Big River Steel closes on debt, equity financing deal

Big River Steel closes on debt, equity financing deal

Osceola, Arkansas-based company will use proceeds to expand its scrap metal recycling and steel production facility.

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Big River Steel (BRS), Osceola, Arkansas, has announced it closed on a $487 million debt financing package, which will go toward 30 years of bonds to finance the expansion of its scrap metal recycling and flat-rolled production facility, doubling its capacity to 3.3 million tons per year. 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 company also announced another $290 million in equity financing, provided on a pro rata basis by BRS' current ownership group, which includes a Koch family investment vehicle, a Goldman Sachs-led group and the Arkansas Teacher Retirement System (ATRS). The bond and equity proceeds set the stage for an incremental downstream investment, which will allow the company to produce even higher grades of electrical steel as demand for hybrid and electric vehicle production is expected to escalate, the company says in a news release.

"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,” says 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."

BRS’s Osceola plant produces tube grade sheet for pipeline construction and silicon steels for a wide variety of energy and electric motor applications and high-strength steels for the U.S. automotive industry. The company has commissioned SMS Group, Germany, to supply mechanical equipment, electrical and automation systems and digitalization for the project.

After the expansion is completed, BRS will have two electric arc furnaces (EAF) and two twin-ladle furnaces.