U.S. Steel Corp. on Oct. 16 priced its previously reported private offering of US$300 million of senior convertible notes due 2026.
The notes will accrue interest at a rate of 5.00% per year, payable semiannually in arrears on May 1 and Nov. 1 of each year starting May 1, 2020. The notes will mature Nov. 1, 2026, and the company may not redeem notes prior to Nov. 5, 2023.
U.S. Steel also granted a 30-day option to initial buyers to purchase up to an additional US$50 million of notes, with closing expected Oct. 21. The company said it expects to fetch about US$291 million in net proceeds from the offering.
The initial conversion rate will be 74.8391 shares per US$1,000 worth of notes, or equal to about US$13.36 per share, a 27.50% premium to the company's last reported share price of US$10.48.
On or after Nov. 5, 2023, and prior to Aug. 1, 2026, U.S. Steel may redeem all or a portion of the notes at a cash redemption price of 100% of the principal amount of the notes to be redeemed plus interest, subject to the price of its shares being at least 130% of the conversion price over specified periods.
The company will use proceeds for general corporate purposes, including previously announced strategic investments and capital expenditures.
Earlier in October, U.S. Steel outlined plans to save about US$200 million in annual fixed costs by 2022, aligning with planned investments in technology and manufacturing.