AK Steel Holding Corporation Monday announced that its subsidiary, AK Steel Corporation, has commenced a registered offering of $400 million aggregate principal amount of its senior notes due 2020. AK Steel intends to use the net proceeds of the offering, together with cash on hand, to finance AK Steel's cash tender offer and consent solicitation, also announced Monday, for any and all of AK Steel's outstanding 7-3/4 percent Senior Notes due 2012. The Offering will be made pursuant to an effective shelf registration statement on file with the Securities and Exchange Commission.
The joint book-running managers for the offering are Credit Suisse, BofA Merrill Lynch, J.P. Morgan, Morgan Stanley, UBS Investment Bank and Wells Fargo Securities.
Simultaneously with the offering, AK Steel has commenced the tender offer pursuant to an Offer to Purchase and Consent Solicitation Statement, dated April 26, 2010, and a related Letter of Transmittal and Consent. Upon the terms and subject to the conditions described in the Offer to Purchase and the Letter of Transmittal, AK Steel is offering to purchase for cash any and all of its outstanding Old Notes and soliciting consents to certain proposed amendments to the indenture governing the Old Notes to, among other things, eliminate substantially all of the restrictive covenants and certain events of default contained in the indenture.
Holders of Old Notes who validly tender their Old Notes and deliver their consents on or prior to 5:00 p.m., New York City time, Friday, May 7, 2010 will be eligible to receive aggregate consideration equal to $1,003.50 per $1,000 principal amount of Old Notes tendered, which includes a consent payment of $30.00 per $1,000 principal amount of Old Notes.
Holders who tender their Old Notes after the Consent Date but prior to the expiration time of 11:59 p.m., New York City time, on Friday, May 21, 2010 will only receive $973.50 per $1,000 principal amount of Old Notes tendered. Tendered Old Notes may be validly withdrawn on or prior to the earlier of the receipt of the Requisite Consents (as defined below) and 5:00 p.m. New York time, Friday, May 7, 2010, but not thereafter unless required by applicable law.
Holders may not tender their Old Notes without delivering their consents to the proposed amendments to the indenture for the Old Notes and may not deliver their consents without tendering their Old Notes pursuant to the tender offer. The proposed amendments require the approval of a majority of the aggregate principal amount of the outstanding Old Notes. If so approved, however, the proposed amendments will not become operative until after AK Steel has paid the consent payment to all holders that have validly tendered (and not validly revoked) consents on or prior to the Consent Date.
AK Steel's obligation to accept for purchase and to pay for the Old Notes in the Tender Offer is subject to the satisfaction or waiver of a number of conditions, including having available pursuant to the issuance of the New Notes, together with approximately $130 million of cash on hand, funds sufficient to pay the Total Consideration, plus accrued and unpaid interest, for all the Old Notes tendered in the Tender Offer.
In addition to the applicable consideration, all holders of Old Notes accepted for purchase will also receive accrued and unpaid interest on those Old Notes from the last interest payment date to, but not including, the date such Old Notes are repurchased.
If any Old Notes remain outstanding following the completion of the Tender Offer, AK Steel intends to, but is not obligated to, promptly redeem such Old Notes in accordance with the terms of the Old Notes and the indenture.
None of AK Steel, AK Steel's board of directors, the dealer managers, the depositary and the information agent makes any recommendation in connection with the Tender Offer. Holders must make their own decisions as to whether to tender their Old Notes, and, if so, the principal amount of Old Notes to tender.
AK Steel has retained Credit Suisse and BofA Merrill Lynch to serve as Dealer Managers for the Tender Offer. AK Steel has also retained Global Bondholder Services Corporation to serve as the information agent.