Cleveland-Cliffs wraps exchange offer for AK Steel 6 3/8%, 7% notes

By Wendy Van Sickle

Columbus, Ohio, March 13 – Cleveland-Cliffs Inc. and AK Steel Holding Corp. announced the final results of the offers to exchange any and all of AK Steel’s outstanding $270,232,000 of 6 3/8% senior notes (Cusip: 001546AV2) due Oct. 15, 2025 and $391,632,000 of 7% senior notes due March 15, 2027 (Cusip: 001546AU4) for new notes issued by Cleveland-Cliffs, according to a press release.

The exchange offers and related consent solicitations expired at 6 a.m. ET on March 13, after having been pushed out from 12:01 a.m. ET on Feb. 12.

By the expiry, holders tendered $231,824,000, or 85.79%, of the 6 3/8% notes and $335,376,000, or 85.64%, of the 7% notes for exchange.

As of the early participation date, 5 p.m. ET on Jan. 28, holders tendered $234,768,000 of the 6 3/8% notes and $334,754,000 of the 7% notes for exchange.

The new notes will have the same coupon and maturity as the existing notes.

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

In conjunction with the exchange offers, AK Steel was 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. The companies announced on Jan. 29 that they received the necessary consents from holders to amend the notes.

For each $1,000 principal amount of AK Steel notes tendered for exchange and related consents that were delivered by the consent deadline, 5 p.m. ET on Jan. 28, holders will receive $1,000 principal amount of new Cleveland-Cliffs notes and a $2.50 cash consent fee.

Holders who tendered their notes for exchange after the consent deadline will receive exchange notes in a principal amount equal to the amount of their existing notes tendered for exchange.

Settlement is expected on Monday.

The exchange offers and consent bids were announced on Jan. 14.

The new notes will be guaranteed on a senior unsecured basis by its material direct and indirect wholly owned domestic subsidiaries, including AK Steel, AK Steel Corp. and its subsidiaries that guarantee the existing notes.

The exchange offers were expected to result in reduced liquidity for the existing AK Steel notes, and the amendments will remove the restrictive covenants and some other terms of the existing AK Steel notes and will afford reduced protection to holders of those securities. Further, neither Cliffs nor its current subsidiaries will have any obligation, contingent or otherwise, to pay amounts due under the existing AK Steel notes or to make any funds available to pay those amounts, whether by dividend, distribution, loan or other payments.

Global Bondholder Services Corp. (866 924-2200 or 212 430-3774) is the information agent and exchange agent for the exchange offers and consent solicitations.

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

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