To What Extent Could U.S. Steel’s Recent Stock Offering Improve The Company’s Indebtedness?

-11.73%
Downside
40.78
Market
36.00
Trefis
X: United States Steel logo
X
United States Steel

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.

Debt Reduction From Stock Offering 1
Have more questions about U.S. Steel? See the links below.

Relevant Articles
  1. Can U.S. Steel Stock Return To Pre-Inflation Shock Highs?
  2. What’s Happening With U.S. Steel Stock?
  3. Will U.S. Steel Stock Continue To Outperform Despite Economic Headwinds?
  4. Is U.S. Steel Set For Tough Q3 Results?
  5. Why We Are Cutting Our Price Estimate For U.S. Steel Stock
  6. How Will U.S. Steel Stock Fare In An Uncertain Economy?

Notes:

1) The purpose of these analyses is to help readers focus on a few important things. We hope such lean communication sparks thinking, and encourages readers to comment and ask questions on the comment section, or email content@trefis.com
2) Figures mentioned are approximate values to help our readers remember the key concepts more intuitively. For precise figures, please refer to our complete analysis for U.S. Steel

See More at Trefis | View Interactive Institutional Research (Powered by Trefis)

Get Trefis Technology

Notes:
  1. Moody’s downgrades U.S. Steel’s CFR to B3; assigns B1 rating to senior secured note offering; outlook negative, Moody’s Investors Service []
  2. United States Steel Corporation Prices Common Stock Offering, U.S. Steel News Release []