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Cleveland-Cliffs Inc. (NYSE:CLF), a leading metal mining company with a market capitalization of $5.27 billion, has entered into a significant financial agreement by issuing $850 million in senior guaranteed notes, according to a filing with the Securities and Exchange Commission today. According to InvestingPro analysis, the company currently shows a strong free cash flow yield, suggesting efficient capital management despite market volatility. The notes, with a 7.500% interest rate, are due in 2031 and were issued in a private transaction exempt from the registration requirements of the Securities Act of 1933.
The notes will pay interest semi-annually with the first payment due on September 15, 2025, and will mature on September 15, 2031. These unsecured senior obligations are on par with the company’s existing and future unsecured senior indebtedness and are senior to any subordinated debt. The company maintains a healthy current ratio of 1.85, indicating solid short-term liquidity management. They are, however, subordinated to any secured debt to the extent of the collateral’s value.
The notes are guaranteed by Cleveland-Cliffs’ material direct and indirect wholly-owned domestic subsidiaries, making them structurally senior to any non-guaranteed company debt. The indenture governing the notes includes typical covenants restricting the company’s ability to engage in certain activities, such as creating liens, entering into sale and leaseback transactions, and merging or consolidating with other companies.
Cleveland-Cliffs has the option to redeem the notes at a premium before March 15, 2028, and at gradually reduced prices thereafter until maturity. Additionally, the company may use up to 35% of the proceeds from certain equity offerings to redeem notes at a 107.500% redemption price, provided a majority of the notes remain outstanding.
The company plans to use the net proceeds from the note issuance for general corporate purposes, which may include repaying borrowings under its asset-based credit facility. This move is part of Cleveland-Cliffs’ broader strategy to manage its total debt of $3.8 billion and financial obligations efficiently. InvestingPro analysis indicates the company is currently undervalued, with additional insights available through the comprehensive Pro Research Report, which provides deep-dive analysis of CLF among 1,400+ US equities.
The detailed terms of the notes and the indenture will be included in the company’s upcoming Quarterly Report on Form 10-Q for the quarter ending March 31, 2025. This SEC filing provides the basis for the information in this article.
In other recent news, Cleveland-Cliffs Inc. reported a Q4 loss, with revenues around $4.3 billion and an adjusted EBITDA loss of approximately $85 million. The company remains optimistic for a 2025 rebound, citing improvements in their order book for both automotive and non-automotive products. In financial developments, Cleveland-Cliffs priced $850 million in Senior Guaranteed Notes due in 2031, with an annual interest rate of 7.500%. The proceeds from this offering are planned for general corporate purposes, including repaying borrowings under its asset-based credit facility. In a similar move, the company also announced its intention to offer $750 million in Senior Guaranteed Notes due 2031. GLJ Research upgraded Cleveland-Cliffs’ stock rating from Sell to Buy, citing expectations of the implementation of tariffs by the incoming Trump administration and typical seasonal strength in the steel sector. Lastly, Cleveland-Cliffs appointed Jane M. Cronin as a new independent board member, a move expected to bring new insights to the board’s operations. These are among the recent developments for the company.
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