To What Extent Could U.S. Steel’s Recent Stock Offering Improve The Company’s Indebtedness?
The downturn in the fortunes of the U.S. steel industry has taken its toll on the credit ratings of U.S. steel companies. Competition from imported steels has negatively impacted shipment volumes and realized prices for the likes of U.S. Steel, as indicated by the graphs shown below.
Though regulatory action taken by U.S. authorities is expected to lessen the competition from steel imports going forward, U.S. Steel currently has a speculative grade credit rating from major ratings agencies. [1] The company has recently concluded a common stock offering, raising $434.7 million in gross proceeds. [2] The company intends to use the proceeds of the stock offering for debt reduction, capital expenditure, and other corporate purposes. Assuming that the company uses 75% of the gross proceeds for debt reduction, it could lower its Net Debt/EBITDA ratio by around 10%. Debt reduction using the proceeds of the stock offering is likely to make ratings agencies view the company’s indebtedness more favorably.
Have more questions about U.S. Steel? See the links below.
- What Is U.S. Steel’s Revenue And EBITDA Breakdown?
- What Is U.S. Steel’s Fundamental Value Based On Expected 2015 Results?
- How Has U.S. Steel’s Revenue Composition Changed Over The Last 5 Years?
- By What Percentage Did U.S. Steel’s Revenue & EBITDA Change In The Last 5 Years?
- By What Percentage Can U.S. Steel’s Revenue & EBITDA Grow In The Next 3 Years?
- How Has The Increase In Steel Imports To The U.S. Impacted U.S. Steel’s U.S. Flat-Rolled Steel Operations?
- How Has The Decline In Oil Prices Impacted U.S. Steel’s Tubular Steel Shipments?
- Can U.S. Steel Stock Return To Pre-Inflation Shock Highs?
- What’s Happening With U.S. Steel Stock?
- Will U.S. Steel Stock Continue To Outperform Despite Economic Headwinds?
- Is U.S. Steel Set For Tough Q3 Results?
- Why We Are Cutting Our Price Estimate For U.S. Steel Stock
- How Will U.S. Steel Stock Fare In An Uncertain Economy?
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Notes:- Moody’s downgrades U.S. Steel’s CFR to B3; assigns B1 rating to senior secured note offering; outlook negative, Moody’s Investors Service [↩]
- United States Steel Corporation Prices Common Stock Offering, U.S. Steel News Release [↩]