Cleveland Cliffs Inc (CLF)

[DewDiligence]

Re: CLF’s bond maneuvers

I don’t think we know enough about CLF’s longer-term plans to render an educated opinion on the bond maneuvers. Recall that LG said on the 1Q19 CC that there are some things in the works he’s not ready to disclose; from the 1Q19 CC transcript:

https://finance.yahoo.com/news/cleveland-cliffs-inc-clf-q1-203343406.html

LG: … you're talking about the various growth options that we have going forward, if I can disclose a little more color... The answer is no. None of those are [ripe] for disclosure right now. You're going to have to take my word, they exist…

These undisclosed projects may require significant cash expenditures in 2025 and 2026.

What we can say is that by replacing $600M of the 2025 bonds for (new) 2027 bonds, CLF will have considerably more financial flexibility in 2025 and 2026. CLF is replacing a $1.07B repayment obligation in 2025 by a $470M repayment obligation in 2025 and a $600M repayment obligation in 2027. (The other $150M to the new $750M bond issue is essentially a swap with the remaining 2021 bonds.)

In short, this argument can’t be settled today, but I’m willing to give LG the benefit of the doubt.