Yahoo Finance U.S. Steel Declares Pricing of Senior Secured Notes Due 2025
United States Steel Corporation X recently announced the pricing of the previously declared private offering of around $1.1 billion principal amount of 12% senior secured notes due 2025. The company stated that the notes will be issued at 94.665% of their face value.
Moreover, the notes will pay semi-annual interests in arrears on Jun 1 and Dec 1 every year, starting Dec 1, 2020. The notes will mature on Jun 1, 2025, unless they are repurchased or redeemed at an earlier date. The company expects the sale of the notes to close on May 29, which is subject to customary closing conditions.
Further, the company stated that the notes will be unconditionally and fully guaranteed on a senior secured basis by all of its subsidiaries, except for certain excluded subsidiaries. The notes and the note guarantees will also be secured by first-priority liens. The company plans to employ the net proceeds from the offering to boost liquidity, strengthen the balance sheet and for general corporate purposes.
U.S. Steel ended the first quarter with cash and cash equivalents of $1,350 million, up 144% year over year. Its long-term debt rose 98.5% year over year to $4,616 million.
Shares of U.S. Steel have plunged 39.6% in the past year compared with the industry’s 33.7% decline.
The company’s adjusted loss per share of 73 cents in the first quarter was narrower than the Zacks Consensus Estimate of a loss of 80 cents.
During first-quarter 2020, the company fortified its footprint, strengthened its balance sheet and aggressively cut costs amid the impacts of the coronavirus pandemic as well as volatility in the oil and gas markets. These actions helped the company surpass its first-quarter view.
Also, the company granted Stelco an option to purchase a 25% stake in its Minntac iron ore mining operations for a purchase price of $600 million. Notably, the move showcases the consistent execution of its strategy and delivers $100 million of incremental cash to the balance sheet in 2020. The transaction will enable U.S. Steel to record an additional $500 million of capital to support its strategy.
Zacks Rank & Key Picks
U.S. Steel currently carries a Zacks Rank #3 (Hold).
Some better-ranked stocks in the basic materials space are Agnico Eagle Mines Limited AEM, The Scotts Miracle-Gro Company SMG and Newmont Corporation NEM. While Agnico Eagle sports a Zacks Rank #1 (Strong Buy), Scotts Miracle-Gro and Newmont carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Agnico Eagle has an expected earnings growth rate of 75.3% for 2020. The company’s shares have surged 54.2% in the past year.
Scotts Miracle-Gro has an expected earnings growth rate of 17.7% for fiscal 2020. Its shares have returned 50.5% in the past year.
Newmont has an expected earnings growth rate of 82.6% for 2020. The company’s shares have surged 87.9% in the past year.
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