Nippon Steel to raise $5.6 billion in subordinated loans to fund US Steel deal

CNA

8 hours ago

TOKYO :Japan's Nippon Steel said on Wednesday it would raise 800 billion yen ($5.6 billion) through two subordinated loans to partially fund its recent $14.9 billion acquisition of U.S. Steel and refinance previous loans.
Japan's biggest steelmaker will use a 500 billion yen subordinated loan to partially repay a 2 trillion yen bridge loan secured in June for the deal. A separate 300 billion yen loan will refinance a previous 450 billion yen subordinated loan.
The 500 billion yen loan will be covered by Japan's three megabanks - Mitsubishi UFJ Financial Group, Sumitomo Mitsui Financial Group and Mizuho Financial Group - as well as by Sumitomo Mitsui Trust Group and Development Bank of Japan by September 18, a Nippon Steel spokesperson said.
The 300 billion yen portion will come from four banks - the three megabanks and Sumitomo Mitsui Trust - on July 22.
The remaining 1.5 trillion yen of the bridge loan will be financed through a combination of methods, based on an assessment of interest rates, market conditions and other factors, the spokesperson said.
"While additional capital-based financing is among the options under consideration, any such move would be based on the principle of avoiding earnings-per-share (EPS) dilution," the spokesperson said.
Following the acquisition, Nippon Steel's debt-to-equity ratio rose to about 0.8 from 0.35 as of March 31 due to the bridge loans and a loss on the sale of its stake in a U.S. joint venture with ArcelorMittal.
Nippon Steel decided to sell its joint venture stake to help get approval for the U.S. Steel acquisition.
The company aims to bring the ratio down to the 0.7 range by the end of March 2026 through measures such as cash flow from earnings and asset sales.
($1 = 143.9000 yen)