Japan's Nippon Steel announced that it will raise JPY 800 billion ($5.6 billion) through subordinated loans to partially finance its $14.9 billion acquisition of US Steel and refinance existing debt.
The funding consists of two components: a JPY 500 billion ($3.44 billion) facility from Japan's top financial institutions-including Mitsubishi UFJ, Sumitomo Mitsui, Mizuho, Sumitomo Mitsui Trust, and Development Bank of Japan-due by September 18. This money will reduce a JPY 2 trillion ($13.75 billion) temporary loan arranged in June for the acquisition.
A separate JPY 300 billion ($2.06 billion) loan from four major banks will replace existing subordinated debt on July 22. The company plans to address the remaining JPY 1.5 trillion in temporary financing through multiple approaches depending on market circumstances.
The US Steel deal substantially altered Nippon Steel's financial profile, pushing its debt-to-equity ratio from 0.35 to roughly 0.8 as of March 31. This jump resulted from bridge financing and losses incurred when divesting its ArcelorMittal joint venture stake, a move required for regulatory approval.
The steelmaker targets lowering its debt-to-equity ratio to approximately 0.7 by March 2026 using operational cash flow and asset disposals. Management stressed that any future capital raising would protect shareholder earnings per share.
$1 = 145.395 JPY