United States Steel plans $1.25 billion unsecured credit facility with Lone Star purchase

By Sara Rosenberg

New York, March 29 - United States Steel Corp. has received a commitment for a $1.25 billion five-year credit facility to help fund its acquisition of Lone Star Technologies, Inc., company officials said in a conference call Thursday.

JPMorgan is the lead bank on the deal.

The facility consists of a $750 million unsecured revolver and a $500 million unsecured term loan.

Furthermore, the company has received a commitment from JPMorgan for a $500 million unsecured bridge facility, officials said in the call.

In addition to helping fund the acquisition, the credit facility will replace the company's $600 million inventory-backed facility.

Under the transaction agreement, United States Steel is buying Lone Star for $67.50 per share in cash for an aggregate value of $2.1 billion.

Other acquisition financing will come from cash on hand and the company's existing receivables purchase program.

The transaction is subject to the approval of Lone Star's shareholders and other customary closing conditions, including regulatory approvals, and is expected to close in the second or third quarter.

United States Steel is a Pittsburgh-based integrated steel producer. Lone Star is a Dallas-based manufacturer and marketer of oilfield casing, tubing and line pipe, specialty tubing products, and flat-rolled steel and other tubular products and services.

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