U.S. Steel’s 2.75% convertibles accelerated after technical default

By Rebecca Melvin

New York, Nov. 30 – United States Steel Corp. 2.75% convertibles are being accelerated because of a technical default related to the company’s non-payment on a note for the Province of Ontario, a market source said.

A U.S. Steel spokeswoman said that the company would not comment beyond what was in an 8-K filing on a notice of acceleration from holders for its 2.75% senior convertible notes due 2019. The filing did not refer to the Ontario note.

The convertibles’ acceleration notice was received on Nov. 20 from people who say they are the beneficial owners of at least 25% of the outstanding principal amount of the convertibles.

U.S. Steel Canada Inc. has filed for protection from creditors in Canada and therefore may not have made payments on its C$150.6 million note to the Province of Ontario.

The notice declares all principal and interest for the 2.75% convertibles due and payable, and the company said it will pay promptly in full the outstanding principal amount of the convertibles and accrued interest once it receives documentation confirming ownership of the beneficial owners.

The outstanding principal amount of the convertibles was $118,595,000 as of Nov. 25.

The bonds had recently been trading at 97 having dropped from the 150 range in tandem with a slide in the bond’s underlying common stock. The acceleration means the bonds will be paid out at par.

The steel company is based in Pittsburgh.

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