By Kosaku Narioka
Nippon Steel plans to raise up to $5.6 billion in subordinated loans, as part of efforts to strengthen its balance sheet following its $14 billion acquisition of U.S. Steel.
The Japanese steelmaker said Thursday that it signed committed subordinated term loans of up to 500 billion yen, equivalent to $3.48 billion, to repay the short-term loans taken out for the acquisition of U.S. Steel.
Nippon Steel also said it would obtain new subordinated term loans of Y300 billion to refinance part of the existing loans taken out in 2020.
The company said these loans would have attributes and features resembling equity, such as an option to defer interest payments, long-term redemption periods and subordination in liquidation or bankruptcy proceedings.
Nippon Steel said it expected rating agencies would deem 50% of the raised funds to be equity for the purpose of their ratings.
Nippon Steel in June completed its long-sought U.S. Steel acquisition after securing a national-security agreement with the Trump administration that cleared the way for the deal to move forward.
The agreement calls for Nippon Steel to make around $11 billion in new investments over the next three years. A commitment to build a new steel mill after 2028 would boost the total investment to $14 billion.
Nippon Steel also said it would book a loss of about $1.58 billion related to the sale of its stake in an Alabama-based joint venture to partner ArcelorMittal. The stake sale was aimed at addressing antitrust concerns.
U.S. Steel, which generated nearly $16 billion in sales last year, primarily supplies sheet steel to the automotive, appliance and construction industries.
Nippon Steel had been keen on adding the U.S. business to help offset declining sales in Japan.
Write to Kosaku Narioka at kosaku.narioka@wsj.com
(END) Dow Jones Newswires
July 03, 2025 02:37 ET (06:37 GMT)
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