TORONTO (miningweekly.com) – NYSE-listed Cliffs Natural Resources has entered into a new senior secured asset-based revolving credit facility (ABL facility) and has completed a private offering of $540-million of senior secured notes due on March 31, 2020, the company announced on Monday.
Cleveland, Ohio-based Cliffs received net proceeds, after the initial buyers' discounts and the payment of fees and expenses, of about $491.4-million from the offering of the new first lien notes.
The company used a portion of the net proceeds from the offering to repay all amounts outstanding under its former revolving credit facility and intended to use the remainder for general corporate purposes. Further, the new ABL facility was expected to provide up to $550-million in borrowing availability on a revolving basis, subject to a borrowing base limitation and issuing letters of credit.
Cliffs also on Monday announced that it had successfully completed private offers to exchange its newly issued 7.75% senior secured notes due 2020 for certain outstanding senior unsecured notes. The company had accepted for exchange about $675-million of existing notes that were tendered in the exchange offers, in exchange for about $544-million of new second lien notes.
The company stated that with the new financing structure, Cliffs was no longer subject to the covenants associated with its former revolving credit facility, such as interest coverage and secured debt-to-earnings before interest, taxes, depreciation and amortisation tests. Also, as a result of completing the exchange offers, Cliffs was able to remove about $130-million of long-term debt from the balance sheet.
"We believe that our new financing structure just put in place through the completion of the refinancing transactions will give us all the liquidity and financial flexibility we need to successfully complete the strategy we have executed in a disciplined manner since August 7, 2014, and which differentiates Cliffs from any other iron-ore producer in the world.
“As the largest supplier of pellets in the US and no longer a major participant in the volatile seaborne market, we are very pleased with the backing received from the investment community. The success of our refinancing makes clear that the investors understand and support our overall strategy and that Cliffs is better positioned than all other iron-ore producers in the world whose fundamentals are fully dependent on supplying sinter feed to China,” Cliffs chairperson, president and CEO Lourenco Goncalves said.
Cliffs last week announced that it had agreed to sell its chromite claims in Northern Ontario’s Ring of Fire to Noront Resources for a meagre $20-million.
In November last year, Cliffs announced that it was closing its Bloom Lake iron-ore mine, in Quebec, after struggling to secure funds to expand the mine and make it viable. Cliffs in January stopped production at Bloom Lake, where costs exceeded expectations, and started restructuring the Canadian operations following years of weak iron-ore prices.
The company also in January filed for creditor protection for its Canadian operations to try to isolate losses and protect shareholders from the majority of the $650-million to $700-million in closure costs tied to its mothballed assets in the country.