Item 1.01
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Entry into a Material Definitive Agreement
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Senior Notes Offering
On March 23, 2017, AK Steel Corporation (AK Steel), the wholly-owned subsidiary of AK Steel Holding Corporation (AK Holding)
completed the public offering of $400.0 million aggregate principal amount of its 7.00% Senior Notes due 2027 (the Notes). The Notes are governed by an indenture, dated as of May 11, 2010 (the Base Indenture), among AK
Steel, as issuer, AK Holding, as guarantor, and U.S. Bank National Association, as trustee, as supplemented by a seventh supplemental indenture, dated as of March 23, 2017 (the Seventh Supplemental Indenture, together with the Base
Indenture, the Indenture), among AK Steel, as issuer, AK Holding, AK Tube LLC, AK Steel Properties, Inc. and Mountain State Carbon, LLC, as guarantors (AK Holding, AK Tube LLC, AK Steel Properties, Inc. and Mountain State Carbon, LLC,
collectively, the Guarantors), and U.S. Bank National Association, as trustee. A copy of the Seventh Supplemental Indenture is filed as Exhibit 4.1 hereto and incorporated by reference herein.
The Notes were sold in a public offering pursuant to an amended Registration Statement on Form S-3 (File No. 333- 210785) (the Registration
Statement) and a related prospectus and prospectus supplement filed with the Securities and Exchange Commission and were issued pursuant to an underwriting agreement (the Underwriting Agreement), dated as of March 16, 2017,
among AK Steel, the Guarantors and Merrill Lynch, Pierce, Fenner & Smith Incorporated, Wells Fargo Securities, LLC, Citigroup Global Markets Inc. and Goldman, Sachs & Co., as representatives of the several underwriters named
therein (the Underwriters), and are fully and unconditionally guaranteed by the Guarantors.
The Notes bear interest payable semiannually in
cash in arrears on March 15 and September 15 of each year, commencing on September 15, 2017. The Indenture provides that the Notes are redeemable at AK Steels option, in whole or in part, at any time on or after March 15,
2022, at a redemption price equal to 100% of the principal amount of the Notes plus a make-whole premium. AK Steel may redeem the Notes beginning on March 15, 2022, at the redemption price (expressed as a percentage of principal
amount) set forth below, plus accrued and unpaid interest to the redemption date, if redeemed during the twelve-month period commencing on March 15 of the years indicated below:
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Year
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Redemption
Price
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2022
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103.500
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%
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2023
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102.333
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%
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2024
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101.167
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%
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2025 and thereafter
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100.000
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%
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In addition, at any time prior to March 15, 2020, AK Steel may redeem up to 35% of the principal amount of the Notes
(including any additional Notes) with the net cash proceeds of one or more sales of AK Holdings common stock (to the extent the proceeds are contributed to AK Steel as equity) at a redemption price (expressed as a percentage of principal
amount) of 107.000%, plus accrued and unpaid interest to the redemption date; provided that at least 65% of the aggregate principal amount of Notes originally issued remains outstanding after such redemption.
The Indenture also contains certain covenants which restrict AK Steel and its restricted subsidiaries ability to create liens on its and their assets;
incur subsidiary debt; engage in sale/leaseback transactions; and engage in a consolidation, merger or sale of assets.
AK Steel expects the net proceeds
from the issuance and sale of the Notes will be approximately $394.0 million after deducting the underwriting discounts and commissions. AK Steel intends to use the net proceeds from this offering to pay the consideration for its previously
announced concurrent cash tender offer (the Cash Tender Offer) for any and all of its approximately $529.8 million outstanding aggregate principal amount of its 7.625% Senior Notes due 2020 (the Old Notes), including accrued
and unpaid interest and estimated offering expenses. If any Old Notes remain outstanding following the completion of the Cash Tender Offer, AK Steel intends to use the proceeds, together with cash on hand and/or borrowings under its revolving credit
facility, to redeem such Old Notes in accordance with the terms of the Old Notes and the applicable indenture.
The foregoing description does not
constitute a complete summary of the Indenture and is qualified by reference in its entirety to the full text of the Indenture, a copy which is filed as Exhibit 4.1 to this Current Report on Form 8-K and is incorporated herein by reference.