Yahoo Finance Cleveland-Cliffs Declares Pricing of Senior Secured Notes
Cleveland-Cliffs Inc. CLF announced the pricing of $400 million total principal amount of senior secured notes due 2025. The notes will carry annual interest rate of 9.875% and will be issued at a price of 94.5% of the principal amount. Also, the offering is exempted from the registration requirements of the Securities Act of 1933.
The notes will be guaranteed by Cleveland-Cliffs’ material fully-owned domestic subsidiaries on a senior secured basis. Further, the company expects the offering to close on Apr 17, which is subject to customary closing conditions.
The company plans to use the net proceeds from the offering for general corporate purposes and may also include repayment of a portion of the outstanding borrowings under the asset-based credit (ABL) facility.
As of Dec 31, 2019, Cleveland-Cliffs had cash and cash equivalents of $352.6 million, down from $823.2 million as of Dec 31, 2018. Long-term debt was $2,113.8 million at the end of 2019, up 1% year over year.
Shares of Cleveland-Cliffs have plunged 60.5% in the past year compared with the industry’s 19.1% decline.
In March, Cleveland-Cliffs successfully completed the acquisition of AK Steel Holding Corporation. The buyout creates a unique position for the company as it will possess a dynamic combination of assets — two efficient integrated blast furnace steel mills along with a new state-of-the-art hot briquetted iron (HBI) facility, two electric arc furnace plants along with many other technologically developed facilities.
Recently, Cleveland-Cliffs announced that it will temporarily idle production at two of its iron ore mining operations — Northshore Mining and Tilden Mine — due to weak market conditions stemming from the coronavirus pandemic.
The company is adjusting the production of iron ore during the first half of the year. The company has decided not to continue building additional iron ore inventory until market conditions improve. It also stated that it will quickly restart and ramp up production, once the steel market in North America improves.
Zacks Rank & Key Picks
Cleveland-Cliffs currently carries a Zacks Rank #3 (Hold).
A few better-ranked stocks in the basic materials space are Novagold Resources Inc. NG, Franco-Nevada Corporation FNV and Barrick Gold Corporation GOLD, all carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 (Strong Buy) Rank stocks here.
Novagold has an expected earnings growth rate of 11.1% for fiscal 2020. The company’s shares have surged 185.3% in the past year.
Franco-Nevada has an expected earnings growth rate of 15.9% for 2020. Its shares have returned 71.8% in the past year.
Barrick has an expected earnings growth rate of 41.2% for 2020. The company’s shares have rallied 85.3% in the past year.
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