Nippon Steel to raise $5.6 billion to finance deal with U.S. Steel

Japanese steelmaker Nippon Steel has announced that it will raise 800 billion yen (about $5.6 billion) through two subordinated loans to partially finance the $14.9 billion acquisition of U.S. Steel and refinance previous debt obligations, Reuters reports.

According to the company’s statement, 500 billion yen will be used to partially repay a 2 trillion yen tranche loan that Nippon Steel secured in June to finance the deal. Another 300 billion yen will be used to refinance a previously obtained subordinated loan of 450 billion yen.

The 500 billion yen tranche will be financed by September 18 by Japan’s largest banks: Mitsubishi UFJ Financial Group, Sumitomo Mitsui Financial Group, Mizuho Financial Group, as well as Sumitomo Mitsui Trust Group and the Development Bank of Japan. The company will receive a 300 billion yen loan from four banks on July 22.

Nippon Steel plans to finance the remaining 1.5 trillion yen using various instruments, depending on market conditions and interest rates. The company emphasizes that any additional capital-based financing will be carried out on the principle of preventing dilution of earnings per share (EPS).

After the deal, Nippon Steel’s debt-to-equity ratio rose from 0.35 to 0.8 due to loans and losses from the sale of its stake in a joint venture with ArcelorMittal in the US. The sale of this asset helped the company get approval for the deal with U.S. Steel. By the end of March 2026, Nippon Steel plans to reduce its debt burden to 0.7, mainly through cash flow and asset sales.

As GMK Center reported earlier, in mid-June, Nippon Steel closed the deal to buy United States Steel. Under the terms of the deal, Nippon Steel paid $55 per share for the American steel producer, for a total of $14.9 billion. The companies also signed a National Security Agreement (NSA) with the US government, and US Steel will issue a “golden share” to the US government.