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DEBT AND CREDIT FACILITIES | 3 Months Ended
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Mar. 31, 2021
Debt Disclosure [Abstract] |
DEBT AND CREDIT FACILITIES | The following represents a summary of our long-term debt:
(In Millions)
March 31, 2021
Debt Instrument |  | Issuer 1 |  | Annual Effective Interest Rate |  | Total Principal Amount |  | Unamortized Debt Issuance Costs |  | Unamortized Premiums (Discounts) |  | Total Debt
Senior Secured Notes: |  |  |  |  |  |  |  |  |  |  |  |
9.875% 2025 Senior Secured Notes |  | Cliffs |  | 10.57% |  | $ | 633 |  |  | $ | (5) |  |  | $ | (16) |  |  | $ | 612 |
6.75% 2026 Senior Secured Notes |  | Cliffs |  | 6.99% |  | 845 |  |  | (19) |  |  | (8) |  |  | 818 |
Senior Unsecured Notes: |  |  |  |  |  |  |  |  |  |  |  |
1.50% 2025 Convertible Senior Notes |  | Cliffs |  | 6.26% |  | 296 |  |  | (3) |  |  | (47) |  |  | 246 |
5.75% 2025 Senior Notes |  | Cliffs |  | 6.01% |  | 396 |  |  | (2) |  |  | (4) |  |  | 390 |
7.00% 2027 Senior Notes |  | Cliffs |  | 9.24% |  | 73 |  |  | — |  |  | (7) |  |  | 66 |
7.00% 2027 AK Senior Notes |  | AK Steel |  | 9.24% |  | 56 |  |  | — |  |  | (6) |  |  | 50 |
5.875% 2027 Senior Notes |  | Cliffs |  | 6.49% |  | 556 |  |  | (4) |  |  | (17) |  |  | 535 |
4.625% 2029 Senior Notes |  | Cliffs |  | 4.63% |  | 500 |  |  | (9) |  |  | — |  |  | 491 |
4.875% 2031 Senior Notes |  | Cliffs |  | 4.88% |  | 500 |  |  | (9) |  |  | — |  |  | 491 |
6.25% 2040 Senior Notes |  | Cliffs |  | 6.34% |  | 263 |  |  | (2) |  |  | (3) |  |  | 258 |
IRBs due 2024 to 2028 |  | AK Steel |  | Various |  | 92 |  |  | — |  |  | 2 |  |  | 94 |
EDC Revolving Facilities 3 |  | * |  | Various |  | 80 |  |  | — |  |  | — |  |  | 53 |
ABL Facility 3 |  | Cliffs 2 |  | 2.14% |  | 3,500 |  |  | — |  |  | — |  |  | 1,630 |
Total long-term debt |  |  |  |  |  |  |  |  |  |  |  | $ | 5,734 |
* Our subsidiaries, Fleetwood Metal Industries Inc. and The Electromac Group Inc., are the borrowers under the EDC Revolving Facilities.
1 Unless otherwise noted, references in this column and throughout this NOTE 8 - DEBT AND CREDIT FACILITIES to "Cliffs" are to Cleveland-Cliffs Inc., and references to "AK Steel" are to AK Steel Corporation (n/k/a Cleveland-Cliffs Steel Corporation).
2 Refers to Cleveland-Cliffs Inc. as borrower under our ABL Facility.
3 The total principal amounts for the indicated credit facilities are stated at their respective maximum borrowing capacities.
(In Millions)
December 31, 2020
Debt Instrument |  | Issuer 1 |  | Annual Effective Interest Rate |  | Total Principal Amount |  | Unamortized Debt Issuance Costs |  | Unamortized Premiums (Discounts) |  | Total Debt
Senior Secured Notes: |  |  |  |  |  |  |  |  |  |  |  |
4.875% 2024 Senior Notes |  | Cliffs |  | 5.00% |  | $ | 395 |  |  | $ | (3) |  |  | $ | (1) |  |  | $ | 391 |
9.875% 2025 Senior Secured Notes |  | Cliffs |  | 10.57% |  | 955 |  |  | (8) |  |  | (25) |  |  | 922 |
6.75% 2026 Senior Secured Notes |  | Cliffs |  | 6.99% |  | 845 |  |  | (20) |  |  | (9) |  |  | 816 |
Senior Unsecured Notes: |  |  |  |  |  |  |  |  |  |  |  |
7.625% 2021 AK Senior Notes |  | AK Steel |  | 7.33% |  | 34 |  |  | — |  |  | — |  |  | 34 |
7.50% 2023 AK Senior Notes |  | AK Steel |  | 6.17% |  | 13 |  |  | — |  |  | — |  |  | 13 |
6.375% 2025 Senior Notes |  | Cliffs |  | 8.11% |  | 64 |  |  | — |  |  | (4) |  |  | 60 |
6.375% 2025 AK Senior Notes |  | AK Steel |  | 8.11% |  | 29 |  |  | — |  |  | (2) |  |  | 27 |
1.50% 2025 Convertible Senior Notes |  | Cliffs |  | 6.26% |  | 296 |  |  | (4) |  |  | (49) |  |  | 243 |
5.75% 2025 Senior Notes |  | Cliffs |  | 6.01% |  | 396 |  |  | (3) |  |  | (4) |  |  | 389 |
7.00% 2027 Senior Notes |  | Cliffs |  | 9.24% |  | 73 |  |  | — |  |  | (8) |  |  | 65 |
7.00% 2027 AK Senior Notes |  | AK Steel |  | 9.24% |  | 56 |  |  | — |  |  | (6) |  |  | 50 |
5.875% 2027 Senior Notes |  | Cliffs |  | 6.49% |  | 556 |  |  | (4) |  |  | (18) |  |  | 534 |
6.25% 2040 Senior Notes |  | Cliffs |  | 6.34% |  | 263 |  |  | (2) |  |  | (3) |  |  | 258 |
IRBs due 2024 to 2028 |  | AK Steel |  | Various |  | 92 |  |  | — |  |  | 2 |  |  | 94 |
EDC Revolving Facility 3 |  | * |  | 3.25% |  | 40 |  |  | — |  |  | — |  |  | 18 |
ABL Facility 3 |  | Cliffs 2 |  | 2.15% |  | 3,500 |  |  | — |  |  | — |  |  | 1,510 |
Total debt |  |  |  |  |  |  |  |  |  |  |  | 5,424 |
Less: current debt |  |  |  |  |  |  |  |  |  |  |  | 34 |
Total long-term debt |  |  |  |  |  |  |  |  |  |  |  | $ | 5,390 |
* Our subsidiaries, Fleetwood Metal Industries Inc. and The Electromac Group Inc., are the borrowers under the EDC Revolving Facility.
1 Unless otherwise noted, references in this column and throughout this NOTE 8 - DEBT AND CREDIT FACILITIES to "Cliffs" are to Cleveland-Cliffs Inc., and references to "AK Steel" are to AK Steel Corporation (n/k/a Cleveland-Cliffs Steel Corporation).
2 Refers to Cleveland-Cliffs Inc. as borrower under our ABL Facility.
3 The total principal amounts for the indicated credit facilities are stated at their respective maximum borrowing capacities.
4.625% 2029 Senior Notes On February 17, 2021, we entered into an indenture among Cliffs, the guarantors party thereto and U.S. Bank National Association, as trustee, relating to the issuance by Cliffs of $500 million aggregate principal amount of 4.625% 2029 Senior Notes issued at par value. The 4.625% 2029 Senior Notes were issued in private placement transactions exempt from the registration requirements of the Securities Act. The 4.625% 2029 Senior Notes bear interest at a rate of 4.625% per annum, payable semi-annually in arrears on March 1 and September 1 of each year, commencing on September 1, 2021. The 4.625% 2029 Senior Notes will mature on March 1, 2029. The 4.625% 2029 Senior Notes are unsecured senior obligations and rank equally in right of payment with all of our existing and future unsecured and unsubordinated indebtedness. The 4.625% 2029 Senior Notes are guaranteed on a senior unsecured basis by our material direct and indirect wholly-owned domestic subsidiaries and, therefore, are structurally senior to any of our existing and future indebtedness that is not guaranteed by such guarantors and are structurally subordinated to all existing and future indebtedness and other liabilities of our subsidiaries that do not guarantee the 4.625% 2029 Senior Notes. The 4.625% 2029 Senior Notes may be redeemed, in whole or in part, on not less than 10 nor more than 60 days’ prior notice sent to the holders of the notes. The following is a summary of redemption prices for our 4.625% 2029 Senior Notes:
Redemption Period |  | Redemption Price 1 |  | Restricted Amount
Prior to March 1, 2024 - using the proceeds of equity issuance |  | 104.625 |  | % |  | Up to 35% of original aggregate principal
Prior to March 1, 2024 2 |  | 100.000 |  |  |  |
Beginning March 1, 2024 |  | 102.313 |  |  |  |
Beginning March 1, 2025 |  | 101.156 |  |  |  |
Beginning on March 1, 2026 and thereafter |  | 100.000 |  |  |  |
1 Plus accrued and unpaid interest, if any, up to, but excluding, the redemption date.
2 Plus a "make-whole" premium.
In addition, if a change in control triggering event, as defined in the indenture, occurs with respect to the 4.625% 2029 Senior Notes, we will be required to offer to repurchase the notes at a purchase price equal to 101% of their principal amount, plus accrued and unpaid interest, if any, to, but not including, the date of repurchase. The terms of the 4.625% 2029 Senior Notes contain certain customary covenants; however, there are no financial covenants. 4.875% 2031 Senior Notes On February 17, 2021, we entered into an indenture among Cliffs, the guarantors party thereto and U.S. Bank National Association, as trustee, relating to the issuance by Cliffs of $500 million aggregate principal amount of 4.875% 2031 Senior Notes issued at par value. The 4.875% 2031 Senior Notes were issued in private placement transactions exempt from the registration requirements of the Securities Act. The 4.875% 2031 Senior Notes bear interest at a rate of 4.875% per annum, payable semi-annually in arrears on March 1 and September 1 of each year, commencing on September 1, 2021. The 4.875% 2031 Senior Notes will mature on March 1, 2031. The 4.875% 2031 Senior Notes are unsecured senior obligations and rank equally in right of payment with all of our existing and future unsecured and unsubordinated indebtedness. The 4.875% 2031 Senior Notes are guaranteed on a senior unsecured basis by our material direct and indirect wholly-owned domestic subsidiaries and, therefore, are structurally senior to any of our existing and future indebtedness that is not guaranteed by such guarantors and are structurally subordinated to all existing and future indebtedness and other liabilities of our subsidiaries that do not guarantee the 4.875% 2031 Senior Notes. The 4.875% 2031 Senior Notes may be redeemed, in whole or in part, on not less than 10 nor more than 60 days’ prior notice sent to the holders of the notes. The following is a summary of redemption prices for our 4.875% 2031 Senior Notes:
Redemption Period |  | Redemption Price 1 |  | Restricted Amount
Prior to March 1, 2026 - using the proceeds of equity issuance |  | 104.875 |  | % |  | Up to 35% of original aggregate principal
Prior to March 1, 2026 2 |  | 100.000 |  |  |  |
Beginning March 1, 2026 |  | 102.438 |  |  |  |
Beginning March 1, 2027 |  | 101.625 |  |  |  |
Beginning March 1, 2028 |  | 100.813 |  |  |  |
Beginning on March 1, 2029 and thereafter |  | 100.000 |  |  |  |
1 Plus accrued and unpaid interest, if any, up to, but excluding, the redemption date.
2 Plus a "make-whole" premium.
In addition, if a change in control triggering event, as defined in the indenture, occurs with respect to the 4.875% 2031 Senior Notes, we will be required to offer to repurchase the notes at a purchase price equal to 101% of their principal amount, plus accrued and unpaid interest, if any, to, but not including, the date of repurchase. The terms of the 4.875% 2031 Senior Notes contain certain customary covenants; however, there are no financial covenants. Debt Extinguishments - 2021 On March 11, 2021, we purchased an aggregate principal amount of $322 million of the 9.875% 2025 Senior Secured Notes using the net proceeds from the February 11, 2021 issuance of 20 million common shares and cash on hand. On March 12, 2021, we fully redeemed the 4.875% 2024 Senior Secured Notes, 7.625% 2021 AK Senior Notes, 7.50% 2023 AK Senior Notes, 6.375% 2025 Senior Notes and 6.375% 2025 AK Senior Notes, which totaled an aggregate principal amount of $535 million. The following is a summary of the debt extinguished and the respective impact on extinguishment:
|  |  |  |  | (In Millions)
|  |  | Three Months Ended March 31, 2021
Debt Instrument |  |  |  |  | Debt Extinguished |  | (Loss) on Extinguishment
9.875% 2025 Senior Secured Notes |  |  |  |  | $ | 322 |  |  | $ | (42) |
4.875% 2024 Senior Secured Notes |  |  |  |  | 395 |  |  | (14) |
7.625% 2021 AK Senior Notes |  |  |  |  | 34 |  |  | — |
7.50% 2023 AK Senior Notes |  |  |  |  | 13 |  |  | — |
6.375% 2025 Senior Notes |  |  |  |  | 64 |  |  | (7) |
6.375% 2025 AK Senior Notes |  |  |  |  | 29 |  |  | (3) |
|  |  |  |  | $ | 857 |  |  | $ | (66) |
Debt Extinguishments - 2020 On March 13, 2020, in connection with the AK Steel Merger, we purchased $364 million aggregate principal amount of 7.625% 2021 AK Senior Notes and $311 million aggregate principal amount of 7.50% 2023 AK Senior Notes upon early settlement of tender offers made by Cliffs. The net proceeds from the offering of 6.75% 2026 Senior Secured Notes, along with a portion of the ABL Facility borrowings, were used to fund such purchases. As the 7.625% 2021 AK Senior Notes and 7.50% 2023 AK Senior Notes were recorded at fair value just prior to being purchased, there was no gain or loss on extinguishment. Additionally, in connection with the final settlement of the tender offers, we purchased $9 million aggregate principal amount of the 7.625% 2021 AK Senior Notes and $56 million aggregate principal amount of the 7.50% 2023 AK Senior Notes with cash on hand. The following is a summary of the debt extinguished and the respective impact on extinguishment:
|  |  |  |  | (In Millions)
|  |  | Three Months Ended March 31, 2020
Debt Instrument |  |  |  |  | Debt Extinguished |  | Gain on Extinguishment
7.625% 2021 AK Senior Notes |  |  |  |  | $ | 373 |  |  | $ | — |
7.50% 2023 AK Senior Notes |  |  |  |  | 367 |  |  | 3 |
|  |  |  |  | $ | 740 |  |  | $ | 3 |
ABL Facility As of March 31, 2021, we were in compliance with the ABL Facility liquidity requirements and, therefore, the springing financial covenant requiring a minimum fixed charge coverage ratio of 1.0 to 1.0 was not applicable. The following represents a summary of our borrowing capacity under the ABL Facility:
|  | (In Millions)
|  | March 31, 2021
Available borrowing base on ABL Facility 1 |  | $ | 3,500 |
Borrowings |  | (1,630) |
Letter of credit obligations 2 |  | (272) |
Borrowing capacity available |  | $ | 1,598 |
1 As of March 31, 2021, the ABL Facility has a maximum borrowing base of $3.5 billion. The available borrowing base is determined by applying customary advance rates to eligible accounts receivable, inventory and certain mobile equipment.
2 We issued standby letters of credit with certain financial institutions in order to support business obligations including, but not limited to, workers' compensation, employee severance, insurance, operating agreements, IRBs and environmental obligations.
Debt Maturities The following represents a summary of our maturities of debt instruments based on the principal amounts outstanding at March 31, 2021:
|  | (In Millions)
|  | Maturities of Debt
2021 (remaining period of year) |  | $ | — |
2022 |  | — |
2023 |  | 53 |
2024 |  | 62 |
2025 |  | 2,955 |
Thereafter |  | 2,823 |
Total maturities of debt |  | $ | 5,893 |

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- Definition The entire disclosure for information about short-term and long-term debt arrangements, which includes amounts of borrowings under each line of credit, note payable, commercial paper issue, bonds indenture, debenture issue, own-share lending arrangements and any other contractual agreement to repay funds, and about the underlying arrangements, rationale for a classification as long-term, including repayment terms, interest rates, collateral provided, restrictions on use of assets and activities, whether or not in compliance with debt covenants, and other matters important to users of the financial statements, such as the effects of refinancing and noncompliance with debt covenants. + References Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 470 -URI http://asc.fasb.org/topic&trid=2208564 + Details
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