Item 1.01. Entry into a Material Definitive Agreement.
Senior Convertible Notes Offering
On October 16, 2019, United States Steel Corporation (the
“Corporation”) entered into a purchase agreement (the “Purchase Agreement”), pursuant to which the
Corporation agreed to sell an aggregate principal amount of $300,000,000 of its 5.00% Senior Convertible Notes due 2026 (the
“Convertible Notes”) to the several initial purchasers named in Schedule I of the Purchase Agreement
(collectively, the “Initial Purchasers”). In addition, the Corporation granted the Initial Purchasers a 30-day
option to purchase up to an additional $50,000,000 in aggregate principal amount of Convertible Notes, on the same terms and
The closing of the sale of the Convertible Notes occurred on
October 21, 2019. The Corporation received net proceeds, after deducting commissions and estimated offering expenses, of approximately
$291 million from the sale of the Convertible Notes. The Corporation intends to use the net proceeds for general corporate purposes,
including, without limitation, for previously announced strategic investments and capital expenditures.
The Convertible Notes were sold in a private offering exempt
from the registration requirements of the Securities Act of 1933, as amended (the “Securities Act”), to persons reasonably
believed to be qualified institutional buyers pursuant to the exemption from registration provided by Rule 144A of the Securities
A copy of the Purchase Agreement is included in this Form 8-K
as Exhibit 10.1 and is incorporated herein by reference. The summary description of the Purchase Agreement in this report is qualified
in its entirety by reference to Exhibit 10.1.
The Convertible Notes were issued pursuant to an indenture,
dated October 21, 2019 (the “Indenture”), between the Corporation and The Bank of New York Mellon, as trustee.
The Convertible Notes are general unsecured obligations of the
Corporation and bear interest at a rate of 5.00% per year payable semi-annually in arrears in cash on May 1 and November 1, beginning
on May 1, 2020. The Convertible Notes mature on November 1, 2026, unless earlier repurchased, redeemed or converted. The Convertible
Notes may not be redeemed prior to November 5, 2023. On or after November 5, 2023, and prior to August 1, 2026, the Corporation
may redeem the Convertible Notes for cash at the Corporation’s option, in whole or in part, at any time and from time to
time upon giving notice of redemption, at a cash redemption price equal to the principal amount of the Convertible Notes to be
redeemed, plus accrued and unpaid interest to, but excluding, the redemption date, if the last reported sale price per share of
the common stock has been at least 130% of the conversion price then in effect for at least 20 trading days (whether or not consecutive),
including the trading day immediately preceding the date on which the Corporation provides notice of redemption, during any 30
consecutive trading day period ending on, and including, the trading day immediately preceding the date on which the Corporation
provides notice of redemption.
The conversion rate will initially be 74.8391 shares of common
stock per $1,000 principal amount of the Convertible Notes (equivalent to an initial conversion price of approximately $13.36
per share of common stock). The conversion rate will be subject to adjustment in some events but will not be adjusted for any
accrued and unpaid interest. In addition, following certain corporate events that occur prior to the maturity date or upon notice
of an optional redemption prior to the maturity date, the conversion rate will increase for a holder who elects to convert its
Convertible Notes in connection with such a corporate event or redemption in certain circumstances.
Prior to the close of business on the business day immediately
preceding August 1, 2026, holders will be entitled to convert their Convertible Notes for shares of common stock only upon satisfaction
of one or more of the following conditions: (1) during any calendar quarter commencing after the calendar quarter ending December
31, 2019 (and only during such calendar quarter), if the closing sale price of the common stock for at least 20 trading days (whether
or not consecutive) during the period of 30 consecutive trading days ending on, and including, the last trading day of the immediately
preceding calendar quarter is greater than 130% of the applicable conversion price on each applicable trading day; (2) during
the five business day period after any five consecutive trading day period (the “measurement period”) in which the
trading price per $1,000 principal amount of Convertible Notes for each trading day of the measurement period was less than 98%
of the product of the last reported sale price of the common stock and the conversion rate on each such trading day; (3) if
the Corporation calls any or all of the notes for redemption; or (4) upon the occurrence of specified corporate events. On
or after August 1, 2026, holders may convert all or a portion of their Convertible Notes at any time prior to the close of business
on the second scheduled trading day immediately preceding the maturity date. The Corporation will settle conversions of the Convertible
Notes by paying or causing to be delivered, as the case may be, cash, shares of common stock or a combination of cash and such
shares, at its election.
If the Corporation undergoes a “fundamental change”
(as defined in the Indenture), subject to certain conditions, holders may require the Corporation to repurchase for cash all or
part of their Convertible Notes at a purchase price equal to 100% of the principal amount of the Convertible Notes to be repurchased,
plus accrued and unpaid interest to, but excluding, the fundamental change repurchase date. The Indenture contains customary dilution
provisions as well as adjustment provisions in connection with conversions under certain corporate events or an optional redemption.
The Indenture contains customary provisions regarding the Corporation’s
ability to merge with, consolidate with, or sell assets to any other persons. The Indenture also contains customary provisions
regarding events of default, which could result in an acceleration of repayment of the principal amount and accrued and unpaid
interest on any outstanding Convertible Notes.
A copy of the Indenture is included in this Form 8-K as Exhibit
4.1 and is incorporated herein by reference. The summary description of the Indenture in this report is qualified in its entirety
by reference to Exhibit 4.1.
This Current Report on Form 8-K does not constitute an offer
to sell, or a solicitation of an offer to buy the Convertible Notes, or any security, and shall not constitute an offer, solicitation
or sale in any jurisdiction in which such offering would be unlawful.