Street Calls of the Week
Cleveland-Cliffs Inc. (NYSE:CLF), currently valued at $5.4 billion in market capitalization, announced Monday that it has issued $850 million in aggregate principal amount of 7.625% Senior Guaranteed Notes due 2034. The notes were sold in a private transaction exempt from registration under the Securities Act of 1933, according to a statement based on an SEC filing. InvestingPro data shows the company operates with a significant debt burden, with total debt standing at $7.7 billion as of the latest quarter.
The notes, issued under an indenture dated Monday among Cleveland-Cliffs, certain subsidiary guarantors, and U.S. Bank Trust Company as trustee, are unsecured senior obligations of the company. They rank equally with other unsecured senior debt and will mature on January 15, 2034. Interest will be paid semi-annually in arrears on January 15 and July 15 each year, starting January 15, 2026.
The notes are guaranteed on an unsecured senior basis by Cleveland-Cliffs’ material direct and indirect wholly owned domestic subsidiaries. They are structurally senior to any company debt not guaranteed by these subsidiaries and structurally subordinated to liabilities of subsidiaries that do not guarantee the notes.
The indenture contains covenants limiting the company’s and its subsidiaries’ ability to create certain liens, enter into sale and leaseback transactions, merge or consolidate, or transfer or sell all or substantially all assets. In the event of a defined change of control, Cleveland-Cliffs must offer to repurchase the notes at 101% of principal plus accrued interest.
Cleveland-Cliffs may redeem some or all of the notes at any time before January 15, 2029, at par plus accrued interest and a make-whole premium. After January 15, 2029, the company may redeem the notes at an initial price of 103.813% of principal, declining annually to par by January 15, 2031. Up to 35% of the original principal may be redeemed with proceeds from certain equity offerings at 107.625% if at least 65% of the notes remain outstanding.
The company, which generates annual revenue of $18.5 billion, plans to use the net proceeds to redeem $685 million of outstanding notes due 2027 and to repay borrowings under its asset-based credit facility. Trading at $11.04, the stock is currently fairly valued according to InvestingPro’s Fair Value model, with an overall Financial Health Score of FAIR.
This information is based on a statement in a press release and details provided in the company’s SEC filing.
In other recent news, Cleveland-Cliffs Inc. has announced the pricing of an upsized offering of $850 million in senior unsecured guaranteed notes due 2034, with an annual interest rate of 7.625%. The company plans to use the proceeds, along with available liquidity, to redeem existing senior notes due in 2027. Additionally, Cleveland-Cliffs has secured multiyear fixed-price contracts with several U.S. automakers, marking a shift from its usual one-year agreements. In legal developments, United States Steel Corporation and Nippon Steel Corporation have voluntarily dismissed their lawsuit against Cleveland-Cliffs with prejudice. Furthermore, the U.S. Department of Commerce has imposed 50% tariffs on certain steel derivative products to address tariff circumvention, a move supported by Cleveland-Cliffs. These tariffs target products processed through Mexico and Canada but made from steel melted and poured outside North America.
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