Filed Under:
Tickers in this Article: AKS, SHLO, KBSTY, ANGGY
AK Steel Corporation (AK Steel), a subsidiary of AK Steel Holding Corporation (AKS), announced the pricing of $30 million private offering as an add-on notes to its outstanding $350 million aggregate principal amount of 8.750% senior secured notes due 2018.

The add-on notes, which will mature on Dec 1, 2018, will be wholly guaranteed by AK Holding on a senior basis and will be secured by the holding company’s total real property, plant and equipment and its related proceeds. AK Steel will be paying semi-annual interest on the add-on notes twice a year on Jun 1 and Dec 1.

The net proceeds from the issuance of add-on senior notes will be utilized for general corporate purposes. Depending on customary closing conditions, the offering is expected to close on Jun 24, 2013.

Since the add-on notes are not registered under the Securities Act of 1933 or the securities laws of any other jurisdiction, it cannot be offered or sold in the U.S. or to any U.S. persons except pursuant to an applicable exemption from, or in a transaction not subject to, the registration requirements of the Securities Act.

However, it can be offered only to qualified institutional customers following the Rule 144A under the Securities Act and to non-U.S. persons outside the U.S. under Regulation S of the Securities Act.

Separately, AK Steel announced second quarter guidance on Jun 17, where it expects a loss between 33 and 38 cents as non-cash tax expenses coupled with maintenance outage costs may dent its bottom line. Analysts polled by Zacks are expecting a loss of 10 cents a share for the quarter.

AK Steel expects to take tax charges of roughly $11 million (or 8 cents a share) in the quarter related to a valuation allowance for its deferred tax assets. In addition; the quarter’s results will include the impact of a planned maintenance outage at the Middletown Works blast furnace. AK Steel expects to incur maintenance outage costs of around $21 million in the second quarter, an increase from $1 million in the first quarter.


Moreover, the company anticipates its average per-ton selling price to slip roughly 1% in the second quarter from the first quarter level of $1,062 per ton. The expected sequential decline is partly triggered by lower spot market prices for carbon steel products. However, AK Steel added that its spot market prices have been favorable of late given a recent price hike of carbon flat-rolled steel products.

AK Steel currently holds a Zacks Rank #3 (Hold).

Other companies in the steel industry with favorable Zacks Rank are Kobe Steel Ltd. (KBSTY), Shiloh Industries Inc. (SHLO) and Angang Steel Company Limited (ANGGY). While both Kobe Steel and Shiloh Industries hold a Zacks Rank #1 (Strong Buy), Angang Steel retains a Zacks Rank #2 (Buy).

comments powered by Disqus

Trading Center