U.S. Steel Strengthens Balance Sheet With Sustainable Financing, Completes Tender Process

Published on: 07 September 2022
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United States Steel Corporation announced the successful closing of $290 million of green bond-designated unsecured Arkansas Development Finance Authority environmental improvement revenue bonds.

The proceeds from the bonds will be used for "eligible green projects" as defined by the International Capital Market Association's Green Bond Principles.

Separately, in a tender offer procedure completed last week, the company successfully repurchased approximately $300 million of outstanding debt at a discount to par.

U. S. Steel President and Chief Executive Officer David B. Burritt said: 

"Friday’s closing on the Green Bonds reinforces our commitment to achieving our 2030 greenhouse gas emissions intensity reduction and 2050 net-zero goals.

"We are also continuing to strengthen our balance sheet, in line with our capital allocation priorities, by replacing more expensive, nearer-term debt with less expensive, longer-dated debt, all while reducing our interest expense and extending our maturity profile.”

The Arkansas Development Finance Authority issued the Green Bonds, which have a coupon rate of 5.45% and a maturity date of 2052. U. S. Steel will pay semiannual interest under the terms of the deal with the Arkansas bond issuer.

The proceeds from the Green Bonds will be used to partially fund work on the company's solid waste disposal facilities, including two electric arc furnaces (EAF) and other equipment and facilities at Big River 2 (BR2), its new technologically advanced flat-rolled steelmaking facility currently under construction near Osceola, Arkansas. Scrap steel will be recycled, refined, and processed into final steel products at the facility.

BR2 is expected to be completed in 2024 and will be the most innovative steelmaking plant in North America, with two EAFs capable of producing three million tonnes of advanced steel per year, a state-of-the-art endless casting and rolling line, and advanced finishing capabilities. 

When compared to the old integrated steelmaking process, BR2 is predicted to emit up to 70–80% less greenhouse gas emissions, directly supporting the company's sustainability ambitions. 

Underwriters for the Green Bonds include BofA Securities, Barclays, Citigroup, Goldman Sachs & Co. LLC, J.P. Morgan, Morgan Stanley, Wells Fargo Securities, and Crews & Associates, Inc.

Source: US Steel

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