ÐÇ¿Õ´«Ã½

Quarterly report pursuant to Section 13 or 15(d)

DEBT AND CREDIT FACILITIES

v3.24.2
DEBT AND CREDIT FACILITIES
 6 Months Ended
Jun. 30, 2024
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		 June 30,
2024		 December 31,
2023
Senior Secured Notes:
6.750% 2026 Senior Secured Notes
 Cliffs 6.990% $ —Ìý $ 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 750Ìý
4.875% 2031 Senior Notes
 Cliffs 4.875% 325Ìý 325Ìý
7.000% 2032 Senior Notes
 Cliffs 7.000% 825Ìý —Ìý
6.250% 2040 Senior Notes
 Cliffs 6.340% 235Ìý 235Ìý
ABL Facility
Cliffs2
Variable3
370Ìý —Ìý
Total principal amount 3,558Ìý 3,192Ìý
Unamortized discounts and issuance costs (51) (55)
Total long-term debt $ 3,507Ìý $ 3,137Ìý
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 6.690% as of JuneÌý30, 2024.
7.000% 2032 SENIOR NOTES OFFERING
On March 18, 2024, 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 $825Ìýmillion aggregate principal amount of our 7.000% 2032 Senior Notes, which were issued at par. The 7.000% 2032 Senior Notes were issued in a private placement transaction exempt from the registration requirements of the Securities Act.
The 7.000% 2032 Senior Notes bear interest at a rate of 7.000% per annum, payable semi-annually in arrears on March 15 and September 15 of each year, commencing on September 15, 2024. The 7.000% 2032 Senior Notes mature on March 15, 2032.
The 7.000% 2032 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 7.000% 2032 Senior Notes are guaranteed on a senior unsecured basis by our material direct and indirect wholly owned domestic subsidiaries. The 7.000% 2032 Senior Notes are structurally subordinated to all existing and future indebtedness and other liabilities of our subsidiaries that do not guarantee the 7.000% 2032 Senior Notes.
The 7.000% 2032 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 7.000% 2032 Senior Notes. The 7.000% 2032 Senior Notes are redeemable prior to March 15, 2027, 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 7.000% 2032 Senior Notes prior to March 15, 2027, at a redemption price equal to 107.000% of the principal amount thereof with the net cash proceeds of one or more equity offerings. The 7.000% 2032 Senior Notes are redeemable beginning on March 15, 2027, at a redemption price equal to 103.500% of the principal amount thereof, decreasing to 101.750% on March 15, 2028, and are redeemable at par beginning on March 15, 2029. In each case, we pay the applicable redemption or "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 7.000% 2032 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 7.000% 2032 Senior Notes contain certain customary covenants; however, there are no financial covenants.
DEBT EXTINGUISHMENTS
On March 18, 2024, we used a portion of the net proceeds from the 7.000% 2032 Senior Notes issuance to repurchase $640Ìýmillion in aggregate principal amount of our 6.750% 2026 Senior Secured Notes pursuant to a tender offer. On April 3, 2024,
we redeemed the remaining $189Ìýmillion in aggregate principal amount of our then-outstanding 6.750% 2026 Senior Secured Notes with the remaining portion of the net proceeds from the 7.000% 2032 Senior Notes issuance and available liquidity.
ABL FACILITY
As of JuneÌý30, 2024, 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) June 30,
2024
Available borrowing base on ABL Facility1
$ 4,050Ìý
Borrowings (370)
Letter of credit obligations2
(46)
Borrowing capacity available $ 3,634Ìý
1 As of JuneÌý30, 2024, 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, operating agreements, employee severance, environmental obligations, workers' compensation and insurance obligations.
DEBT MATURITIES
The following represents a summary of our maturities of debt instruments based on the principal amounts outstanding at JuneÌý30, 2024 (in millions):
2024 2025 2026 2027 2028 Thereafter Total
$ —Ìý $ —Ìý $ —Ìý $ 685Ìý $ 370Ìý $ 2,503Ìý $ 3,558Ìý