Cleveland Cliffs Inc (CLF)

[DewDiligence]

Valuation recap—If we assume for the sake of discussion that all of the recently issued convertible notes will eventually be converted into common shares at the initial conversion price of $8.17/sh, then CLF has ~340M fully-diluted shares on a pro forma basis (based on the 9/30/17 balance sheet and the Dec 2017 convertible and non-convertible bond offerings).

There will be $316.25M of convertible notes outstanding (assuming exercise of the underwriter’s option); however, we counted these securities as equity in the above paragraph, so it would be erroneous to also count them as debt. Therefore, CLF has approximately $1.2B of net debt on a pro forma basis (based on the 9/30/17 balance sheet and the Dec 2017 non-convertible bond offering).

Thus, at the current share price *$7.88 as I’m typing), CLF’s enterprise value is roughly 340M($7.88) + $1.2B = ~$3.9B.