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AK Steel notes price at par to yield 8.75%; terms

AK Steel late yesterday completed an offering of secured notes via joint bookrunners Bank of America, Deutsche Bank, Citigroup, Wells Fargo, Goldman Sachs, and UBS, according to sources. Terms printed wide of talk by 12.5 bps, but at the target size of $350 million. Proceeds from the benchmark issuer’s return to market after eight months – along with proceeds from the concurrent offerings of its exchangeable senior notes and AK Holding’s shares of common stock – will be used to repay borrowings under its ABL credit facility, with the remainder earmarked for general corporate purposes. Ratings were assigned as BB-/B1 following a downgrade of the credit to B/B3, from B+/B2, with agencies citing difficult industry conditions and tight credit metrics for AK Steel. AK Steel is an integrated producer of flat-rolled carbon, specialty stainless and electrical steels and tubular products. Terms:

 

Issuer AK Steel
Ratings BB-/B1
Amount $350 million
Issue secured notes
Coupon 8.75%
Price 100
Yield 8.75%
Spread T+792
Maturity Dec. 1, 2018
Call nc3
Trade Nov. 14, 2012
Settle Nov. 20, 2012 (T+4)
Books BAML/DB/Citi/WF/GS/UBS
Jt Leads
Co’s.
Px talk 8.5% area
Notes w/ three-year equity clawback for 35% @ 108.75; carries T+50 make-whole call