Nippon Steel announced that it plans to raise ¥550 billion (about $3.55 billion) through the sale of convertible bonds as part of its funding strategy for business operations and financial commitments.
The bond issue will be conducted in two equal tranches of ¥275 billion each, with maturities in 2029 and 2031, and will carry stock acquisition rights and zero interest, according to the company’s regulatory filings.
The proposed convertible bond sale is intended, in part, to replace a bridge loan that was taken out to finance the company’s acquisition of U.S. Steel last year. Nippon Steel is also planning to make additional investments into the U.S. asset as part of its longer-term growth plan.
Issuing convertible bonds allows the company to raise capital while limiting immediate dilution of existing shareholders, as these securities convert into equity at a later stage under specified conditions. Market analysts have noted that this represents one of the largest convertible bond offerings by a Japanese company.
The bond sale may be increased depending on investor demand and market conditions, and the funds are expected to support the company’s broader business operations and growth strategies over the coming years.
Nippon Steel has also revised its financial forecasts, widening its expected net loss for the fiscal year ending March due to operational disruptions, including a blast furnace fire and costs associated with the U.S. Steel acquisition.