United States Steel reveals expected pricing on $1.25 billion unsecured credit facility

By Sara Rosenberg

New York, April 25 - United States Steel Corp. detailed expected pricing on its proposed $1.25 billion five-year credit facility that will be used to help fund its acquisition of Lone Star Technologies, Inc., according to a 10-Q filed with the Securities and Exchange Commission Wednesday.

Pricing on the $750 million unsecured revolver and the $500 million unsecured term loan will be based on a ratings grid (see table).

JPMorgan is the lead bank on the deal.

The company has also received a commitment from JPMorgan for a $500 million one-year unsecured bridge facility.

In addition to helping fund the acquisition, the credit facility will replace the company's $600 million inventory-backed facility.

Under the transaction agreement, United States Steel is buying Lone Star for $67.50 per share in cash for an aggregate value of $2.1 billion.

Other acquisition financing will come from cash on hand and the company's existing receivables purchase program.

The transaction is subject to the approval of Lone Star's shareholders and other customary closing conditions, including regulatory approvals, and is expected to close in the second or third quarter.

United States Steel is a Pittsburgh-based integrated steel producer. Lone Star is a Dallas-based manufacturer and marketer of oilfield casing, tubing and line pipe, specialty tubing products, and flat-rolled steel and other tubular products and services.

Table: Libor Pricing Grid

Ratings Revolver Applicable Margin Term Loan Applicable Margin

Baa1/BBB+ 27 bps 35 bps

Baa2/BBB 40 bps 50 bps

Baa3/BBB- 50 bps 62.5 bps

Ba1/BB+ 72.5 bps 87.5 bps

Lower 105 bps 125 bps

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