Cleveland-Cliffs Inc. Quarterly report pursuant to Section 13 or 15(d)

Quarterly report pursuant to Section 13 or 15(d)

Debt And Credit Facilities

Debt And Credit Facilities

3 Months Ended

Mar. 31, 2012

Debt And Credit Facilities [Abstract]

Debt And Credit Facilities

NOTE 9 – DEBT AND CREDIT FACILITIES

The following represents a summary of our long-term debt as of March 31, 2012 and December 31, 2011:

($ in Millions)

March 31, 2012

Debt Instrument

Type

Average
Annual
Interest Rate

Final
Maturity

Total Face
Amount

Total Long-
term Debt

$1.25 Billion Term Loan

Variable

1.37 %

2016

959.5

(6)

872.2

(6)

$700 Million 4.875% 2021 Senior Notes

Fixed

4.88 %

2021

700.0

699.3

(5)

$1.3 Billion Senior Notes:

$500 Million 4.80% 2020 Senior Notes

Fixed

4.80 %

2020

500.0

499.1

(4)

$800 Million 6.25% 2040 Senior Notes

Fixed

6.25 %

2040

800.0

790.1

(3)

$400 Million 5.90% 2020 Senior Notes

Fixed

5.90 %

2020

400.0

398.1

(2)

$325 Million Private Placement Senior Notes:

Series 2008A - Tranche A

Fixed

6.31 %

2013

270.0

Series 2008A - Tranche B

Fixed

6.59 %

2015

55.0

$1.75 Billion Credit Facility:

Revolving Loan

Variable

2016

1,750.0

(1)

Total

5,434.5

3,583.8


December 31, 2011
Debt Instrument	Type	Average Annual Interest Rate		Final Maturity		Total Face Amount			Total Long-term Debt
$1.25 Billion Term Loan	Variable		1.40 %		2016	$	972.0	(6)	$	897.2	(6)
$700 Million 4.875% 2021 Senior Notes	Fixed		4.88 %		2021		700.0			699.3	(5)
$1.3 Billion Senior Notes:
$500 Million 4.80% 2020 Senior Notes	Fixed		4.80 %		2020		500.0			499.1	(4)
$800 Million 6.25% 2040 Senior Notes	Fixed		6.25 %		2040		800.0			790.1	(3)
$400 Million 5.90% 2020 Senior Notes	Fixed		5.90 %		2020		400.0			398.0	(2)
$325 Million Private Placement Senior Notes:
Series 2008A - Tranche A	Fixed		6.31 %		2013		270.0			270.0
Series 2008A - Tranche B	Fixed		6.59 %		2015		55.0			55.0
$1.75 Billion Credit Facility:
Revolving Loan	Variable		-		2016		1,750.0			-	(1)

Total						$	5,447.0		$	3,608.7

(1) As of March 31, 2012 and December 31, 2011, no revolving loans were drawn under the credit facility and the principal amount of letter of credit obligations totaled $23.5 million for each period respectively, thereby reducing available borrowing capacity to $1,726.5 million for each period, respectively. As of April 26, 2012, we had direct borrowings on our $1.75 billion credit facility in the amount of $425.0 million for purposes of funding general operations.

(2) As of March 31, 2012 and December 31, 2011, the $400 million 5.90 percent senior notes were recorded at a par value of $400 million less unamortized discounts of $1.9 million and $2.0 million, respectively, based on an imputed interest rate of 5.98 percent.

(3)As of March 31, 2012 and December 31, 2011, the $800 million 6.25 percent senior notes were recorded at par value of $800 million less unamortized discounts of $9.9 million in each period, respectively, based on an imputed interest rate of 6.38 percent.

(4) As of March 31, 2012 and December 31, 2011, the $500 million 4.80 percent senior notes were recorded at a par value of $500 million less unamortized discounts of $0.9 million in each period, respectively, based on an imputed interest rate of 4.83 percent.

(5) As of March 31, 2012 and December 31, 2011, the $700 million 4.88 percent senior notes were recorded at a par value of $700 million less unamortized discounts of $0.7 million in each period, respectively, based on an imputed interest rate of 4.89 percent.

(6) As of March 31, 2012 and December 31, 2011, $290.5 and $278.0 million, respectively, had been paid down on the original $1.25 billion term loan and of the remaining term loan $87.2 million and $74.8 million, respectively, was classified as Current portion of term loan. The current classification is based upon the principal payment terms of the arrangement requiring principal payments on each three-month anniversary following the funding of the term loan.

The terms of the private placement senior notes, term loan and credit facility each contain customary covenants that require compliance with certain financial covenants based on: (1) debt to earnings ratio and (2) interest coverage ratio. As of March 31, 2012 and December 31, 2011, we were in compliance with the financial covenants related to both the private placement senior notes and the credit facilities. The terms of the senior notes due in 2020, 2021 and 2040 contain certain customary covenants; however, there are no financial covenants.

Short-term Facilities

Asia Pacific Iron Ore maintains a bank contingent instrument facility and cash advance facility. The facility, which is renewable annually at the bank's discretion, provides A$40 million in credit for contingent instruments, such as performance bonds and the ability to request a cash advance facility to be provided at the discretion of the bank. As of March 31, 2012, the outstanding bank guarantees under this facility totaled A$24.7 million ($25.5 million), thereby reducing borrowing capacity to A$15.3 million ($15.9 million). We have provided a guarantee of the facility, along with certain of our Australian subsidiaries. The facility agreement contains customary covenants that require compliance with certain financial covenants: (1) debt to earnings ratio and (2) interest coverage ratio, both based on the financial performance of the Company. As of March 31, 2012 and December 31, 2011, we were in compliance with these financial covenants.

Letters of Credit

In conjunction with our acquisition of Consolidated Thompson, we issued standby letters of credit with certain financial institutions in order to support Consolidated Thompson's and Bloom Lake's general business obligations. In addition, we issued standby letters of credit with certain financial institutions during the third quarter of 2011 in order to support Wabush's obligations. As of March 31, 2012 and December 31, 2011, these letter of credit obligations totaled $95.0 million. All of these standby letters of credit are in addition to the letters of credit provided for under the amended and restated multicurrency credit agreement.

Debt Maturities

Maturities of debt instruments based on the principal amounts outstanding at March 31, 2012, total approximately $62.3 million in 2012, $369.7 million in 2013, $124.6 million in 2014, $428.8 million in 2015, $299.1 million in 2016 and $2.4 billion thereafter.

- Definition

The entire disclosure for information about short-term and long-term debt arrangements, which includes amounts of borrowings under each line of credit, note payable, commercial paper issue, bonds indenture, debenture issue, own-share lending arrangements and any other contractual agreement to repay funds, and about the underlying arrangements, rationale for a classification as long-term, including repayment terms, interest rates, collateral provided, restrictions on use of assets and activities, whether or not in compliance with debt covenants, and other matters important to users of the financial statements, such as the effects of refinancing and noncompliance with debt covenants.

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