Steel Dynamics plans $1 billion bonds for Severstal Columbus purchase

By Sara Rosenberg

New York, July 22 – Steel Dynamics Inc. plans to issue $500 million of seven-year high-yield notes and $500 million of ten-year high-yield notes for its purchase of Severstal Columbus LLC, a technologically advanced mini-mill in Mississippi, from OAO Severstal, according to an 8-K filed with the Securities and Exchange Commission on Tuesday.

Goldman Sachs Bank USA is leading the debt.

Backing the notes is a commitment for a $1 billion one-year covenant-light bridge loan split between a $500 million tranche A priced at Libor plus 400 basis points and a $500 million tranche B priced at Libor plus 437.5 bps. Both tranches have a 1% Libor floor and will see spreads increase by 50 bps every three months.

Other funds for the $1,625,000,000 acquisition will come from at least $300 million of cash on hand and up to $400 million of revolving credit facility borrowings.

Closing is expected by year-end, conditioned on receipt of regulatory approvals and customary conditions.

At closing, leverage is expected at the 3.5 times or less range.

Steel Dynamics is a Fort Wayne, Ind.-based steel producer and metals recycler.

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