| DEBT AND CREDIT FACILITIES |
NOTE 8 - DEBT AND CREDIT FACILITIES
The following represents a summary of our long-term debt as of MarchÌý31, 2014 and DecemberÌý31, 2013:
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($ in Millions) |
Ìý |
MarchÌý31, 2014 |
Ìý |
Debt Instrument |
Ìý |
Type |
Ìý |
Annual Effective Interest Rate |
Ìý |
Final Maturity |
Ìý |
Total Face Amount |
Ìý |
Total Debt |
Ìý |
$700 Million 4.875% 2021 Senior Notes |
Ìý |
Fixed |
Ìý |
4.89% |
Ìý |
2021 |
Ìý |
$ |
700.0 |
|
Ìý |
$ |
699.5 |
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(1) |
$1.3 Billion Senior Notes: |
Ìý |
Ìý |
Ìý |
Ìý |
Ìý |
Ìý |
Ìý |
Ìý |
Ìý |
Ìý |
Ìý |
$500 Million 4.80% 2020 Senior Notes |
Ìý |
Fixed |
Ìý |
4.83% |
Ìý |
2020 |
Ìý |
500.0 |
|
Ìý |
499.3 |
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(2) |
$800 Million 6.25% 2040 Senior Notes |
Ìý |
Fixed |
Ìý |
6.34% |
Ìý |
2040 |
Ìý |
800.0 |
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Ìý |
790.5 |
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(3) |
$400 Million 5.90% 2020 Senior Notes |
Ìý |
Fixed |
Ìý |
5.98% |
Ìý |
2020 |
Ìý |
400.0 |
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Ìý |
398.5 |
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(4) |
$500 Million 3.95% 2018 Senior Notes |
Ìý |
Fixed |
Ìý |
4.14% |
Ìý |
2018 |
Ìý |
500.0 |
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Ìý |
496.7 |
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(5) |
$1.75 Billion Credit Facility: |
Ìý |
Ìý |
Ìý |
Ìý |
Ìý |
Ìý |
Ìý |
Ìý |
Ìý |
Ìý |
Ìý |
Revolving Loan |
Ìý |
Variable |
Ìý |
1.68% |
Ìý |
2017 |
Ìý |
1,750.0 |
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Ìý |
175.0 |
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(6) |
Equipment Loans |
Ìý |
Fixed |
Ìý |
Various |
Ìý |
2020 |
Ìý |
164.8 |
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Ìý |
156.5 |
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Ìý |
Short-Term Borrowing Arrangements |
Ìý |
Ìý |
Ìý |
Ìý |
Ìý |
2014 |
Ìý |
75.7 |
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Ìý |
75.7 |
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Fair Value Adjustment to Interest Rate Hedge |
Ìý |
Ìý |
Ìý |
Ìý |
Ìý |
Ìý |
Ìý |
Ìý |
Ìý |
— |
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Ìý |
Total debt |
Ìý |
Ìý |
Ìý |
Ìý |
Ìý |
Ìý |
Ìý |
$ |
4,890.5 |
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Ìý |
$ |
3,291.7 |
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Ìý |
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Less: Short-term and current portion of
ÌýÌýÌýÌýÌýÌýÌýÌýÌýÌýÌýlong-term debt
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Ìý |
Ìý |
Ìý |
Ìý |
Ìý |
Ìý |
Ìý |
Ìý |
Ìý |
96.9 |
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Ìý |
Long-term debt |
Ìý |
Ìý |
Ìý |
Ìý |
Ìý |
Ìý |
Ìý |
Ìý |
Ìý |
$ |
3,194.8 |
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Ìý |
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($ in Millions) |
Ìý |
December 31, 2013 |
Ìý |
Debt Instrument |
Ìý |
Type |
Ìý |
Annual Effective Interest Rate |
Ìý |
Final Maturity |
Ìý |
Total Face Amount |
Ìý |
Total Debt |
Ìý |
$700 Million 4.875% 2021 Senior Notes |
Ìý |
Fixed |
Ìý |
4.88% |
Ìý |
2021 |
Ìý |
700.0 |
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Ìý |
699.4 |
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(1) |
$1.3 Billion Senior Notes: |
Ìý |
Ìý |
Ìý |
Ìý |
Ìý |
Ìý |
Ìý |
Ìý |
Ìý |
Ìý |
Ìý |
$500 Million 4.80% 2020 Senior Notes |
Ìý |
Fixed |
Ìý |
4.83% |
Ìý |
2020 |
Ìý |
500.0 |
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Ìý |
499.2 |
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(2) |
$800 Million 6.25% 2040 Senior Notes |
Ìý |
Fixed |
Ìý |
6.34% |
Ìý |
2040 |
Ìý |
800.0 |
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Ìý |
790.4 |
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(3) |
$400 Million 5.90% 2020 Senior Notes |
Ìý |
Fixed |
Ìý |
5.98% |
Ìý |
2020 |
Ìý |
400.0 |
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Ìý |
398.4 |
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(4) |
$500 Million 3.95% 2018 Senior Notes |
Ìý |
Fixed |
Ìý |
4.14% |
Ìý |
2018 |
Ìý |
500.0 |
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Ìý |
496.5 |
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(5) |
$1.75 Billion Credit Facility: |
Ìý |
Ìý |
Ìý |
Ìý |
Ìý |
Ìý |
Ìý |
Ìý |
Ìý |
Ìý |
Ìý |
Revolving Loan |
Ìý |
Variable |
Ìý |
1.64% |
Ìý |
2017 |
Ìý |
1,750.0 |
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Ìý |
— |
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(6) |
Equipment Loans |
Ìý |
Fixed |
Ìý |
Various |
Ìý |
2020 |
Ìý |
164.8 |
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Ìý |
161.7 |
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Ìý |
Fair Value Adjustment to Interest Rate Hedge |
Ìý |
Ìý |
Ìý |
Ìý |
Ìý |
Ìý |
Ìý |
Ìý |
Ìý |
(2.1 |
) |
Ìý |
Total debt |
Ìý |
Ìý |
Ìý |
Ìý |
Ìý |
Ìý |
Ìý |
$ |
4,814.8 |
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Ìý |
$ |
3,043.5 |
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Ìý |
Less current portion |
Ìý |
Ìý |
Ìý |
Ìý |
Ìý |
Ìý |
Ìý |
Ìý |
Ìý |
20.9 |
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Ìý |
Long-term debt |
Ìý |
Ìý |
Ìý |
Ìý |
Ìý |
Ìý |
Ìý |
Ìý |
Ìý |
$ |
3,022.6 |
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Ìý |
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(1) |
As of MarchÌý31, 2014 and DecemberÌý31, 2013, the $700 million 4.875 percent senior notes were recorded at a par value of $700 million less unamortized discounts of $0.5 million and $0.6 million, respectively, based on an imputed interest rate of 4.89 percent.
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(2) |
As of MarchÌý31, 2014 and DecemberÌý31, 2013, the $500 million 4.80 percent senior notes were recorded at a par value of $500 million less unamortized discounts of $0.7 million and $0.8 million, respectively, based on an imputed interest rate of 4.83 percent.
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(3) |
As of MarchÌý31, 2014 and DecemberÌý31, 2013, the $800 million 6.25 percent senior notes were recorded at a par value of $800 million less unamortized discounts of $9.5 million and $9.6 million, respectively, based on an imputed interest rate of 6.34 percent.
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(4) |
As of MarchÌý31, 2014 and DecemberÌý31, 2013, the $400 million 5.90 percent senior notes were recorded at a par value of $400 million less unamortized discounts of $1.5 million and $1.6 million, respectively, based on an imputed interest rate of 5.98 percent.
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(5) |
As of MarchÌý31, 2014 and DecemberÌý31, 2013, the $500 million 3.95 percent senior notes were recorded at a par value of $500 million less unamortized discounts of $3.3 million and $3.5 million, respectively, based on an imputed interest rate of 4.14 percent.
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(6) |
As of MarchÌý31, 2014, $175.0 million of revolving loans were drawn under the credit facility. As of DecemberÌý31, 2013, no revolving loans were drawn under the credit facility. As of MarchÌý31, 2014 and DecemberÌý31, 2013, the principal amount of letter of credit obligations totaled $5.2 million and $8.4 million, respectively, thereby reducing available borrowing capacity to $1.6 billion and $1.7 billion for each period, respectively.
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Credit Facility
At March 31, 2014, the amendments made on February 8, 2013 to the Amended and Restated Multicurrency Credit Agreement among Cliffs Natural Resources Inc. and various lenders dated August 11, 2011 (as further amended by Amendment No. 1 as of October 16, 2012), or revolving credit agreement, were no longer applicable and the covenants reverted back to those in place prior to the February 8, 2013 amendment. At March 31, 2014, the covenants require compliance with certain financial ratios based on:
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Debt to earnings ratio (Total Funded Debt to EBITDA, as those terms are defined in the revolving credit agreement), as of the last day of each fiscal quarter cannot exceedÌý3.5 to 1.0.
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Minimum interest coverage ratio (Consolidated EBITDA to Interest Expense, as those terms are defined in the revolving credit agreement), for the preceding four quarters must not be less than 2.5 to 1.0 on the last day of any fiscal quarter.
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As of March 31, 2014, we were in compliance with these financial covenants. Additionally, as of December 31, 2013, we were in compliance with all applicable financial covenants related to the revolving credit agreement.
Short-Term Facilities
Asia Pacific Iron Ore maintains a bank contingent instrument and cash advance facility. The facility, which is renewable annually at the bank’s discretion, provides A$30.0 million ($27.8 million) at MarchÌý31, 2014 in credit for contingent instruments, such as performance bonds, and the ability to request a cash advance facility to be provided at the discretion of the bank. At DecemberÌý31, 2013, the facility provided A$30.0 million ($26.8 million) in credit for contingent instruments. As of MarchÌý31, 2014, the outstanding bank guarantees under the facility totaled A$23.0 million ($21.3 million), thereby reducing borrowing capacity to A$7.0 million ($6.5 million). As of DecemberÌý31, 2013, the outstanding bank guarantees under the facility totaled A$23.0 million ($20.5 million), thereby reducing borrowing capacity to A$7.0Ìýmillion ($6.3 million). We have provided a guarantee of the facility, along with certain of our Australian subsidiaries. The terms of the short-term facility contain certain customary covenants; however, there are no financial covenants.
As of March 31, 2014, we had outstanding borrowings of $50.0 million on an uncommitted credit facility agreement which was used for general corporate purposes. ÌýPer the uncommitted credit agreement, each loan drawn cannot be outstanding less than 30 days or more than 90 days. ÌýInterest payable under the uncommitted credit facility is at a variable rate based on LIBOR plus an agreed upon margin.
As of March 31, 2014, we had outstanding borrowings of $25.7 million on a pre-export trade finance loan through an outstanding letter of credit. Per the agreement, the loan drawn has a fixed date of maturity that is short-term in nature. Interest payable under the pre-export trade finance loan is at a fixed rate of less than one percent.
Letters of Credit
We issued standby letters of credit with certain financial institutions in order to support general business obligations including, but not limited to, workers compensation and environmental obligations. As of MarchÌý31, 2014 and DecemberÌý31, 2013, these letter of credit obligations totaled $47.3 million and $48.0 million, respectively. All of these standby letters of credit are in addition to the letters of credit provided for under the revolving credit agreement.
Debt Maturities
The following represents a summary of our maturities of debt instruments, excluding borrowings on the revolving credit agreement, based on the principal amounts outstanding at MarchÌý31, 2014:
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Ìý |
(In Millions) |
Ìý |
Maturities of Debt |
2014 (April 1 - December 31) |
$ |
91.5 |
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2015 |
21.8 |
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2016 |
22.7 |
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2017 |
23.6 |
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2018 |
524.6 |
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2019 and thereafter |
2,448.0 |
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Total maturities of debt |
$ |
3,132.2 |
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