ÐÇ¿Õ´«Ã½

Quarterly report pursuant to Section 13 or 15(d)

DEBT AND CREDIT FACILITIES

v3.23.3
DEBT AND CREDIT FACILITIES
 9 Months Ended
Sep. 30, 2023
Debt Disclosure [Abstract] Ìý
DEBT AND CREDIT FACILITIES
NOTE 7 - DEBT AND CREDIT FACILITIES
The following represents a summary of our long-term debt:
(In millions)
Debt Instrument
Issuer1
Annual Effective
Interest Rate		 September 30,
2023		 December 31,
2022
Senior Secured Notes:
6.750% 2026 Senior Secured Notes
 Cliffs 6.990% $ 829Ìý $ 829Ìý
Senior Unsecured Notes:
7.000% 2027 Senior Notes
 Cliffs 9.240% 73Ìý 73Ìý
7.000% 2027 AK Senior Notes
 AK Steel 9.240% 56Ìý 56Ìý
5.875% 2027 Senior Notes
 Cliffs 6.490% 556Ìý 556Ìý
4.625% 2029 Senior Notes
Cliffs 4.625% 368Ìý 368Ìý
6.750% 2030 Senior Notes
 Cliffs 6.750% 750Ìý —Ìý
4.875% 2031 Senior Notes
 Cliffs 4.875% 325Ìý 325Ìý
6.250% 2040 Senior Notes
 Cliffs 6.340% 235Ìý 235Ìý
ABL Facility
Cliffs2
Variable3
325Ìý 1,864Ìý
Total principal amount 3,517Ìý 4,306Ìý
Unamortized discounts and issuance costs (59) (57)
Total long-term debt $ 3,458Ìý $ 4,249Ìý
1 Unless otherwise noted, references in this column and throughout this NOTE 7 - 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 Our ABL Facility annual effective interest rate was 7.148% and 5.602%, respectively, as of SeptemberÌý30, 2023 and DecemberÌý31, 2022.
6.750% 2030 Senior Notes - 2023 Offering
On April 14, 2023, we entered into an indenture among Cliffs, the guarantors party thereto and U.S. Bank Trust Company, National Association, as trustee, relating to the issuance of $750Ìýmillion aggregate principal amount of our 6.750% 2030 Senior Notes, which were issued at par. The 6.750% 2030 Senior Notes were issued in a private placement transaction exempt from the registration requirements of the Securities Act.
The 6.750% 2030 Senior Notes bear interest at a rate of 6.750% per annum, payable semi-annually in arrears on April 15 and October 15 of each year, which commenced on October 15, 2023. The 6.750% 2030 Senior Notes mature on April 15, 2030.
The 6.750% 2030 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 6.750% 2030 Senior Notes are guaranteed on a senior unsecured basis by our material direct and indirect wholly owned domestic subsidiaries. The 6.750% 2030 Senior Notes are structurally subordinated to all existing and future indebtedness and other liabilities of our subsidiaries that do not guarantee the 6.750% 2030 Senior Notes.
The 6.750% 2030 Senior Notes may be redeemed, in whole or in part, at any time at our option not less than 10 days nor more than 60 days after prior notice is sent to the holders of the 6.750% 2030 Senior Notes. The 6.750% 2030 Senior Notes are redeemable prior to April 15, 2026, at a redemption price equal to 100% of the principal amount thereof plus a "make-whole" premium set forth in the indenture. We may also redeem up to 35% of the aggregate principal amount of the 6.750% 2030 Senior Notes prior to April 15, 2026 at a redemption price equal to 106.750% of the principal amount thereof with the net cash proceeds of one or more equity offerings. The 6.750% 2030 Senior Notes are redeemable beginning on April 15, 2026, at a redemption price equal to 103.375% of the principal amount thereof, decreasing to 101.688% on April 15, 2027, and are redeemable at par beginning on April 15, 2028. In each case, we pay the applicable redemption and "make-whole" premiums plus accrued and unpaid interest, if any, to, but not including, the date of redemption.
In addition, if a change in control triggering event, as defined in the indenture, occurs with respect to the 6.750% 2030 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 6.750% 2030 Senior Notes contain certain customary covenants; however, there are no financial covenants.
ABL FACILITY
On June 9, 2023, we entered into the Fourth ABL Amendment to our ABL Facility to, among other things, increase the amount of tranche A revolver commitments available thereunder by an additional $250Ìýmillion to an aggregate principal amount of $4.75Ìýbillion and extend the maturity date of all commitments under the ABL Facility from March 13, 2025 to June 9, 2028. The Fourth ABL Amendment removed the LIBOR option for variable rate loans due to its cessation and replaced it with a SOFR option. Borrowings under the ABL Facility bear interest, at our option, at a base rate or, if certain conditions are met, a SOFR rate, in each
case, plus an applicable tiered margin. The base rate is equal to the greater of the federal funds rate plus 0.5% or the term SOFR plus 1.25%.
As of SeptemberÌý30, 2023, 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) September 30,
2023
Available borrowing base on ABL Facility1
$ 4,750Ìý
Borrowings (325)
Letter of credit obligations2
(94)
Borrowing capacity available $ 4,331Ìý
1 As of SeptemberÌý30, 2023, the ABL Facility has a maximum available borrowing base of $4.75 billion. The 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, operating agreements, employee severance, environmental obligations, and insurance.
DEBT MATURITIES
The following represents a summary of our maturities of debt instruments based on the principal amounts outstanding at SeptemberÌý30, 2023 (in millions):
2023 2024 2025 2026 2027 Thereafter Total
$ —Ìý $ —Ìý $ —Ìý $ 829Ìý $ 685Ìý $ 2,003Ìý $ 3,517Ìý