Nippon Steel Secures $5.6 Billion to Bolster U.S. Steel Acquisition

In a major financial move supporting its global expansion, Nippon Steel Corporation has finalized two subordinated loan agreements totaling approximately $5.6 billion USD (¥800 billion), designed to fund its acquisition of U.S. Steel and optimize capital structure.

A Dual-Tranche Strategy

$3.5 Billion (¥500 Billion) Subordinated Commitment Facility

• Contracted on July 3, 2025.

• Drawdown scheduled between now and September 18, 2025.

• Structured into three portions: ¥160 B ($1.12 B), ¥150 B ($1.05 B), ¥150 B and ¥190 B (~$1.33 B).

• Will be used to repay bridge financing secured through Nippon Steel North America Holdings for the U.S. Steel transaction.

$2.1 Billion (¥300 Billion) Refinancing Loan

• Drawdown scheduled for July 22, 2025.

• Allocated for prepayment of existing ¥300 B (~$2.1 B) subordinated loan signed in July 2020.

• Both loans are long-term, with maturity periods ranging from 35 to 40 years, and flexible terms for interest deferral and subordination.

Structurally Designed for Financial Strength

Both loans are engineered to meet credit rating agencies’ equity recognition standards. This includes key features such as:

• Long maturities (up to 2061)

• Subordinated repayment structure

• Interest payment deferral options

• Absence of financial covenants or early repayment clauses

These characteristics enable 50% of each loan to be treated as equity by Japanese and international credit agencies — improving the company’s debt-equity profile without issuing new shares.

Aligning with Strategic Growth and Debt Targets

The financing supports Nippon Steel’s mid- to long-term vision of becoming the “Best Steelmaker with World-Leading Capabilities,” which includes increasing global crude steel capacity to 100 million tons.

Following the U.S. Steel acquisition, Nippon Steel aims to:

• Restore its debt-to-equity (D/E) ratio to 0.7 in FY2025

• Rebalance capital structure through consolidated earnings and cash flow growth

• Strengthen its financial position to support global operations

Conclusion: Fortifying Steel Leadership with Fiscal Discipline

This $5.6 billion financing package strengthens Nippon Steel’s ability to manage integration risks and balance sheet pressures while executing a high-impact acquisition. As the company consolidates its U.S. operations and expands global scale, this long-term, hybrid financing approach affirms its commitment to both shareholder value and financial health.

Source: https://www.nipponsteel.com/common/secure/en/news/20250703_100.pdf 

Prepared by: Next Move Strategy Consulting