Cliffs reaches $1.75bn credit arrangement with banks

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The miner said that its syndicate of lending banks had unanimously agreed to amend an existing $1.75 billion unsecured revolving credit facility.

Cliffs said that existing facility, which used a leverage covenant ratio, had been replaced with a debt-to-capitalisation ratio, which it described as a “more consistent” source of liquidity.

The miner said the new arrangement would allow its borrowing capacity to be less susceptible to the impact of volatile iron ore and metallurgical coal pricing. Cliffs said that it had tested the changes to the facility in a variety of pricing scenarios and was “confident” in the amended terms.

“The new amended terms are effective [from] June 30, 2014 and received the unanimous support of the entire lender group, despite requiring only greater than 50% approval,” Cliffs said.

The facility will be maintained at $1.75 billion and will mature on the existing date of October 16, 2017, Cliffs said.

Cliffs cfo Terry Paradie said that the arrangement was an endorsement of the underlying fundamentals of the company’s long-term strategy.

Cliffs, one of North America’s largest iron ore pellet and coking coal producers, has faced criticism from its shareholders for losing more than 85% of its equity value since 2011.

One of the company’s largest shareholders, Casablanca Capital, demanded that the miner replace its management team earlier this month.

Cliffs said that it planned to idle its Pinaccle coking coal mine in West Virginia on June 26, citing deteriorating conditions in the metallurgical coal market.