Cleveland-Cliffs Inc. (NYSE: CLF) (“Cliffs”) today announced
that it intends to offer to sell, subject to market and other
conditions, $550 million aggregate principal amount of Senior
Secured Notes due 2028 (the “Secured Notes”) and $400 million
aggregate principal amount of Senior Notes due 2028 (the “Unsecured
Notes” and, together with the Secured Notes, the “Notes”) in
separate offerings (the “Notes Offerings”) that are exempt from the
registration requirements of the Securities Act of 1933 (the
“Securities Act”).
The Unsecured Notes will be guaranteed on a senior unsecured
basis by Cliffs’ material wholly owned domestic subsidiaries (other
than excluded subsidiaries) and, following the closing of the
Merger (as defined below), will be guaranteed on a senior unsecured
basis by AK Steel Holding Corporation (“AK Holding”) and its
material wholly owned subsidiaries (other than excluded
subsidiaries). The Secured Notes will be, following the closing of
the Merger, guaranteed on a senior secured basis by Cliffs’
material wholly owned domestic subsidiaries, including AK Holding
and its material wholly owned subsidiaries (subject in each case 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.
We expect that the Notes Offerings will be consummated prior to
the consummation of the previously announced merger (the "Merger")
with AK Holding. As a result, the gross proceeds are expected to be
deposited into an escrow account until the consummation of the
Merger. In addition, the Notes will be subject to a “special
mandatory redemption” in the event that (i) the Merger is not
consummated on or prior to June 30, 2020 or (ii) if on or prior to
June 30, 2020, the Merger Agreement (as defined below) has been
terminated and is not otherwise amended or replaced. If a special
mandatory redemption event occurs, Cliffs will redeem the Notes at
the “special mandatory redemption price” equal to the issue price
of the Notes plus the accrued yield (as defined in the Secured
Notes and Unsecured Notes) and accrued and unpaid interest, if any,
to, but excluding, the redemption date.
The Secured Notes offering and the Unsecured Notes offering are
not contingent upon one another.
Cliffs intends to use the net
proceeds from the Notes Offerings to repurchase, in the previously
announced tender offers ("Tender Offers") for any and all
outstanding 7.625% senior notes due 2021 (the “AK Steel 2021
Notes”) and 7.50% Senior Secured Notes due 2023 (the “AK Steel 2023
Notes”) issued by AK Steel Corporation, all AK Steel 2021 Notes and
AK Steel 2023 Notes that are validly tendered and not validly
withdrawn. To the extent any AK Steel 2021 Notes and AK Steel 2023
Notes remain outstanding after expiration of the Tender Offers,
Cliffs intends to use the net proceeds from the Notes Offerings to
redeem any and all such outstanding AK Steel 2021 Notes and AK
Steel 2023 Notes, although it has no legal obligation to do so and
the selection of any particular redemption date (subject to the
requirements of the respective indentures governing such notes, as
may be modified by the consent solicitations being conducted
concurrently with the Tender Offers) is in its discretion. Cliffs
also intends to use any remaining net proceeds from the Notes
Offerings to pay for fees and expenses in connection with the
Merger and the Notes Offerings, and for general corporate
purposes.
This news release does not
constitute an offer to sell or the solicitation of an offer to buy
any securities. The 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 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 the largest and oldest
independent iron ore mining company in the United States.
Cleveland-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, Cleveland-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. On December 2, 2019, Cleveland-Cliffs agreed
to acquire AK Steel, a leading North American producer of
sophisticated steel products, which is expected to close in the
first quarter of 2020. Driven by the core values of safety, social,
environmental and capital stewardship, Cliffs’ employees endeavor
to provide all stakeholders with operating and financial
transparency.
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 Holding 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 Holding’s respective industries or businesses. Cliffs
and AK Holding 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
Agreement and Plan of Merger between Cliffs, AK Holding and Pepper
Merger Sub Inc., a direct wholly owned subsidiary of Cliffs,
entered on December 2, 2019 (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
Holding 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 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 Holding will incur significant
transaction and other costs in connection with the Merger, which
may be in excess of those anticipated by Cliffs or AK Holding; 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 Holding or Cliffs;
the risk that pending litigation relating to the Merger and any
potential future litigation against Cliffs, AK Holding or their
respective directors may delay or prevent the completion of the
Merger; 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 Holding 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 Holding. Other
risks to Cliffs and AK Holding 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 Holding’s respective financial condition,
operating results, credit rating, liquidity and businesses
generally are described under the caption “Risk Factors” in Cliffs’
and AK Holding’s respective Annual Reports on Form 10-K for the
year ended December 31, 2019 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 Holding 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 Holding, including
economic, competitive, regulatory and operational risks, many of
which are beyond the control of Cliffs and AK Holding 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
Holding. In view of these uncertainties, Cliffs and AK Holding
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 Holding 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, Cliffs filed with the
SEC a registration statement on Form S-4 (File No. 333-235855) (as
amended and as it may be supplemented from time to time, the
“Registration Statement”) that was declared effective by the SEC on
February 4, 2020 and that includes a joint proxy statement of
Cliffs and AK Holding and also constitutes a prospectus of Cliffs.
On February 4, 2020, AK Holding filed with the SEC its definitive
joint proxy statement/prospectus in connection with the proposed
Merger. Cliffs and AK Holding 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 Holding may file with the SEC. INVESTORS
AND SECURITY HOLDERS ARE URGED TO READ THE REGISTRATION STATEMENT,
THE DEFINITIVE 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. Cliffs and AK Holding began mailing the definitive joint
proxy statement/prospectus to the shareholders of Cliffs and
stockholders of AK Holding, respectively, on or about February 5,
2020. Investors and security holders may obtain copies of the
Registration Statement, the definitive joint proxy
statement/prospectus 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 Holding are also available from AK Holding free of
charge at its website, www.aksteel.com, or by contacting AK
Holding’s Investor Relations at 513.425.5215.
Participants in the Solicitation Regarding
the Proposed Merger
Cliffs and AK Holding 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
Holding’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 Holding’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 definitive
joint proxy statement/prospectus and the Registration Statement, 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.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20200226005838/en/
Cleveland-Cliffs Investor Relations: Paul Finan Director,
Investor Relations (216) 694-6544
Media: Patricia Persico Director, Corporate Communications (216)
650-0168
Cleveland Cliffs (NYSE:CLF)
Historical Stock Chart
From Apr 2024 to May 2024
Cleveland Cliffs (NYSE:CLF)
Historical Stock Chart
From May 2023 to May 2024