Cleveland-Cliffs Declares Full Redemption of Notes Due 2020

Cleveland-Cliffs Inc. CLF plans to redeem the entirety of its outstanding 4.8% senior notes due October 2020 and 5.9% senior notes due March 2020. The total principal amount outstanding of these notes is roughly $211 million.

Cleveland-Cliffs expects the total payment to holders of the notes to be roughly $220 million, which includes unpaid and accrued interest to the redemption date along with make-whole premiums. Moreover, the notes will be repaid with the company’s cash in hand. Per the company, this redemption reduces total debt liability and positions it to return capital to shareholders.

Shares of Cleveland-Cliffs have gained 13.2% in the past three months, against the industry’s decline of roughly 14.9%.

Buoyed by strong demand for pellets, the company raised 2018 sales volume guidance to 21 million long tons from the previous projection of 20.5 million in second-quarter 2018. Notably, it expects to sell between 6 million and 6.5 million long tons in the third quarter and the remaining is expected to be sold in the fourth quarter.

Moreover, Cleveland-Cliffs is focused on de-leveraging its balance sheet. The company’s long-term debt was down roughly 42.5% year over year to $2,297 million at the end of the second quarter. The company’s debt-cut actions are likely to reduce annualized interest expenses. Moreover, the company’s cash and cash equivalents jumped more than two-folds to $802.5 million at the end of second-quarter 2018.

Zacks Rank & Other Stocks to Consider

Cleveland-Cliffs currently sports a Zacks Rank #1 (Strong Buy).

A few other top-ranked stocks in the basic materials space are Ingevity Corporation NGVT, Huntsman Corporation HUN and Celanese Corporation CE, each sporting a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.

Ingevity has an expected long-term earnings growth rate of 12%. Its shares have moved up 61.4% in the past year.

Huntsman has an expected long-term earnings growth rate of 8.5%. Its shares have returned 15.2% in a year.

Celanese has an expected long-term earnings growth rate of 10%. Its shares have gained 18.1% in the past year.

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