Iron Miner Cliffs Plans $300 Million Share Sale to Pay Debt

  • Company joins U.S. Steel, Freeport in tapping stock market
  • Shares extend decline after close of regular U.S. trading

Cliffs Natural Resources Inc. plans to sell $300 million in common shares as the largest U.S. iron-ore producer cleans up its balance sheet after commodity prices slumped.

Proceeds from the secondary offering will be used for general corporate purposes, including the repayment of debt such as senior notes due January 2018, the Cleveland-based company said Tuesday in a statement. Cliffs will raise an aggregate of $345 million if the underwriters exercise their option to purchase additional shares.

Cliffs joins a growing list of mining and metal companies turning to the equity market to raise funds after shares rallied. U.S. Steel Corp. said Monday it plans to sell new stock worth $439 million while Iamgold Corp. unveiled a bought deal for 38.9 million shares priced to raise about $200 million. Last month, copper producer Freeport-McMoRan Inc. announced plans to sell as much as $1.5 billion in new stock.

In June, Cliffs Chief Executive Officer Lourenco Goncalves said existential threats to the miner with a 170-year legacy have all been removed with the sale of the Bloom Lake mine in Canada, renewal of a supply contract with ArcelorMittal and the failure of Essar Steel Algoma to undertake its own competing North American iron expansion.

Units of Bank of America Corp., Credit Suisse Group AG, Goldman Sachs Group Inc. and Deutsche Bank AG are acting as joint bookrunners for the offering.

The statement was released after the close of regular trading in New York, where Cliffs fell 1.7 percent to $7.57 at 4:34 p.m., extending Tuesday’s 4.6 percent decline. The shares surged 387 percent this year through the close after five straight annual declines.

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