Cleveland Cliffs Inc (CLF)

[winchem21]

Three strategic possibilities for the refinancing:

1. With CLF's current bargain valuation and expected EBITDA growth over the next couple of years; I would not be surprised to see CLF taken private or acquired in the near future. CLF just made the decision not to pay off the 2021 bonds as they were previously planning to do and moved $600 M 2025 debt out another two years and the 2021 bonds out six years. Would this refinancing make it easier to take the company private from a potential buyer perspective? They keep pulling shares off the market which seems to be further lowering their market cap as SP is remaining fairly flat. Enterprise value is just over $4 billion now and EBITDA will rise to $1 billion in 2-3 years, that is a very low ratio.

2. If CLF goes full steam ahead at Nashwauk, it will take a great deal of capital to build mine, HBI plant and pellet plant as LG has stated they would do. If they go it alone on all three, perhaps another $2 billion or more? The greatest long-term growth potential in CLF's ore business segment is mining Nashwauk. MN is starting to move things around and CLF just dropped its lawsuit against the state. Hibbing runs out of ore in five years and it will require significant capital to replace this source. Something needs to happen well before 2027 to address this.

3. A third possibility would be CLF acquiring another company, especially with the bargain prices rampart across the industry. More importantly, if Nashwauk does not pan out, CLF will have to pivot and find a way to grow the company.

It is clear that there were specific strategic reasons to bring in the new CFO.