Cleveland-Cliffs Inc. (NYSE: CLF) (“Cliffs”) announced today
that it has priced $400 million aggregate principal amount of
Senior Secured Notes due 2025 (the “Notes”) in an offering (the
“Notes Offering”) that is exempt from the registration requirements
of the Securities Act of 1933 (the “Securities Act”). The Notes
will bear interest at an annual rate of 9.875% and will be issued
at a price of 94.500% of their principal amount.
The Notes will be guaranteed on a senior secured basis by
Cliffs’ material wholly owned domestic subsidiaries (subject 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 (the “ABL Facility”).
The Notes Offering is expected to close on April 17, 2020,
subject to customary closing conditions.
Cliffs intends to use the net proceeds from the Notes Offering
for general corporate purposes, including to strengthen its balance
sheet and increase liquidity, which may include repaying a portion
of the borrowings outstanding under the ABL Facility.
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 among the largest vertically integrated
producers of differentiated iron ore and steel in North America.
With an emphasis on non-commoditized products, Cliffs is uniquely
positioned to supply both customized iron ore pellets and
sophisticated steel solutions to a quality-focused customer base,
with an industry-leading market share in the automotive industry. A
commitment to environmental sustainability is core to our business
operations and extends to how we partner with stakeholders across
our communities and the steel value chain. Headquartered in
Cleveland, Ohio, Cleveland-Cliffs employs approximately 12,000
people across mining and steel manufacturing operations in the
United States, Canada and Mexico.
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,” “will,” “would” or the
negative of such terms or other variations thereof and words and
terms of similar substance used in connection with any discussion
of future plans, actions or events identify forward-looking
statements with respect to our business, strategy and plans,
expectations relating to the merger (the “Merger”) between Cliffs
and AK Steel Holding Corporation (“AK Steel”) and future financial
condition and performance. We 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
severe financial hardship, bankruptcy, temporary or permanent shut
downs or operational challenges, due to the ongoing novel strain of
coronavirus (“COVID-19”) pandemic or otherwise, of one or more of
our major customers, including customers in the automotive market,
key suppliers or contractors, which among other adverse effects,
could lead to reduced demand for our products, increased difficulty
collecting receivables and customers and/or suppliers/contractors
asserting force majeure or other reasons for not performing their
contractual obligations to us; the uncertainty and weaknesses in
global economic conditions, including downward pressure on prices
caused by the ongoing COVID-19 pandemic, oversupply of imported
products, reduced market demand and risks related to U.S.
government actions with respect to Section 232 of the Trade
Expansion Act (as amended by the Trade Act of 1974), the United
States-Mexico-Canada Agreement and/or other trade agreements,
treaties or policies; the uncertainties associated with the highly
competitive and highly cyclical steel industry and reliance on the
demand for steel from the automotive industry; the continued
volatility of iron ore and steel prices and other trends, which may
impact the price adjustment calculations under certain of our sales
contracts; our ability to cost-effectively achieve planned
production rates or levels, including at our hot briquetted iron
(“HBI”) plant once we re-start construction activities, and to
resume full operations, at our facilities that are temporarily
idled due to the COVID-19 pandemic; our ability to successfully
identify and consummate any strategic investments or development
projects, including our HBI plant; the impact of our steel-making
furnace customers reducing their steel production due to the
COVID-19 pandemic or increased market share of steel produced using
other methods or lighter-weight steel alternatives, including
aluminum; our ability to maintain adequate liquidity, our level of
indebtedness and the availability of capital could limit cash flow
available to fund working capital, planned capital expenditures,
acquisitions and other general corporate purposes or ongoing needs
of our business; our actual economic iron ore reserves or
reductions in current mineral estimates, including whether any
mineralized material qualifies as a reserve; the outcome of any
contractual disputes with our customers, joint venture partners or
significant energy, material or service providers or any other
litigation or arbitration; problems or uncertainties with sales
volume or mix, productivity, transportation, environmental
liabilities, employee benefit costs and other risks of the steel
and mining industries; impacts of existing and increasing
governmental regulation and related costs and liabilities,
including failure to receive or maintain required operating and
environmental permits, approvals, modifications or other
authorization of, or from, any governmental or regulatory entity
and costs related to implementing improvements to ensure compliance
with regulatory changes; our ability to maintain appropriate
relations with unions and employees; the ability of our customers,
joint venture partners and third party service providers to meet
their obligations to us on a timely basis or at all; the events or
circumstances that could impair or adversely impact the viability
of a production plant or mine and the carrying value of associated
assets, as well as any resulting impairment charges; the
uncertainties associated with natural disasters, weather
conditions, unanticipated geological conditions, supply or price of
energy, equipment failures and other unexpected events; the
unpredictability and severity of catastrophic events, including
acts of terrorism or outbreak of war or hostilities, as well as
management’s responses to any of the aforementioned factors;
adverse changes in interest rates and tax laws; the potential
existence of significant deficiencies or material weakness in our
internal control over financial reporting; our ability to realize
the anticipated benefits of the Merger and to successfully
integrate the businesses of AK Steel into our existing businesses,
including uncertainties associated with maintaining relationships
with customers, vendors and employees, as well as realizing the
estimated future synergies; the possibility that the Merger may be
less accretive than expected, and may be dilutive, to our earnings
per share, whether as a result of adverse changes in market
conditions, volatility in the commodity prices for iron ore and/or
steel, adverse regulatory developments or otherwise; additional
debt we assumed or issued in connection with the Merger may
negatively impact our credit profile and limit our financial
flexibility; the risks related to our ability to issue new senior
notes on favorable terms, if at all; changes in the cost of raw
materials and supplies; supply chain disruptions or poor quality of
raw materials or supplies, including scrap, coal, coke and alloys;
disruptions in, or failures of, our information technology systems,
including those related to cybersecurity; unanticipated costs
associated with healthcare, pension and other postretirement
benefits obligations; and other risks described under the caption
“Risk Factors” in Cliffs’ and AK Steel’s Annual Reports on Form
10-K for the year ended December 31, 2019 and other periodic
reports filed with the Securities and Exchange Commission. Unless
expressly stated otherwise, forward-looking statements are based on
the expectations and beliefs of the Cliffs management team 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
operations and business environment of Cliffs, including economic,
competitive, regulatory and operational risks, many of which are
beyond the control of Cliffs 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. In view of these uncertainties, Cliffs
cautions 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 undertakes 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.
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version on businesswire.com: https://www.businesswire.com/news/home/20200415005760/en/
MEDIA CONTACT: Patricia Persico Director, Corporate
Communications (216) 694-5316
INVESTOR CONTACT: Paul Finan Director, Investor Relations
(216) 694-6544
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