts and/or
venture agreements by customers and/or participants under
provisions of the U.S. Bankruptcy Code; events or circumstances
that could impair or adversely impact the viability of a mine and
the carrying value of associated assets; problems with
productivity, weather conditions, fluctuations in ore grade, tons
mined, changes in cost factors including energy costs, and employee
benefit costs; and the effect of these various risks on the
Company's liquidity, compliance with restrictive covenants in debt
agreements and financial position. Reference is made to the
detailed explanation of the many factors and risks that may cause
such predictive statements to turn out differently, as set forth in
the Company's most recent Annual Report and Reports on Form 10-K
and 10-Q and previous news releases filed with the Securities and
Exchange Commission, which are available publicly on Cliffs'
website. The information contained in this document speaks as of
the date of this news release and may be superceded by subsequent
events. Contacts: Media: (216) 694-4870 Financial Community: (800)
214-0739 or (216) 694-5459 News releases and other information on
the Company are available on the Internet at
http://www.cleveland-cliffs.com/ . DATASOURCE: Cleveland-Cliffs Inc
Contact: Cleveland-Cliffs Inc Media, +1-216-694-4870, or Financial,
+1-800-214-0739, or +1-216-694-5459 Web site:
http://www.cleveland-cliffs.com/
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