Japanese steel major Nippon Steel Corp. (NISTY.PK), which closed its $14.9 billion acquisition of United States Steel Corp. in mid-June, announced Thursday that it has signed up to 500 billion yen worth subordinated term loan agreements to partially repay the short-term loans taken out for the merger.
Nippon Steel will also obtain a new subordinated term loans totaling 300 billion yen to refinance a previous loan.
In Tokyo, Nippon Steel shares gained 4.4 percent to close Thursday's regular trading at 2,850.00 yen.
The short-term loans or Bridge Loans were taken for the merger between Nippon Steel's subsidiary in the U.S. and U.S. Steel.
The maximum total loan amount would be 500 billion yen, comprising Tranche A of 160 billion yen, Tranche B of 150 billion yen, and Tranche C of 190 billion yen.
The drawdown date would be any optional date between the contract date and September 18.
In addition, Nippon Steel announced that it has resolved to make a prepayment on July 22 of Tranche A of its existing subordinated term loans totaling 450 billion yen, which were executed on July 21, 2020.
In conjunction with this, Nippon Steel will obtain new subordinated term loans totaling 300 billion yen.
The Refinance Loans' drawdown date would be July 22 and maturity date would be June 13, 2061.
The company added that the Committed Subordinated Loans and the Refinance Loans will be containing features of both equity and liabilities.
Nippon Steel expects that rating agencies, such as Rating and Investment Information, Inc., Japan Credit Rating Agency, Ltd., Moody's Japan K.K., and S&P Global Ratings Japan Inc., will deem 50% of the raised funds to be equity for the purpose of their ratings.
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