New 8-K out for $400M in senior secured notes - note holders will do much better than the 4.875% interest rate if they're retired early (before Jan 15 2021), either +3% or nearly +5%, which to me means there's no intention of CLF to pay off the notes early, would cost them a lot of money:
On December 19, 2017, Cleveland-Cliffs Inc., an Ohio corporation (the “ Company ”), entered into an indenture (the “ Secured Notes Indenture ”) among the Company, the guarantors party thereto (the “ Guarantors ”) and U.S. Bank National Association, as trustee and first lien notes collateral agent (the “ Trustee ”), relating to the issuance by the Company of $400 million aggregate principal amount of 4.875% Senior Secured Notes due 2024 (the “ Secured Notes ”). The Secured Notes were sold on December 19, 2017 in a private transaction exempt from the registration requirements of the Securities Act of 1933 (the “ Securities Act ”). The Secured Notes have not been, and will not be, registered under the Securities Act and may not be offered or sold in the United States absent registration or an applicable exemption from the registration requirements of the Securities Act.
The Secured Notes bear interest at a rate of 4.875% per annum. Interest on the Secured Notes is payable semi-annually in arrears on January 15 and July 15 of each year, commencing on July 15, 2018. The Secured Notes mature on January 15, 2024 and are secured senior obligations of the Company.
The Company may redeem any of the Secured Notes beginning on January 15, 2021. The initial redemption price is 102.438% of their principal amount, plus accrued and unpaid interest, if any, to, but excluding, the redemption date. The redemption price will decline each year after January 15, 2021 and will be 100% of their principal amount, plus accrued interest, beginning on January 15, 2023. The Company may also redeem some or all of the Secured Notes at any time and from time to time prior to January 15, 2021 at a price equal to 100% of the principal amount thereof plus a “make-whole” premium, plus accrued and unpaid interest, if any, to, but excluding, the redemption date. The Company may also redeem up to 10% of the original aggregate principal amount of the Secured Notes (calculated after giving effect to any issuance of additional Secured Notes) per year prior to January 15, 2021 at a redemption price equal to 103% of the principal amount thereof, plus accrued and unpaid interest, if any, to, but excluding, the redemption date.
In addition, at any time and from time to time on or prior to January 15, 2021, the Company may redeem in the aggregate up to 35% of the original aggregate principal amount of the Secured Notes (calculated after giving effect to any issuance of additional Secured Notes) with the net cash proceeds of certain equity offerings, at a redemption price of 104.875%, plus accrued and unpaid interest, if any, to, but excluding, the redemption date, so long as at least 65% of the original aggregate principal amount of the Secured Notes (calculated after giving effect to any issuance of additional Secured Notes) issued under the Secured Notes Indenture remain outstanding after each such redemption.
The Thought Police: To censor and protect. Craig Bruce
