Cleveland-Cliffs begins tender offer for AK Steel notes due 2021, 2023

By Wendy Van Sickle

Columbus, Ohio, Feb. 26 – Cleveland-Cliffs Inc. and AK Steel Holding Corp. began cash tender offers for any and all of AK Steel’s outstanding $406.2 million of 6 5/8% senior notes due 2021 (Cusip: 001546AS9) and $380 million of 7½% senior notes due 2023 (Cusip: 001546AT7), according to a press release.

The offer is in connection with Cleveland-Cliffs’ anticipated acquisition of AK Steel.

In conjunction with the tender offers, AK Steel is soliciting consents to adopt certain proposed amendments to each of the indentures governing the existing notes to eliminate certain of the covenants, restrictive provisions and events of default, shorten the period of notice required in connection with a call of the AK Steel notes for redemption and release the liens securing the 2023 notes.

For each $1,000 principal amount of AK Steel notes tendered and related consents delivered by the early deadline, 5 p.m. ET on March 10, holders will receive $1,004.35 per $1,000 principal amount of 2021 notes and $1,041.75 per $1,000 principal amount of 2023 notes.

In each case, the total consideration includes an early tender premium of $50 per $1,000 principal amount that will not be paid to holders who tender their notes after the early deadline.

The offers are set to expire at 12:01 a.m. ET on March 25.

Holders will also be paid accrued interest to, but excluding, the relevant settlement date. Early and final settlements are expected to occur promptly after the early and final deadlines.

To the extent any AK Steel notes are not purchased through the tender offers, Cleveland-Cliffs intends to cause AK Steel to effect the redemption of those notes as soon as practicable after the consummation of the merger.

The consent of the holders of a majority of the aggregate outstanding principal amount of the notes and at least two-thirds of the 2023 notes with respect to the release of the liens securing those notes, will be required to effect the applicable proposed amendments.

The tender offers and consent solicitations are conditioned upon the consummation of the pending acquisition of AK Steel by Cleveland-Cliffs as well as the issuance of a new series of notes by Cleveland-Cliffs.

Additionally, each tender offer and consent solicitation is conditioned upon the completion of the other tender offer and consent solicitation.

Global Bondholder Services Corp. (866 924-2200 or 212 430-3774) is the information agent and depository.

Credit Suisse (800 820-1653 or 212 538-1862) is the dealer manager and solicitation agent.

The issuer is a Cleveland-based iron ore mining company. AK Steel is a West Chester, Ohio-based steel producer.

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