Cleveland-Cliffs prices $850 million in senior notes

CLEVELAND - Cleveland-Cliffs Inc. (NYSE: NYSE:CLF), a prominent North American steel producer with a market capitalization of $4.8 billion, has announced the pricing of $850 million in Senior Guaranteed Notes due in 2031. According to InvestingPro analysis, the company currently shows good financial health with an overall score of 2.56, despite challenging market conditions. These notes will carry an annual interest rate of 7.500% and are to be issued at par value. The company’s material direct and indirect wholly-owned domestic subsidiaries will guarantee the notes on a senior unsecured basis, with certain subsidiaries excluded from the guarantee. With a current debt-to-equity ratio of 0.55 and total debt of $3.8 billion as of the latest quarter, this offering aims to optimize the company’s capital structure. InvestingPro’s Fair Value analysis suggests the stock is currently undervalued.

The offering, which bypasses the registration requirements of the Securities Act of 1933, is set to close on February 6, 2025, contingent upon customary closing conditions. The notes are being offered to qualified institutional buyers under Rule 144A and to non-U.S. persons outside the United States under Regulation S.

Cleveland-Cliffs plans to allocate the net proceeds from this offering towards general corporate purposes. These include repaying borrowings under its asset-based credit facility. The transaction is described as leverage neutral by the company, aimed at enhancing liquidity and transitioning from secured to unsecured debt.

The notes and their guarantees have not been registered under the Securities Act or any state or other jurisdiction’s securities laws. Consequently, they may not be offered or sold in the United States absent registration or an exemption from registration requirements.

Cleveland-Cliffs specializes in value-added sheet products, especially for the automotive industry, and has a vertically integrated process that includes mining iron ore, producing pellets and direct reduced iron, and processing ferrous scrap through to primary steelmaking and downstream finishing. The company generated revenues of $20 billion in the last twelve months, though it faces challenges with a gross profit margin of 2.56%. Discover more insights about CLF’s performance metrics and 8 additional ProTips with a subscription to InvestingPro. With headquarters in Cleveland, Ohio, the company employs approximately 30,000 people across its operations in the United States and Canada.

This news is based on a press release statement and does not constitute an offer to sell or a solicitation of an offer to buy any securities. The information provided in this article is intended solely for informational purposes and does not imply any endorsement of the company’s future performance or prospects.

In other recent news, Cleveland-Cliffs Inc. reported a loss for the fourth quarter of 2024, with steel shipments totaling 3.8 million net tons and revenues around $4.3 billion. The company also reported an adjusted EBITDA loss of approximately $85 million for the same period. Despite a challenging year, the company maintains a "GOOD" overall financial health score according to InvestingPro analysis. The company’s recent acquisition of Stelco (TSX:STLC) Holdings Inc. is expected to enhance its future performance.

Cleveland-Cliffs Inc. also announced plans to offer $750 million in Senior Guaranteed Notes due 2031, with the intent to allocate the proceeds for general corporate purposes, including debt repayment. GLJ Research analyst Gordon Johnson upgraded the company’s stock rating from Sell to Buy, based on expectations of forthcoming tariffs and typical seasonal strength in the steel sector.

Jane M. Cronin has been appointed to the company’s Board of Directors, a move expected to bring new insights to the board’s operations. These are some of the recent developments shaping the trajectory of Cleveland-Cliffs.

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