ÐÇ¿Õ´«Ã½

Quarterly report pursuant to Section 13 or 15(d)

DEBT AND CREDIT FACILITIES

v3.21.1
DEBT AND CREDIT FACILITIES
 3 Months Ended
Mar. 31, 2021
Debt Disclosure [Abstract] Ìý
DEBT AND CREDIT FACILITIES
The following represents a summary of our long-term debt:
(In Millions)
March 31, 2021
Debt Instrument
Issuer1
Annual Effective
Interest Rate
 Total Principal Amount Unamortized
Debt Issuance Costs		 Unamortized Premiums (Discounts) Total Debt
Senior Secured Notes:
9.875% 2025 Senior Secured Notes
 Cliffs 10.57% $ 633Ìý $ (5) $ (16) $ 612Ìý
6.75% 2026 Senior Secured Notes
 Cliffs 6.99% 845Ìý (19) (8) 818Ìý
Senior Unsecured Notes:
1.50% 2025 Convertible Senior Notes
 Cliffs 6.26% 296Ìý (3) (47) 246Ìý
5.75% 2025 Senior Notes
 Cliffs 6.01% 396Ìý (2) (4) 390Ìý
7.00% 2027 Senior Notes
 Cliffs 9.24% 73Ìý —Ìý (7) 66Ìý
7.00% 2027 AK Senior Notes
 AK Steel 9.24% 56Ìý —Ìý (6) 50Ìý
5.875% 2027 Senior Notes
 Cliffs 6.49% 556Ìý (4) (17) 535Ìý
4.625% 2029 Senior Notes
Cliffs 4.63% 500Ìý (9) —Ìý 491Ìý
4.875% 2031 Senior Notes
 Cliffs 4.88% 500Ìý (9) —Ìý 491Ìý
6.25% 2040 Senior Notes
 Cliffs 6.34% 263Ìý (2) (3) 258Ìý
IRBs due 2024 to 2028 AK Steel Various 92Ìý —Ìý 2Ìý 94Ìý
EDC Revolving Facilities3
* Various 80Ìý —Ìý —Ìý 53Ìý
ABL Facility3
Cliffs2
2.14% 3,500Ìý —Ìý —Ìý 1,630Ìý
Total long-term debt $ 5,734Ìý
* Our subsidiaries, Fleetwood Metal Industries Inc. and The Electromac Group Inc., are the borrowers under the EDC Revolving Facilities.
1 Unless otherwise noted, references in this column and throughout this NOTE 8 - DEBT AND CREDIT FACILITIES to "Cliffs" are to ÐÇ¿Õ´«Ã½ Inc., and references to "AK Steel" are to AK Steel Corporation (n/k/a ÐÇ¿Õ´«Ã½ Steel Corporation).
2 Refers to ÐÇ¿Õ´«Ã½ Inc. as borrower under our ABL Facility.
3 The total principal amounts for the indicated credit facilities are stated at their respective maximum borrowing capacities.
(In Millions)
December 31, 2020
Debt Instrument
Issuer1
Annual Effective
Interest Rate
 Total Principal Amount Unamortized
Debt Issuance Costs		 Unamortized
Premiums
(Discounts)		 Total Debt
Senior Secured Notes:
4.875% 2024 Senior Notes
 Cliffs 5.00% $ 395Ìý $ (3) $ (1) $ 391Ìý
9.875% 2025 Senior Secured Notes
 Cliffs 10.57% 955Ìý (8) (25) 922Ìý
6.75% 2026 Senior Secured Notes
 Cliffs 6.99% 845Ìý (20) (9) 816Ìý
Senior Unsecured Notes:
7.625% 2021 AK Senior Notes
 AK Steel 7.33% 34Ìý —Ìý —Ìý 34Ìý
7.50% 2023 AK Senior Notes
 AK Steel 6.17% 13Ìý —Ìý —Ìý 13Ìý
6.375% 2025 Senior Notes
 Cliffs 8.11% 64Ìý —Ìý (4) 60Ìý
6.375% 2025 AK Senior Notes
 AK Steel 8.11% 29Ìý —Ìý (2) 27Ìý
1.50% 2025 Convertible Senior Notes
 Cliffs 6.26% 296Ìý (4) (49) 243Ìý
5.75% 2025 Senior Notes
 Cliffs 6.01% 396Ìý (3) (4) 389Ìý
7.00% 2027 Senior Notes
 Cliffs 9.24% 73Ìý —Ìý (8) 65Ìý
7.00% 2027 AK Senior Notes
 AK Steel 9.24% 56Ìý —Ìý (6) 50Ìý
5.875% 2027 Senior Notes
 Cliffs 6.49% 556Ìý (4) (18) 534Ìý
6.25% 2040 Senior Notes
 Cliffs 6.34% 263Ìý (2) (3) 258Ìý
IRBs due 2024 to 2028 AK Steel Various 92Ìý —Ìý 2Ìý 94Ìý
EDC Revolving Facility3
* 3.25% 40Ìý —Ìý —Ìý 18Ìý
ABL Facility3
Cliffs2
2.15% 3,500Ìý —Ìý —Ìý 1,510Ìý
Total debt 5,424Ìý
Less: current debt 34Ìý
Total long-term debt $ 5,390Ìý
* Our subsidiaries, Fleetwood Metal Industries Inc. and The Electromac Group Inc., are the borrowers under the EDC Revolving Facility.
1 Unless otherwise noted, references in this column and throughout this NOTE 8 - DEBT AND CREDIT FACILITIES to "Cliffs" are to ÐÇ¿Õ´«Ã½ Inc., and references to "AK Steel" are to AK Steel Corporation (n/k/a ÐÇ¿Õ´«Ã½ Steel Corporation).
2 Refers to ÐÇ¿Õ´«Ã½ Inc. as borrower under our ABL Facility.
3 The total principal amounts for the indicated credit facilities are stated at their respective maximum borrowing capacities.
4.625% 2029 Senior Notes
On February 17, 2021, we entered into an indenture among Cliffs, the guarantors party thereto and U.S. Bank National Association, as trustee, relating to the issuance by Cliffs of $500 million aggregate principal amount of 4.625% 2029 Senior Notes issued at par value.
The 4.625% 2029 Senior Notes were issued in private placement transactions exempt from the registration requirements of the Securities Act. The 4.625% 2029 Senior Notes bear interest at a rate of 4.625% per annum, payable semi-annually in arrears on March 1 and September 1 of each year, commencing on September 1, 2021. The 4.625% 2029 Senior Notes will mature on March 1, 2029.
The 4.625% 2029 Senior Notes are unsecured senior obligations and rank equally in right of payment with all of our existing and future unsecured and unsubordinated indebtedness. The 4.625% 2029 Senior Notes are guaranteed on a senior unsecured basis by our material direct and indirect wholly-owned domestic subsidiaries and, therefore, are structurally senior to any of our existing and future indebtedness that is not guaranteed by such guarantors and are structurally subordinated to all existing and future indebtedness and other liabilities of our subsidiaries that do not guarantee the 4.625% 2029 Senior Notes.
The 4.625% 2029 Senior Notes may be redeemed, in whole or in part, on not less than 10 nor more than 60 days’ prior notice sent to the holders of the notes. The following is a summary of redemption prices for our 4.625% 2029 Senior Notes:
Redemption Period
Redemption Price1
Restricted Amount
Prior to March 1, 2024 - using the proceeds of equity issuance 104.625Ìý % Up to 35% of original aggregate principal
Prior to March 1, 20242
100.000Ìý
Beginning March 1, 2024 102.313Ìý
Beginning March 1, 2025 101.156Ìý
Beginning on March 1, 2026 and thereafter 100.000Ìý
1 Plus accrued and unpaid interest, if any, up to, but excluding, the redemption date.
2 Plus a "make-whole" premium.
In addition, if a change in control triggering event, as defined in the indenture, occurs with respect to the 4.625% 2029 Senior Notes, we will be required to offer to repurchase the notes at a purchase price equal to 101% of their principal amount, plus accrued and unpaid interest, if any, to, but not including, the date of repurchase.
The terms of the 4.625% 2029 Senior Notes contain certain customary covenants; however, there are no financial covenants.
4.875% 2031 Senior Notes
On February 17, 2021, we entered into an indenture among Cliffs, the guarantors party thereto and U.S. Bank National Association, as trustee, relating to the issuance by Cliffs of $500 million aggregate principal amount of 4.875% 2031 Senior Notes issued at par value.
The 4.875% 2031 Senior Notes were issued in private placement transactions exempt from the registration requirements of the Securities Act. The 4.875% 2031 Senior Notes bear interest at a rate of 4.875% per annum, payable semi-annually in arrears on March 1 and September 1 of each year, commencing on September 1, 2021. The 4.875% 2031 Senior Notes will mature on March 1, 2031.
The 4.875% 2031 Senior Notes are unsecured senior obligations and rank equally in right of payment with all of our existing and future unsecured and unsubordinated indebtedness. The 4.875% 2031 Senior Notes are guaranteed on a senior unsecured basis by our material direct and indirect wholly-owned domestic subsidiaries and, therefore, are structurally senior to any of our existing and future indebtedness that is not guaranteed by such guarantors and are structurally subordinated to all existing and future indebtedness and other liabilities of our subsidiaries that do not guarantee the 4.875% 2031 Senior Notes.
The 4.875% 2031 Senior Notes may be redeemed, in whole or in part, on not less than 10 nor more than 60 days’ prior notice sent to the holders of the notes. The following is a summary of redemption prices for our 4.875% 2031 Senior Notes:
Redemption Period
Redemption Price1
Restricted Amount
Prior to March 1, 2026 - using the proceeds of equity issuance 104.875Ìý % Up to 35% of original aggregate principal
Prior to March 1, 2026 2
100.000Ìý
Beginning March 1, 2026 102.438Ìý
Beginning March 1, 2027 101.625Ìý
Beginning March 1, 2028 100.813Ìý
Beginning on March 1, 2029 and thereafter 100.000Ìý
1 Plus accrued and unpaid interest, if any, up to, but excluding, the redemption date.
2 Plus a "make-whole" premium.
In addition, if a change in control triggering event, as defined in the indenture, occurs with respect to the 4.875% 2031 Senior Notes, we will be required to offer to repurchase the notes at a purchase price equal to 101% of their principal amount, plus accrued and unpaid interest, if any, to, but not including, the date of repurchase.
The terms of the 4.875% 2031 Senior Notes contain certain customary covenants; however, there are no financial covenants.
Debt Extinguishments - 2021
On March 11, 2021, we purchased an aggregate principal amount of $322Ìýmillion of the 9.875% 2025 Senior Secured Notes using the net proceeds from the February 11, 2021 issuance of 20Ìýmillion common shares and cash on hand. On March 12, 2021, we fully redeemed the 4.875% 2024 Senior Secured Notes, 7.625% 2021 AK Senior Notes, 7.50% 2023 AK Senior Notes, 6.375% 2025 Senior Notes and 6.375% 2025 AK Senior Notes, which totaled an aggregate principal amount of $535Ìýmillion.
The following is a summary of the debt extinguished and the respective impact on extinguishment:
(In Millions)
Three Months Ended
March 31, 2021
Debt Instrument Debt Extinguished (Loss) on Extinguishment
9.875% 2025 Senior Secured Notes $ 322Ìý $ (42)
4.875% 2024 Senior Secured Notes 395Ìý (14)
7.625% 2021 AK Senior Notes 34Ìý —Ìý
7.50% 2023 AK Senior Notes 13Ìý —Ìý
6.375% 2025 Senior Notes 64Ìý (7)
6.375% 2025 AK Senior Notes 29Ìý (3)
$ 857Ìý $ (66)
Debt Extinguishments - 2020
On March 13, 2020, in connection with the AK Steel Merger, we purchased $364 million aggregate principal amount of 7.625% 2021 AK Senior Notes and $311 million aggregate principal amount of 7.50% 2023 AK Senior Notes upon early settlement of tender offers made by Cliffs. The net proceeds from the offering of 6.75% 2026 Senior Secured Notes, along with a portion of the ABL Facility borrowings, were used to fund such purchases. As the 7.625% 2021 AK Senior Notes and 7.50% 2023 AK Senior Notes were recorded at fair value just prior to being purchased, there was no gain or loss on extinguishment. Additionally, in connection with the final settlement of the tender offers, we purchased $9 million aggregate principal amount of the 7.625% 2021 AK Senior Notes and $56 million aggregate principal amount of the 7.50% 2023 AK Senior Notes with cash on hand.
The following is a summary of the debt extinguished and the respective impact on extinguishment:
(In Millions)
Three Months Ended
March 31, 2020
Debt Instrument Debt Extinguished Gain on Extinguishment
7.625% 2021 AK Senior Notes $ 373Ìý $ —Ìý
7.50% 2023 AK Senior Notes 367Ìý 3Ìý
$ 740Ìý $ 3Ìý
ABL Facility
As of MarchÌý31, 2021, we were in compliance with the ABL Facility liquidity requirements and, therefore, the springing financial covenant requiring a minimum fixed charge coverage ratio of 1.0 to 1.0 was not applicable.
The following represents a summary of our borrowing capacity under the ABL Facility:
(In Millions)
March 31,
2021
Available borrowing base on ABL Facility1
$ 3,500Ìý
Borrowings (1,630)
Letter of credit obligations2
(272)
Borrowing capacity available $ 1,598Ìý
1 As of MarchÌý31, 2021, the ABL Facility has a maximum borrowing base of $3.5 billion. The available borrowing base is determined by applying customary advance rates to eligible accounts receivable, inventory and certain mobile equipment.
2 We issued standby letters of credit with certain financial institutions in order to support business obligations including, but not limited to, workers' compensation, employee severance, insurance, operating agreements, IRBs and environmental obligations.
Debt Maturities
The following represents a summary of our maturities of debt instruments based on the principal amounts outstanding at MarchÌý31, 2021:
(In Millions)
Maturities of Debt
2021 (remaining period of year) $ —Ìý
2022 —Ìý
2023 53Ìý
2024 62Ìý
2025 2,955Ìý
Thereafter 2,823Ìý
Total maturities of debt $ 5,893Ìý