Severstal Columbus LLC, a subsidiary of OAO Severstal, issued a $525 million aggregate principal amount of 8-year callable senior secured notes at an original issue discount of two percent and an annual coupon rate of 10.25 percent. The order book has closed two times oversubscribed.
Proceeds of the offering will be used to fully refinance all outstanding debt obligations originally incurred to finance Phase 1 construction at Severstal Columbus. In addition to a longer-term maturity rate, the newly issued debt carries less restrictive covenants that provide the company with greater flexibility to remain in compliance with the financial terms and requirements as agreed in the indenture during cyclical changes that may adversely affect steel industry fundamentals.
“We are satisfied with the robust investor response to this issuance,” said Alexei Kulichenko, CFO of OAO Severstal. “We feel that this reflects expectations among fixed-income market participants that conditions in the North American steel industry are beginning to improve as well as their confidence that Severstal Columbus is well positioned to capitalize on the increase in consumer demand. The facility, one of the lowest cost producers of high quality steel in the US market with a focus on providing superior customer service, is currently operating well above average industry rates. The success of this placement despite the relatively high market volatility in the US and Europe is evidence that these attributes have been recognized by the market.”
Credit Suisse and Citi were joint book-running managers for the offering.