Cliffs to issue $544 million 7¾% notes due 2020 in exchange offers

By Angela McDaniels

Tacoma, Wash., March 30 – Cliffs Natural Resources Inc. accepted about $675 million of notes in its exchange offers, according to a company news release.

In exchange for the accepted notes, the company will issue about $544 million of new 7¾% senior secured notes due 2020.

The exchange offer began Feb. 27 and ended at 9 a.m. ET on March 30, extended from midnight ET on March 25.

Additional details were not disclosed.

As previously reported, the company was originally offering to issue up to $750 million principal amount of the new 7¾% notes in the exchange offer. The cap was increased to $1.25 billion on March 5.

As of 5 p.m. ET on March 11, holders had tendered the following notes, listed in order of priority acceptance level:

• $253.5 million of the $754,138,000 6¼% senior notes due Oct. 1, 2040;

• $193.1 million of the $631,706,000 4 7/8% senior notes due April 1, 2021;

• $127.5 million of the $446,226,000 4.8% senior notes due Oct. 1, 2020; and

• $60.8 million of the $393.75 million 5.9% senior notes due March 15, 2020.

There is a sub-cap of $400 million, increased from the original $325 million, for the 6¼% notes.

For each $1,000 principal amount of existing notes, the total exchange value is $780.00 for the 6¼% notes, $818.75 for the 4 7/8% notes, $821.25 for the 4.8% notes and $860.00 for the 5.9% notes.

Each total exchange value includes an early tender premium of $50 per $1,000 principal amount.

Originally, Cliffs planned to pay the premium only to those who tendered their notes for exchange by the early tender date. On March 12, the company extended the early tender date from 5 p.m. ET on March 11 to coincide with the expiration and said all holders will receive the total exchange value, regardless of when they tender.

The company will also pay accrued interest up to but excluding the settlement date.

The new notes to be issued in the exchange offers will be guaranteed by subsidiaries that directly or indirectly own substantially all of the company’s domestic assets. They will be secured by second liens on substantially all of the company’s assets and the assets of the subsidiary guarantors, except for the “ABL collateral,” which consists of accounts receivable, inventory and other assets securing the company’s proposed new asset-based lending facility, and third liens on the ABL collateral.

The offers were not conditioned on any minimum amount of notes being tendered.

BofA Merrill Lynch (888 292-0070 or 980 388-3646), Jefferies, Deutsche Bank Securities and Credit Suisse were the dealer managers. Global Bondholder Services Corp. (866 470-4300 or 212 430-3774 for banks and brokers) was the information agent and depositary.

Cliffs is a Cleveland-based mining and natural resources company.

© 2015 Prospect News.
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