Cleveland-Cliffs issues $275 million in additional senior notes due 2034

Cleveland-Cliffs Inc. (NYSE:CLF), with a current market capitalization of $6.57 billion, announced Friday it has issued an additional $275 million in aggregate principal amount of 7.625% Senior Guaranteed Notes due 2034. The transaction was completed in a private placement exempt from registration under the Securities Act of 1933, according to a press release statement based on a filing with the Securities and Exchange Commission. According to InvestingPro data, the company currently operates with a significant debt burden, making this issuance particularly noteworthy for investors tracking the company’s financial health.

The additional notes are part of the company’s existing 7.625% Senior Guaranteed Notes due 2034, originally issued in the amount of $850 million. The new notes were issued at 102.75% of their principal amount and are considered the same class and series as the initial notes, except for their date of issuance and issue price.

Interest on the notes is set at an annual rate of 7.625%, payable semi-annually in arrears on January 15 and July 15, beginning January 15, 2026. The notes will mature on January 15, 2034.

The notes are general unsecured senior obligations of Cleveland-Cliffs, ranking equally with the company’s other existing and future unsecured senior indebtedness and senior to subordinated debt. They are guaranteed on an unsecured senior basis by the company’s material direct and indirect wholly owned domestic subsidiaries.

The indenture governing the notes includes covenants that limit the company’s and its subsidiaries’ ability to create certain liens, enter into sale and leaseback transactions, merge or consolidate, and transfer or sell substantially all assets. In the event of a change of control triggering event as defined in the indenture, the company must offer to repurchase the notes at 101% of their principal amount plus accrued interest.

Cleveland-Cliffs may redeem some or all of the notes at any time prior to January 15, 2029, at par plus a make-whole premium. After that date, the redemption price declines annually until it reaches par on January 15, 2031.

The company stated it intends to use the net proceeds from the additional notes to repay borrowings under its asset-based credit facility. While the company maintains a healthy current ratio of 2.04, indicating sufficient liquid assets to meet short-term obligations, InvestingPro analysis shows the company has been quickly burning through cash, with negative free cash flow in the last twelve months.

In other recent news, Cleveland-Cliffs Inc. announced a series of developments regarding its senior notes. The company has priced an additional $275 million of Senior Unsecured Guaranteed Notes due 2034 at 102.750% of their principal amount, with an implied yield of 6.992%. This follows their initial issuance of $850 million in senior notes at a 7.625% interest rate, which will mature on January 15, 2034. Additionally, Cleveland-Cliffs plans to offer another $200 million in senior notes, maintaining the same 7.625% interest rate. Wells Fargo is serving as the sole bookrunner for this add-on offering.

In a separate matter, United States Steel Corporation and Nippon Steel Corporation, along with Nippon Steel North America, have voluntarily dismissed their lawsuit against Cleveland-Cliffs. The lawsuit, which also named the company’s Chairman and CEO Lourenco Goncalves and the International President of the United Steelworkers David McCall as defendants, was originally filed in early 2025. These developments reflect significant financial and legal activities for Cleveland-Cliffs.

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