Ohio-based Cleveland-Cliffs Inc. started offers to exchange outstanding US$270.2 million of 6.375% senior notes due 2025 and US$391.6 million of 7.00% senior notes due 2027 issued by an AK Steel Holding Corp. unit.

The transaction is in connection with Cleveland-Cliffs' planned US$1.1 billion purchase of AK Steel, according to a Jan. 14 release.

The exchange consideration will be US$1,000 in new Cliffs notes with the same interest rates and year of maturity, plus a US$2.50 consent payment.

For each $1,000 principal amount of existing AK Steel notes validly tendered prior to the Feb. 12 expiration date and not withdrawn, eligible holders can receive the applicable exchange consideration.

Eligible AK Steel note holders that validly deliver consent prior to Jan. 28 and do not revoke it will be entitled to receive the consent payment.

The settlement date is expected to be two business days after the expiration date, which may be extended to coincide with the merger's closing that is expected in the first half.

Simultaneously, AK Steel is issuing consent solicitations seeking restrictive covenant amendments for its existing notes, the release added.