8-K: Cleveland-Cliffs Issues $850 Million in Senior Guaranteed Notes

Cleveland-Cliffs Inc. has issued $850 million in 7.500% Senior Guaranteed Notes due in 2031 in a private transaction.

Summary

• Cleveland-Cliffs Inc. issued $850 million in Senior Guaranteed Notes due 2031 on February 6, 2025.
• The notes bear an annual interest rate of 7.500%, payable semi-annually on March 15 and September 15, starting September 15, 2025.
• The notes will mature on September 15, 2031.
• The notes are general unsecured senior obligations, ranking equally with existing and future unsecured senior debt and senior to subordinated debt.
• The notes are effectively subordinated to existing and future secured debt to the extent of the value of the assets securing such debt.
• The notes are guaranteed by the company's material direct and indirect wholly-owned domestic subsidiaries.
• The indenture contains customary covenants limiting the company's ability to create liens, enter into sale and leaseback transactions, merge or consolidate, and transfer assets.
• Upon a change of control, the company must offer to repurchase the notes at 101% of the principal amount plus accrued interest.
• The company may redeem some or all of the notes prior to March 15, 2028, at a make-whole premium.
• From March 15, 2028, the company may redeem the notes at a declining premium, reaching 100% on March 15, 2030.
• The company may redeem up to 35% of the notes with proceeds from certain equity offerings at 107.500% prior to March 15, 2028.
• Customary events of default are included in the indenture, allowing acceleration of amounts due under the notes.
• The company intends to use the net proceeds for general corporate purposes, including repaying borrowings under its asset-based credit facility.

Sentiment

Score: 6

Explanation: The sentiment is neutral. The company is issuing debt, which is a common financial activity. The terms of the debt are standard, and the intended use of proceeds is for general corporate purposes.

Positives

• The issuance provides Cleveland-Cliffs with $850 million in capital.
• The company intends to use the net proceeds for general corporate purposes, including repaying borrowings under its asset-based credit facility.

Negatives

• The notes bear a 7.500% annual interest rate, representing a cost of capital.
• The notes are effectively subordinated to the company's existing and future secured indebtedness.

Risks

• The company's ability to meet its obligations under the indenture is subject to various risks, including market conditions and operational performance.
• The indenture contains covenants that limit the company's operational flexibility.
• An event of default under the indenture could lead to acceleration of the amounts due under the notes.

Future Outlook

The company intends to use the net proceeds from the notes for general corporate purposes, including the repayment of borrowings under its asset-based credit facility.

Industry Context

Issuing debt is a common practice for companies to raise capital for various purposes, such as refinancing existing debt, funding operations, or pursuing acquisitions. The interest rate and terms of the notes reflect the company's creditworthiness and prevailing market conditions.

Stakeholder Impact

• Shareholders: The issuance of debt may impact the company's financial leverage and earnings per share.
• Creditors: The notes represent a new obligation for the company, impacting its credit profile.
• Employees: The use of proceeds for general corporate purposes may support ongoing operations and employment.

Next Steps

• The company anticipates filing a copy of the Indenture as an exhibit to its Quarterly Report on Form 10-Q for the quarter ended March 31, 2025.

Key Dates