Moody’s eyes Cleveland-Cliffs for cut

Moody’s Investors Service said it placed all ratings of Cleveland-Cliffs Inc., including the B1 corporate family rating and the B1-PD probability of default rating under review for downgrade. The SGL-2 speculative grade liquidity rating remains unchanged at this time.

The review follows the announcement by the Cleveland-Cliffs it agreed to acquire ArcelorMittal USA for an implied equity value of $1.4 billion and an enterprise value of $3.3 billion, Moody’s said.

Cleveland-Cliffs plans to issue 78.2 million shares of common stock, non-voting preferred stock with about a value of $373 million and $505 million cash.

“The review will focus on the expected operational efficiencies and ability to optimize production at the steel production sites as well as the expected cost profile and competitive position. Performance through various steel price points, expected steel production mix, and end-market exposures will be further considerations,” the agency said in a press release.

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