Nippon Steel, a Japanese steel company, announced that it has raised 800 billion yen (about $5.6 billion) through two subordinated loans to partially finance the acquisition of U.
S. Steel for $14.9 billion, as well as refinancing previous debt obligations. This is reported by Reuters.
According to the company, 500 billion yen will be used to partially repay a 2 trillion yen tranche loan that Nippon Steel secured in June to finance the deal. Another 300 billion yen will be used to refinance a previously received subordinated loan of 450 billion yen.
The 500 billion tranche will be financed by September 18 by Japan's largest banks: Mitsubishi UFJ Financial Group, Sumitomo Mitsui Financial Group, Mizuho Financial Group, as well as Sumitomo Mitsui Trust Group and the Development Bank of Japan. The company will receive a loan of 300 billion yen from four banks as early as July 22.
Nippon Steel plans to finance the remaining 1.5 trillion yen with various instruments, depending on market conditions and interest rates. The company emphasizes that any additional capital-based financing will be carried out on the principle of avoiding dilution of earnings per share (EPS).
After the deal, the debt-to-equity ratio of Nippon Steel increased from 0.35 to 0.8 due to loans and losses from the sale of a stake in a joint venture with ArcelorMittal in the United States. The sale of this asset helped the company get approval for the deal with U.
S. Steel. By the end of March 2026, Nippon Steel plans to reduce its debt burden to 0.7, including through cash flow and asset sales.
