Nippon Steel has announced it will raise ¥800 billion (approximately $5.6 billion) through two subordinated loans to partially fund its $14.9 billion acquisition of U.S. Steel and to refinance existing liabilities.
The Tokyo-based steelmaker, Japan’s largest, will allocate ¥500 billion of the new capital towards repaying a portion of the ¥2 trillion bridge loan arranged in June to finance the landmark deal. An additional ¥300 billion will be used to refinance a previous subordinated loan of ¥450 billion.
According to a Nippon Steel spokesperson, the ¥500 billion loan will be underwritten by Japan’s three megabanks—Mitsubishi UFJ Financial Group, Sumitomo Mitsui Financial Group and Mizuho Financial Group—alongside Sumitomo Mitsui Trust Group and the Development Bank of Japan. Completion is targeted by 18 September. The ¥300 billion refinancing tranche, scheduled for 22 July, will be provided by the three megabanks and Sumitomo Mitsui Trust.
The company said the remaining ¥1.5 trillion of the bridge loan will be refinanced through a mix of funding approaches, depending on interest rates, prevailing market conditions and strategic assessments. While capital-based financing remains a possibility, Nippon Steel stated that any such move would be weighed carefully to avoid earnings-per-share dilution.
Following the acquisition, Nippon Steel’s debt-to-equity ratio increased from 0.35 as of 31 March to approximately 0.8, reflecting the impact of the bridge loans and the sale of its stake in a U.S. joint venture with ArcelorMittal. The divestiture was a strategic decision to facilitate regulatory approval for the U.S. Steel transaction.
The company intends to reduce its debt-to-equity ratio to the 0.7 range by the end of March 2026 through internal cash flow generation and selected asset sales.
-Reuters
