Steel Mills

Big River Steel Closes on $777 Million in Financing

June 4, 2019

Big River Steel has big plans and now has access to the big dollars needed to fund them. The steelmaker reported Friday that it has closed and funded $487 million of 30-year bonds and $290 million of equity financing. The company will use the bond and equity proceeds to expand its scrap metal recycling and flat-rolled steel production facility in Osceola, Ark.

The expansion will double Big River’s flat-rolled steel production rated capacity to 3.3 million tons annually. The expansion also sets the stage for an incremental downstream investment, which will allow the company to produce even higher grades of electrical steels. The company expects demand for electrical steels to escalate with the market’s continued focus on energy efficiency and announced increases in hybrid and electric vehicle production.

“The level of interest shown by the bond investor community in supporting Big River Steel’s long-term growth is much appreciated and is a testament to the outstanding effort put forth by our employees in meeting the needs of our customers,” said Ari Levy, Big River Steel’s director of finance. “Our ability to quickly penetrate several of the most demanding steel markets, including directly selling to a number of the world’s leading automakers, was a significant factor leading to our success in issuing what we believe to be the longest maturity bonds in the North American steel industry.”

The bonds, which are interest-only for the next 20 years, were priced at par with a coupon of 4.5 percent and traded in the when-issued market as high as 103 to yield 4.137 percent. The equity financing was provided on a pro rata basis by Big River’s current ownership group.

The Arkansas Development Finance Authority acted as the conduit issuer of the bonds, the proceeds from which were loaned to Big River Steel. Goldman, Sachs & Co. LLC served as lead underwriter for the offering and Crews & Associates and SunTrust Robinson Humphrey acted as co-managers.

Big River Steel began operating its Flex Mill™ 30 months ago and has already positioned itself as one of the premier steel producers in North America in terms of profitability, product quality, employee productivity and environmental sustainability, the company claims.