<PAGE>
As filed with the Securities and Exchange Commission on April 1, 1999
Registration no. 333-
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
---------------
FORM S-4
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
---------------
Issuer of Senior Notes registered hereby
AK STEEL CORPORATION
(Exact Name of Registrant as Specified in its Charter)
DELAWARE 3312 31-1401455
(State or Other (Primary Standard Industrial (I.R.S. Employer
Jurisdiction of Classification Code Number) Identification No.)
Incorporation or
Organization)
Guarantor of Senior Notes registered hereby
AK STEEL HOLDING CORPORATION
(Exact Name of Registrant as Specified in its Charter)
DELAWARE 3312 31-1401455
(State or Other (Primary Standard Industrial (I.R.S. Employer
Jurisdiction of Classification Code Number) Identification No.)
Incorporation or
Organization)
703 Curtis Street
Middletown, Ohio 45043
(513) 425-5000
(Address, Including Zip Code, and Telephone Number,
including Area Code, of Registrants' Principal Executive Offices)
James L. Wainscott
Vice President, Treasurer and Chief Financial Officer
AK Steel Corporation
703 Curtis Street
Middletown, Ohio 45043
(513) 425-5000
(Name and Address, Including Zip Code,
and Telephone Number, Including Area Code, of Agent For Service)
Copies of communications to:
Stephen H. Cooper, Esq.
Weil, Gotshal & Manges LLP
767 Fifth Avenue New York,
New York 10153-0119
(212) 310-8000
Approximate date of commencement of proposed sale to the public: As soon as
practicable after the effective date of this Registration Statement.
If any of the securities being registered on this Form are to be offered in
connection with the formation of a holding company and there is compliance
with General Instruction G, check the following box. [_]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462 (b) under the Securities Act, check the following box and
list the Securities Act registration statement number of the earlier effective
registration statement for the same offering. [_]
If this Form is a post-effective amendment filed pursuant to Rule 462 (d)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [_]
CALCULATION OF REGISTRATION FEE
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Proposed
Proposed Maximum
Title of Each Class of Maximum Aggregate Amount of
Securities to be Amount to Offering Price Offering Registration
Registered be Registered Per Unit Price(1) Fee(2)
- -------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
7 7/8% Senior Notes Due
2009.................. $450,000,000 100% $450,000,000 $125,100
- -------------------------------------------------------------------------------
Guarantee of Senior
Notes................. -- -- -- None
</TABLE>
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
(1) Estimated solely for the purposes of calculating the registration fee
pursuant to Rule 457(f)(2).
(2) Calculated pursuant to Rule 457(f)(2).
The registrant hereby amends this registration statement on such date or
dates as may be necessary to delay its effective date until the registrant
shall file a further amendment which specifically states that this
registration statement shall thereafter become effective in accordance with
Section 8(a) of the Securities Act of 1933 or until the registration statement
shall become effective on such date as the Securities and Exchange Commission,
acting pursuant to said Section(a), may determine.
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
<PAGE>
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
+The information in this prospectus is not complete and may be changed. These +
+securities may not be sold until the registration statement filed with the +
+Securities and Exchange Commission is effective. This prospectus is not an +
+offer to sell nor does it seek an offer to buy these securities in any +
+jurisdiction where the offer or sale is not permitted. +
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
Subject to Completion,
Dated April 1, 1999
PROSPECTUS
AK Steel Corporation [LOGO]
Offer to Exchange
7 7/8% Senior Notes Due 2009
which have been registered under the Securities Act
for any and all outstanding
7 7/8% Senior Notes Due 2009
$450,000,000 aggregate principal amount outstanding
Material Terms of the Exchange Offer
. Expires 5:00 p.m., New . The exchange of notes
York City time, on , will not be a taxable
1999, unless extended exchange for U.S. federal
income tax purposes
. We will exchange your
validly tendered . We will not receive any
unregistered notes for an proceeds from the
equal principal amount of exchange offer
registered notes with
substantially identical . The terms of the notes to
terms be issued are
substantially identical
. Not subject to any to those of the
condition other than that outstanding notes, except
the exchange offer not for certain transfer
violate applicable law or restrictions and
any applicable registration rights
interpretation of the relating to the
Staff of the Securities outstanding notes
and Exchange Commission
and certain other . You may tender
customary conditions outstanding notes only in
denominations of $1,000
. You may withdraw your and multiples of $1,000
tender of outstanding
notes at any time prior . Affiliates of our company
to the expiration of the may not participate in
exchange offer the exchange offer
Please refer to "Risk Factors" beginning on page 12 of
this document
for certain important information.
Neither the Securities and Exchange Commission nor any state securities
commission has approved the notes to be issued in this exchange offer, nor has
any of these organizations determined that this prospectus is truthful or
complete. Any representation to the contrary is a criminal offense.
------------
The date of this prospectus is , 1999.
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
Prospectus Summary......................................................... 1
Risk Factors............................................................... 12
Where You Can Find More Information........................................ 16
Use of Proceeds............................................................ 17
Capitalization............................................................. 18
Description of Outstanding Indebtedness.................................... 19
The Exchange Offer......................................................... 21
Description of Notes....................................................... 28
Federal Income Tax Consequences............................................ 59
Plan of Distribution....................................................... 60
Legal Matters.............................................................. 60
Experts.................................................................... 60
Forward-Looking Statements................................................. 61
</TABLE>
----------------
You should rely only on the information contained in this document or to
which we have referred you. We have not authorized anyone to provide you with
information that is different. This document may only be used where it is
legal to sell these securities. The information in this document may only be
accurate on the date of this document.
i
<PAGE>
PROSPECTUS SUMMARY
The following summary highlights selected information from this prospectus
and may not contain all of the information that is important to you. This
prospectus includes the specific terms of the notes we are offering, as well as
information regarding our business. We encourage you to read this prospectus in
its entirety. The terms "AK Steel" and "our company," as used in this
prospectus, refer to AK Steel Corporation, which will be the issuer of the
notes that are being offered. AK Steel is a subsidiary of AK Steel Holding
Corporation, which is a New York Stock Exchange-listed company and will
guarantee the notes. Unless otherwise indicated, steel industry data contained
in this prospectus are derived from publicly available sources, including
industry trade journals and SEC filings, which we have not independently
verified.
The Exchange Offer
On February 10, 1999, AK Steel completed the private placement of
$450,000,000 principal amount of our 7 7/8% Senior Notes Due 2009. These notes
were not registered under the Securities Act and, therefor, they are subject to
significant restrictions on resale. Accordingly, when we sold these notes, we
agreed, among other things, to provide to you and all other holders of these
notes, the opportunity to exchange your unregistered notes for a new series of
substantially identical notes that we have registered under the Securities Act.
This exchange offer is being made for that purpose. We believe that the
registered notes to be issued in this exchange offer may be resold by you
without compliance with the registration and prospectus delivery provisions of
the Securities Act, subject to certain limited conditions. Following the
exchange offer, any unregistered notes that you did not exchange in the
exchange offer will continue to be subject to the existing restrictions on
resale and we will have no obligation to you to register those notes under the
Securities Act.
Summary of the Exchange Offer
Securities Offered...... $450,000,000 aggregate principal amount of 7 7/8%
Senior Notes Due 2009 that have been registered un-
der the Securities Act.
Issuer.................. AK Steel Corporation.
The Exchange Offer...... We are offering to exchange $1,000 principal amount
of our 7 7/8% Senior Notes Due 2009 that we have
registered under the Securities Act for each $1,000
principal amount of our outstanding 7 7/8% Senior
Notes Due 2009 that we issued in February 1999 in a
private placement and that have not been registered
under the Securities Act. All outstanding unregis-
tered notes that are validly tendered and not val-
idly withdrawn will be exchanged. As of this date,
there are $450,000,000 aggregate principal amount
of our unregistered notes outstanding.
We will issue the registered notes promptly after
the expiration of the exchange offer.
1
<PAGE>
After the exchange offer is completed, you will no
longer be entitled to any exchange or registration
rights with respect to your unregistered notes. Un-
der certain limited circumstances, certain holders
of outstanding notes who were ineligible to partic-
ipate in this exchange offer may require us to file
a shelf registration statement under the Securities
Act with respect to their unregistered notes.
Resale.................. We believe that the registered notes that you re-
ceive in the exchange offer may be offered for re-
sale, resold and otherwise transferred by you with-
out compliance with the registration and prospectus
delivery provisions of the Securities Act provided
that:
. you are not an "affiliate" of our company;
. you acquire those notes in the ordinary course
of your business; and
. you are not participating, do not intend to par-
ticipate and have no arrangement or understand-
ing with any person to participate, in the dis-
tribution of those notes.
If our belief is inaccurate and you transfer any
note issued to you in the exchange offer without
delivering a prospectus meeting the requirements of
the Securities Act or without an exemption from
registration of your notes from such requirements,
you may incur liability under the Securities Act.
We do not assume, or indemnify you against, such
liability.
Each broker-dealer that receives registered notes
in the exchange offer for its own account in ex-
change for unregistered notes that it acquired as a
result of market-making or other trading activi-
ties, must acknowledge that it will deliver a pro-
spectus meeting the requirements of the Securities
Act in connection with any resale of the notes it
receives in the exchange offer. A broker-dealer may
use this prospectus for an offer to resell, resale
or other retransfer of the notes it receives in the
exchange offer.
Expiration Date......... This exchange offer will expire at 5:00 p.m., New
York City time, on 1999, unless extended, in
which case the term "expiration date" shall mean
the latest date and time to which we extend the ex-
change offer.
2
<PAGE>
Conditions to the
Exchange Offer.......... The exchange offer is subject to certain customary
conditions, which may be waived by us. The exchange
offer is not conditioned upon any minimum principal
amount of notes being tendered.
Procedures for
Tendering Notes......... If you wish to tender your existing notes for ex-
change pursuant to the exchange offer, you must
transmit to Fifth Third Bank, Cincinnati, Ohio, as
exchange agent, on or before the expiration date,
either
. a properly completed and duly executed letter of
transmittal, which accompanies this prospectus,
or a facsimile of the letter of transmittal, to-
gether with your notes and any other required
documentation; or
. a computer generated message transmitted by
means of The Depository Trust Company's Auto-
mated Tender Offer Program system and forming a
part of a confirmation of book entry transfer in
which you acknowledge and agree to be bound by
the terms of the letter of transmittal.
If you cannot comply with either of these proce-
dures on a timely basis, then you should follow the
guaranteed delivery procedures described below.
By executing or agreeing to be bound by the terms
of the letter of transmittal, you will be deemed to
make certain representations to us described in
"The Exchange Offer" section of this prospectus un-
der the heading "Procedures for Tendering."
Special Procedures for
Beneficial Owners....... If you are a beneficial owner of notes that are
registered in the name of a broker, dealer, commer-
cial bank, trust company or other nominee and you
wish to tender those notes for exchange, you should
contact the registered holder promptly and instruct
the registered holder to tender the notes on your
behalf. If you wish to tender those notes yourself,
you must either make appropriate arrangements to
re-register ownership of the notes in your own name
or obtain a properly completed bond power from the
registered holder. The transfer of registered own-
ership to your own name may take considerable time
and may not be able to be completed prior to the
expiration date.
Guaranteed Delivery
Procedures.............. If you wish to tender your notes for exchange and
time will not permit the documents required by the
letter of transmittal to
3
<PAGE>
reach the exchange agent prior to the expiration
date, or you cannot complete the procedure for
book-entry transfer on a timely basis, you may ten-
der your notes according to the guaranteed delivery
procedures described in the instructions in the ac-
companying transmittal letter.
Acceptance of Tendered
Notes and Delivery of
Registered Notes........
Subject to the conditions described in "The
Exchange Offer" section of this prospectus under
the heading "Conditions to the Exchange Offer", we
will accept for exchange any and all notes that are
validly tendered in the exchange offer and not
withdrawn, prior to 5:00 p.m., New York City time,
on the expiration date.
You may withdraw the tender of your notes at any
Withdrawal Rights....... time prior to 5:00 p.m., New York City time, on the
expiration date, subject to compliance with the
procedures for withdrawal described in "The Ex-
change Offer" section of this prospectus under the
heading "Withdrawal of Tenders."
Federal Income Tax
Considerations.......... The exchange of notes will not be a taxable ex-
change for U.S. federal income tax purposes.
Exchange Agent..........
Fifth Third Bank, Cincinnati, Ohio, the trustee un-
der the indenture governing the notes, is serving
as the exchange agent. The address, telephone num-
ber and facsimile number of the exchange agent are
set forth in "The Exchange Offer" section of this
prospectus under the heading "Exchange Agent."
Consequences of Failure
to Exchange Notes....... If you do not exchange your notes for new regis-
tered notes pursuant to the exchange offer, you
will continue to be subject to significant restric-
tions on the resale of your notes. In general, the
existing notes may not be offered or sold unless
registered under the Securities Act, except pursu-
ant to an exemption from, or in a transaction not
subject to, the Securities Act. We do not currently
plan to register the existing notes under the Secu-
rities Act.
Use of Proceeds......... We will not receive any proceeds from the exchange
offer.
4
<PAGE>
Summary of Terms of the Notes
The form and terms of the notes that we will issue in the exchange offer are
the same as the form and terms of the existing notes, for which they will be
exchanged, except that the notes that we will issue will be registered under
the Securities Act, and, therefore, will not be subject to the significant
resale restrictions that are applicable to the existing notes. The notes issued
in the exchange offer will evidence the same debt as the existing notes that
they replace and will be governed by the same indenture.
Maturity Date........... February 15, 2009.
Interest Payment February 15 and August 15 of each year, beginning
Dates................... August 15, 1999. Interest on the notes that we will
issue will accrue from the last interest payment
date on which interest was paid on the outstanding
notes surrendered in exchange, or, if no interest
has been paid on the outstanding notes, from Febru-
ary 10, 1999, which was the date of original issu-
ance of the outstanding notes.
Optional Redemption..... We may redeem the notes, in whole at any time or in
part from time to time, at our option, on or after
February 15, 2004, at the redemption prices set
forth in the "Description of Notes" section of this
prospectus under the heading "Optional Redemption."
In addition, at any time on one or more occasions
before February 15, 2002, we may, at our option,
redeem up to a cumulative aggregate of $157.5
million principal amount of the notes with money
that we raise in certain public or private equity
offerings, so long as:
. we pay to holders of the notes a redemption price
of 107.875% of the face amount of the notes we
redeem, plus accrued interest;
. we complete any such redemption within 60 days of
completing the related equity offering; and
. at least $292.5 aggregate principal amount of the
notes remains outstanding after the redemption.
Parent Company
Guarantee...............
The notes will be unconditionally guaranteed on a
senior basis by our parent company, AK Steel Hold-
ing Corporation. The guarantee will be equal in
right of payment with all other senior unsecured
indebtedness and guarantees issued by our parent
company.
Ranking................. The notes will be:
. senior unsecured obligations of our company and
will be equal in right of payment with all of our
other existing and future senior unsecured debt;
and
5
<PAGE>
. effectively junior to all of our secured obliga-
tions to the extent of the collateral securing
those obligations, including the $250 million of
our currently outstanding Senior Secured Notes Due
2004.
Change in Control....... If a change in control of AK Steel occurs, we must
give holders of the notes the opportunity to sell
us their notes at a purchase price of 101% of their
face amount plus accrued interest. The term "change
in control" is defined in the "Description of
Notes" section of this prospectus under the heading
"Defined Terms."
Material Covenants...... The indenture governing the notes contains certain
covenants that, among other things, limit our abil-
ity and the ability of our subsidiaries to:
. create liens on our assets to service certain
debt;
. incur additional indebtedness;
. make investments;
. issue or sell equity interests of subsidiaries;
. pay dividends or distributions on, or redeem or
repurchase, capital stock;
. redeem certain subordinated obligations;
. transfer or sell assets;
. engage in transactions with affiliates;
. engage in unrelated businesses; and
. consolidate, merge or transfer substantially all
of ourassets.
These covenants are subject to important exceptions
and qualifications, which are described in the "De-
scription of Notes" section of this prospectus un-
der the heading "Material Covenants."
Form of Notes........... The notes will be represented by one or more perma-
nent global certificates, in fully registered form,
deposited with a custodian for, and registered in
the name of a nominee of, The Depository Trust Com-
pany, as depositary. You will not receive notes in
certificated form unless there occurs one of the
events set forth in the "Description of Notes" sec-
tion of this prospectus under
6
<PAGE>
the heading "Book Entry; Delivery and Form." In-
stead, beneficial interests in the exchange notes
issued in the exchange offer will be shown on, and
transfers of these notes will be effected only
through, records maintained in book-entry form by
The Depository Trust Company and its participants.
7
<PAGE>
Our Company
Who We Are
AK Steel is the most profitable integrated steel producer in the United
States on an operating profit per ton basis, having led the industry in this
measure for each of the last five years. For the fourth quarter of 1998, we
reported operating profit per ton of $61, as well as record tons shipped for
any single quarter, reflecting the increasing benefits of our new Rockport
Works. We concentrate on the production of premium quality coated, cold rolled
and hot rolled carbon steel primarily for sale to the automotive, appliance,
construction and manufacturing markets. We also cold roll and aluminum coat
stainless steel for automotive industry customers. In 1998, AK Steel had net
sales of $2.39 billion, net income of $114.5 million and earnings before
interest, taxes, depreciation and amortization ("EBITDA") of $330.0 million.
At the core of our profitability is an experienced, results-oriented
management team that focuses on continuously increasing productivity, reducing
costs and improving product quality while continually striving to improve
safety and health in the workplace. Since arriving in mid-1992, this management
team has reconfigured AK Steel's production facilities, increased the operating
rates on our equipment and reduced operating costs throughout the organization.
Product quality and reliability have been improved as well, enabling us to
increase our sales of value-added coated and cold rolled products to the high-
end automotive, appliance, construction and manufacturing markets.
The results of these efforts have been significant. Each of our key
production units has achieved substantial percentage increases in average
monthly production since 1992 through a combination of improved operating and
maintenance practices, targeted capital investments and focused production
planning. The tandem cold mill at our Middletown Works has increased average
monthly production by over 103% from 1992 to 1998. Average monthly production
from our Middletown and Ashland coating lines has increased over 94% over the
same period.
We have increased our total annual shipments from 2,989,000 tons in 1992 to
4,601,600 tons in 1998, an increase of nearly 54%. Enhanced productivity rates
on our tandem cold mill and coating lines, together with start-up production at
our new Rockport Works, have allowed us to increase our shipments of value-
added coated and cold rolled products from 1,668,000 tons (representing 56% of
total shipments) in 1992 to 3,131,600 tons (or 68% of total shipments) in 1998.
Increased production of premium quality coated and cold rolled products has
enabled us to focus our commercial efforts on the most demanding requirements
of the automotive, appliance, construction and manufacturing markets. In 1992,
43% of our total shipments, or 1,288,000 tons, served customers in those
markets. In 1998, 67% of our total shipments, or 3,095,000 tons, served those
markets.
Our Rockport Works
In 1996, we decided to build Rockport Works, a new, state-of-the-art
finishing facility on a 1,700-acre site near the Ohio River community of
Rockport, Indiana. Rockport Works, which will be fully operational later this
year, will eliminate the existing bottleneck in our cold rolling and coating
operations, enabling us to better satisfy the growing demand within the
automotive industry for coated products, particularly galvannealed products.
Rockport Works also enables us to significantly expand our presence in the
high-margin stainless steel market and significantly reduce our exposure to the
lower margin and increasingly competitive market for hot rolled products.
8
<PAGE>
Rockport Works is nearing completion ahead of schedule and we are already
realizing the benefits of an improved product mix. The new facility consists of
a continuous cold rolling mill designed to cold reduce carbon steel hot band in
widths up to 80 inches at an estimated rate in excess of 500 tons per hour and
stainless steel hot band in widths up to 60 inches, a hot dip galvanizing and
galvannealing line with a projected capacity of approximately 800,000 tons per
year, a continuous carbon and stainless steel pickling line, a stainless steel
annealing and pickling line, hydrogen annealing facilities and a temper mill.
The hot-dip galvanizing and galvannealing line began operations on June 16,
1998 and the continuous cold mill started-up on September 12, 1998. In each
case, start-up was three months earlier than originally scheduled. The
remaining components of the facility are expected to begin commercial
production at various times during 1999. The staggered start-up of the various
components enables us to generate revenue from the new facility even before
construction is completed. We anticipate spending approximately $150.0 million
more on the facility this year.
We plan to produce approximately 1,400,000 tons of cold rolled carbon steel
annually at Rockport Works, of which approximately 800,000 tons are expected to
be hot dip galvanized. Galvanized steel, including galvannealed material, is
particularly desired by the automotive industry and is associated with the
highest margins of all flat rolled carbon steel products. Primarily as a result
of the expanding requirements of the U.S.-based production facilities of
foreign automotive manufacturers, demand by automotive manufacturers for
galvanized steel has grown from 4.3 million tons in 1992 to 6.7 million tons in
1997, an increase of nearly 53%. Existing domestic production capacity is
insufficient to fully satisfy this growing demand. Moreover, recently completed
facilities of other producers, as well as those announced and scheduled to come
on line within the next few years, are capable of processing material in widths
of only 60 inches or less and are targeted primarily to the construction
market. Our existing facilities are capable of producing coated carbon steel
products up to 76 inches wide. The hot dip galvanizing line at Rockport Works
can produce coated products in widths up to 80 inches, a width currently not
produced in the United States. These products are being targeted to automotive
customers who will benefit from the manufacturing and design flexibility of
larger width steel.
During 1997, domestic consumption of flat rolled stainless steel totalled
over 1.7 million tons, of which approximately 21% was produced abroad. We
currently cold roll and aluminum coat approximately 70,000 tons per year of
Series 400 stainless steel for sale primarily to manufacturers of automotive
exhaust systems. With Rockport Works, we will be able to substantially increase
our shipments of Series 400 stainless steel and to cold roll and sell Series
300 stainless steel, which is used in restaurant and kitchen equipment and
medical appliances, as well as in the oil refining, chemical production and
food processing industries. Both of these products are associated with
substantially higher margins than coated carbon steel. Stainless steel slabs
and hot rolled stainless steel coils in both series will be purchased from
other producers for finishing. We plan to finish an aggregate of approximately
385,000 tons of stainless steel annually at Rockport Works.
9
<PAGE>
Summary Historical Consolidated Financial Data
(dollars in millions, except per ton data)
The following summary historical consolidated financial data have been
derived from, and should be read in conjunction with, the consolidated
financial statements of AK Steel Holding Corporation and the selected
historical consolidated financial data included in its Annual Report on Form
10-K for the year ended December 31, 1998.
<TABLE>
<CAPTION>
Years Ended December 31,
----------------------------
1996 1997 1998
-------- -------- --------
<S> <C> <C> <C>
Statement of Operations Data:
Net sales....................................... $2,301.8 $2,440.5 $2,393.6
Cost of products sold........................... 1,846.5 1,964.5 1,963.4
Selling and administrative expenses............. 114.7 114.8 118.8
Depreciation.................................... 76.1 79.8 97.8
Operating profit................................ 264.5 281.4 213.6
Interest expense................................ 39.8 76.3 56.0
Other income.................................... 12.3 36.4 18.6
Income before income taxes ..................... 237.0 241.5 176.2
Provision for income taxes...................... 91.1 90.6 61.7
Net income...................................... $ 145.9 $ 150.9 $ 114.5
<CAPTION>
As of December 31,
----------------------------
1996 1997 1998
-------- -------- --------
<S> <C> <C> <C>
Balance Sheet Data:
Cash, cash equivalents, and short-term
investments.................................... $ 739.3 $ 606.1 $ 83.0
Working capital................................. 1,005.1 658.2 276.1
Total assets.................................... 2,650.8 3,084.3 3,306.3
Current portion of long-term debt............... -- -- --
Long-term debt (excluding current portion)...... 875.0 997.5 1,145.0
Current portion of pension and postretirement
benefit obligations............................ 0.1 0.1 0.1
Long-term pension and postretirement benefit
obligations (excluding current portion)........ 564.9 554.1 572.6
Stockholders' equity............................ $ 777.0 $ 879.6 $ 929.5
<CAPTION>
Years Ended December 31,
----------------------------
1996 1997 1998
-------- -------- --------
<S> <C> <C> <C>
Other Data:
Ratio of earnings to combined fixed charges(1).. 4.6x 2.9x 2.0x
EBITDA(2)....................................... $ 355.4 $ 399.7 $ 330.0
Ratio of EBITDA to interest expense(3).......... 6.7x 3.8x 2.9x
Operating profit per ton ....................... $ 60 $ 61 $ 46
Capital investments............................. $ 141.6 $ 636.5 $ 772.6
Flat rolled shipments (thousands of tons)....... 4,383 4,647 4,602
</TABLE>
- --------
Footnotes appear on following page.
10
<PAGE>
Notes:
(1) For the purpose of calculating the ratio of earnings to combined fixed
charges, (i) earnings consist of income before income taxes, extraordinary
items and effects of accounting change, the distributed income of less than
50%-owned affiliates, plus fixed charges and (ii) combined fixed charges
consist of interest, whether expensed or capitalized, and preferred stock
dividends.
(2) EBITDA represents earnings before interest expense, provision for income
taxes, depreciation and amortization and is presented herein because it is
a widely accepted indicator of a company's ability to service debt. EBITDA
does not represent net income or cash flow from operations as those items
are defined by generally accepted accounting principles, should not be
considered by prospective purchasers of the notes as an alternative to net
income and does not necessarily indicate whether cash flows will be
sufficient to fund cash needs. Under the indenture governing the notes,
subject to certain exceptions, AK Steel may not incur additional
indebtedness unless the pro forma consolidated EBITDA coverage ratio would
be greater than 2.5 to 1.0. As defined in the Indenture, EBITDA excludes
non-cash post-employment benefits other than pensions and certain special
charges. These exclusions reflect the fact that (i) a component of retiree
medical expense is a non-cash item (representing an estimate of future
medical costs) and (ii) certain of AK Steel's special charges are non-cash
items. Under the indenture, to the extent that these special charges become
cash charges they will be included in the calculation of EBITDA. A full
definition of the term "EBITDA" appears under the heading "Defined Terms"
in the "Description of Notes" section of this prospectus. The calculation
of EBITDA for 1996 and 1997 excludes non-cash postretirement benefits of
approximately $2.5 million and $2.1 million, respectively.
(3) For the purpose of calculating the ratio of EBITDA to interest expense,
interest expense consists of interest, whether expensed or capitalized,
amortization of debt issuance costs and dividends on any preferred stock
that may be issued.
11
<PAGE>
RISK FACTORS
You should carefully consider the risks described below before making a
decision to tender your existing notes for exchange. The risks described below
are not the only ones facing our company. Additional risks not presently known
to us or that we currently deem immaterial may also impair our business
operations.
Factors Relating to our Company
We rely heavily on the automotive industry.
Our shipments of steel directly to the automotive market accounted for
approximately 55%, 56% and 60% of our net sales in 1996, 1997, and 1998,
respectively. Our shipments to General Motors Corporation, our largest customer
in each of the past three years, accounted for approximately 17%, 18% and 19%
of our net sales in 1996, 1997 and 1998, respectively. In addition, a
substantial amount of our sales to steel distributors and converters consists
of products that are resold, in original or modified form, to the automotive
industry.
Our strategy depends upon continued growth in demand for premium quality
coated and cold rolled carbon and stainless steel products, particularly from
the automotive industry. The domestic automotive industry has historically
experienced significant fluctuations in demand, based on such factors as
general economic conditions, interest rates and consumer confidence. In
addition, strikes, lock-outs, work stoppages or other production interruptions
in the automotive industry can adversely affect the demand for our products.
Since the beginning of 1994, automotive industry demand for flat rolled coated
steel products has been high, with consumption of galvanized and galvannealed
material increasing from approximately 4.3 million tons in 1992 to
approximately 6.7 million tons in 1997. A major factor contributing to this
growth has been the increase in construction and operation of U.S.-based
production facilities by foreign automotive manufacturers. Although several
foreign manufacturers have been expanding their production facilities in the
United States, there can be no assurance that demand for our coated and
stainless products will remain high or continue to grow.
Our high level of debt may adversely affect our financial and operating
flexibility.
We have substantial debt and debt service requirements. After giving effect
to the issuance of the notes and the redemption on April 1, 1999 of our
outstanding 10 3/4% Senior Notes Due 2004, we would have had total debt of
approximately $1.27 billion as of December 31, 1998, including approximately
$250.0 million of secured debt. In addition, we have substantial employee
postretirement benefit obligations.
Our highly leveraged financial position has important consequences for us,
including:
. our ability to borrow additional amounts for working capital, capital
expenditures, debt service requirements or other purposes may be limited;
. a substantial portion of our cash flow from operations will be required
to make debt service payments and retiree benefit payments;
. our leverage could limit our ability to capitalize on significant
business opportunities and our flexibility to react to changes in general
economic conditions, competitive pressures and adverse changes in
government regulation;
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. our high leverage could place us at a competitive disadvantage with
respect to companies with which we compete; and
. we may be more vulnerable in the event of a downturn or disruption in our
business or in the economy generally.
While we expect to be able to repay the balance of our indebtedness and meet
our other obligations through cash generated from operations, we may need to
obtain new credit arrangements and other sources of financing in order to meet
our future obligations and working capital requirements and to fund our future
capital expenditures. You should be aware that our ability to repay or
refinance our current debt and to fund our capital expenditures and other
obligations depends on our successful financial and operating performance,
including the performance of Rockport Works. We cannot assure you of our future
performance, which depends upon a number of factors, many of which are beyond
our control. These factors include:
. economic and competitive conditions in the steel industry;
. economic conditions in the automotive industry;
. any operating difficulties, increased operating costs or pricing
pressures we may experience; and
. volatility in financial markets, which may affect invested pension plan
assets and the calculation of benefit plan liabilities.
Under a receivables facility, we sell substantially all of our accounts
receivable to a special-purpose, wholly owned subsidiary. This subsidiary has
an agreement with a group of banks that provides up to $200.0 million for
revolving credit loans and letters of credit secured by the subsidiary's
receivables. As of January 15, 1999, there were no borrowings under this
facility, but $35.7 million of letters of credit were outstanding. This
subsidiary is a separate and distinct legal entity and has no obligation to pay
any amounts due under the notes or to make funds available for any such
payment. If we default, your right to payment under the notes will be junior to
our secured indebtedness to the extent of the collateral securing those
obligations and will be effectively subordinated to the claims of creditors
under our subsidiary's credit facility to the extent of that subsidiary's
assets.
These and other factors could have an adverse effect on the marketability,
price and future value of the notes and our ability to pay interest on and the
principal amount of the notes.
The forthcoming expiration of our union contracts raises uncertainties.
As of December 31, 1998, we had approximately 5,800 active employees, of whom
approximately 54% were represented by the Armco Employees Independent
Federation, Inc. (the "AEIF"), 17% by the United Steelworkers of America (the
"USWA") and 6% by the Oil, Chemical and Atomic Workers Union (the "OCAW"). The
AEIF represents all hourly employees and certain non-exempt salaried employees
at our Middletown Works. The USWA represents hourly steelmaking employees and
certain non-exempt salaried employees at our Ashland Works. The OCAW represents
hourly employees at the Ashland Works' coke manufacturing facility. Employees
at our Rockport Works are not represented by a union. The AEIF contract expires
February 29, 2000, the USWA contract expires September 1, 2000 and the OCAW
contract expires April 1, 2001. We cannot assure you that these contracts will
be successfully renegotiated upon expiration or that a union will not seek to
represent the Rockport Works' employees at some future date nor can we predict
the impact on our operations and financial performance of our failure to
successfully renegotiate these contracts or of the unionization of our Rockport
Works employees.
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We are vulnerable to the potential failure of computer systems to recognize
the year 2000.
In operating our business, we are dependent on information technology and
process control systems that employ computers as well as embedded
microprocessors. We also depend on the proper functioning of the business
systems of third parties, such as our suppliers and customers. Many computer
systems and microprocessors can only process dates in which the year is
represented by two digits. As a result, some of these systems and processors
may interpret "00" incorrectly as the year 1900 instead of the year 2000. The
failure of any of these systems to appropriately interpret the upcoming
calendar year 2000 could have a material adverse effect on our financial
condition, results of operations, cash flow and business prospects.
We have assessed and are modifying or upgrading our business and process
control systems to achieve year 2000 compliance. We also have taken steps to
determine whether our principal suppliers and customers are or expect to be
year 2000 compliant by the end of this year. Testing of our own systems, as
well as electronic data interchange testing with these suppliers and customers,
is expected to be substantially completed by September 30, 1999. We currently
expect our costs for year 2000 compliance to total approximately $5.0 million.
Additional expenditures beyond this amount could be required. We cannot assure
you that our year 2000 program or the programs of third parties who do business
with us will be effective, that our estimates as to the timing and cost of
completing our remediation program will be accurate, or that all remediation
will be complete by the end of the year.
Factors Relating to the Notes to be Issued in the Exchange Offer
The notes will be unsecured.
The notes will be senior obligations of our company and will rank equally
with any old notes that are not exchanged and our 9 1/8% Senior Notes Due 2006.
However, similar to our 9 1/8% notes, the notes will not be secured by any of
our assets. Therefore, holders of our outstanding secured notes, totalling
$250.0 million, as well as holders of additional secured debt that we may incur
in the future, will have claims with respect to certain of our assets that are
prior to the claims of holders of the notes.
There is limited support for our parent company's guarantee.
The notes will be unconditionally guaranteed on a senior basis by our parent
company. Our parent company derives all of its operating income and cash flow
from our company and our outstanding common stock is its only material asset.
The indenture governing the notes contains a covenant restricting our parent
company from holding any assets other than securities of our company.
Accordingly, its ability to perform on its guarantee will be dependent on our
own financial condition and net worth.
We may not be able to purchase your notes upon a change in control.
Upon certain change in control events, each holder of notes may require us to
purchase its notes at a price of 101% of the principal amount thereof plus
accrued interest. Holders of the $550.9 million principal amount of our
outstanding 9 1/8% notes have similar rights. We cannot assure you that we will
have the financial resources necessary to purchase the notes and the 9 1/8%
notes upon a change in control.
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You may not be able to sell your notes easily.
There is no established trading market for the notes. Credit Suisse First
Boston Corporation and PNC Capital Markets, Inc., the initial purchasers of the
outstanding notes, have advised us that they are making a market in the
existing notes and that they intend to make a market in the new notes to be
issued in the exchange offer. However, they are not obligated to do so and may
discontinue their market-making activities at any time without notice. We do
not intend to apply for listing of the notes on any securities exchange or
automated quotation system.
The liquidity of any market for the notes will depend upon the number of
holders of the notes, our performance, the market for similar securities, the
interest of securities dealers in making a market in the notes and other
factors. Accordingly, a liquid trading market may not develop for the notes.
Trading prices for the notes may be volatile.
Historically, the market for non-investment grade debt securities has been
subject to disruptions that have caused substantial volatility in the prices of
such securities. The market for the notes could be subject to similar
volatility. The trading price of the notes also could fluctuate in response to
such factors as variations in our operating results, developments in the steel
industry and the automotive industry, general economic conditions and changes
in securities analysts' recommendations regarding our securities.
Factors Relating to the Steel Industry
We face intense competition.
Competition within the steel industry is intense. In the sale of flat rolled
carbon steel we compete primarily on the basis of product quality,
responsiveness to customer needs and price with other integrated steel
producers and, to a lesser extent, mini-mills. Mini-mills (relatively
efficient, low-cost producers that produce steel from scrap in electric
furnaces) have increased their ability to produce higher quality products,
which has enabled them to become more competitive with integrated steel
producers and, in periods of weak demand, has increased pressure on prices and
margins. Moreover, U.S. carbon steel producers have historically faced
significant competition from foreign producers, and the strength of the U.S.
dollar relative to certain foreign currencies has heightened this competition
in the United States in the past year.
We are currently cold rolling, aluminum coating and marketing Series 400
stainless steel, at an annual rate of approximately 70,000 tons, for use in
automotive exhaust systems. The Rockport Works is intended, in part, to enable
us to substantially expand our presence in the market for flat rolled stainless
steel, which is associated with higher margins than carbon steel, including the
premium grades. Total domestic consumption of flat rolled stainless steel was
over 1.7 million tons in 1997. We intend to cold roll and finish approximately
385,000 tons of stainless steel per year at the Rockport Works. However,
because the high margins associated with stainless steel significantly reduce
the relative impact of shipping costs on the producer, the domestic market for
stainless steel is far more vulnerable to foreign imports and the adverse
effects of a strengthening U.S. dollar than the market for carbon steel.
Imports represented 20%, 20% and 21% of the domestic flat rolled stainless
steel market in 1995, 1996 and 1997, respectively. In addition, there has been
an increase in the capacity of foreign producers in recent years, resulting in
downward pressure on domestic prices. It is difficult to predict the amount of
stainless steel that will be imported into the U.S. in the future.
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Increased domestic and foreign production capacity and growth in imports will
likely result in greater competition and have a negative impact on prices. Our
ability to profitably sell our targeted quantity of flat rolled stainless steel
in this environment will depend on our ability to finish high quality stainless
steel at a cost that is equal to or below that of our principal competitors.
We are vulnerable to cyclical variations in supply and demand.
Historically, the steel industry has been cyclical in nature, reflecting the
cyclicality of many of the principal markets it serves, including the
automotive, appliance and construction industries, and changes in total
industry capacity. Although total domestic steel industry capacity was
substantially reduced during the 1980s through extensive restructuring, and
demand has been particularly strong since 1993, we cannot assure you that
demand will continue at current levels or that recent restarts of previously
idled domestic facilities, the addition of new mini-mills and increases in
foreign imports will not adversely impact pricing and margins.
We must spend substantial sums to meet environmental regulations.
Domestic steel producers, including our company, are subject to stringent
federal, state and local laws and regulations relating to the protection of
human health and the environment. Like other domestic steel producers, we have
expended, and can be expected to expend in the future, substantial amounts for
compliance with these environmental laws and regulations.
WHERE YOU CAN FIND MORE INFORMATION
We have filed with the SEC a registration statement on Form S-4 under the
Securities Act with respect to the notes to be issued in the exchange offer.
This prospectus, which forms a part of the registration statement, does not
contain all of the information set forth in the registration statement and the
exhibits and schedules thereto, certain parts of which are omitted in
accordance with the SEC's rules and regulations. Any statements made in this
prospectus concerning the provisions of various documents are not necessarily
complete and, in each instance, we refer you to the copy of such documents
filed as an exhibit to the registration statement for the full text of those
provisions. Each such statement is deemed qualified in its entirety by such
reference.
AK Steel Holding Corporation, our parent company and the guarantor of the
notes, is listed on the New York Stock Exchange. Our parent company files
annual, quarterly and current reports, proxy statements and other documents
with the SEC under the Securities Exchange Act of 1934. You may read and copy
any of those reports, statements or other documents at the SEC public reference
room at Room 1024, Judiciary Plaza, 450 Fifth Street, N.W., Washington, D.C.
20549. Please call the SEC at 1-800-SEC-0330 for further information on the
public reference room. These filings are also available to the public from
commercial document retrieval services and at the SEC's Web site at
"http://www.sec.gov." In addition, our company maintains a Web site at
"http://www.aksteel.com" that contains additional information, including news
releases about our business and operations.
The SEC allows us to "incorporate by reference" in this prospectus documents
that AK Steel Holding Corporation files with them, which means that we can
disclose important information to you by referring you to those documents. The
information so incorporated by reference is considered to be a part of this
prospectus, and information that our parent corporation files later with the
SEC will automatically update and supersede this information. We incorporate by
reference the documents
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listed below and any future filings made by AK Steel Holding Corporation with
the SEC under Sections 12(a), 13(c), 14 or 15(d) of the Securities Exchange Act
of 1934 until the completion of the exchange offer:
. AK Steel Holding Corporation's Annual Report on Form 10-K for the year
ended December 31, 1998, as amended by Form 10-K/A filed with the SEC on
February 25, 1999; and
. AK Steel Holding Corporation's Current Reports on Form 8-K filed with the
SEC on February 3, 1999, February 16, 1999, February 17, 1999 and March
25, 1999.
USE OF PROCEEDS
This exchange offer does not involve the sale of securities for cash and,
accordingly, we will not receive any proceeds from the issuance of the
registered notes in exchange for existing notes. The net proceeds from the sale
of the existing notes (after the discount to the initial purchasers of those
notes and other offering expenses that were payable by us) were approximately
$439.0 million. We used these monies to finance the approximately $338.1
million cost of redeeming our 10 3/4% Senior Notes Due 2004 on April 1, 1999
(plus accrued interest on those notes through that date) and will use the
balance for general corporate purposes.
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CAPITALIZATION
The following table sets forth the consolidated capitalization of AK Steel
Holding Corporation (including our company) at December 31, 1998 on an
historical basis and as adjusted to give pro forma effect to the sale of $450.0
million of notes on February 10, 1999 and the application of the net proceeds
therefrom as if the same had occurred on December 31, 1998. The information
presented below should be read in conjunction with the consolidated financial
statements included in AK Steel Holding Corporation's 1998 Annual Report on
Form 10-K.
<TABLE>
<CAPTION>
December 31, 1998
----------------------
Historical As Adjusted
---------- -----------
(amounts in millions)
<S> <C> <C>
Cash and short-term investments........................ $ 83.0 $ 187.0(1)
======== ========
Long-term debt(2):
Senior Secured Notes Due 2004........................ $ 250.0 $ 250.0
10 3/4% Senior Notes Due 2004........................ 325.0 --
9 1/8% Senior Notes Due 2006......................... 550.0 550.0
7 7/8% Senior Notes Due 2009......................... -- 450.0
Other(3)............................................. 20.0 20.0
-------- --------
Total long-term debt............................... 1,145.0 1,270.0
-------- --------
Stockholders' equity:
Common stock--authorized 200,000,000 shares;
63,868,087 shares issued; 59,022,588 shares
outstanding......................................... 0.6 0.6
Additional paid-in capital........................... 722.0 722.0
Treasury stock--at cost--4,845,499 shares............ (87.8) (87.8)
Retained earnings.................................... 294.7 282.7
-------- --------
Total stockholders' equity......................... 929.5 917.5
-------- --------
Total capitalization............................. $2,074.5 $2,187.5
======== ========
</TABLE>
- --------
(1) Does not reflect the payment on April 1, 1999 of accrued interest on the 10
3/4% notes.
(2) At December 31, 1998, we had no short-term debt outstanding and no current
obligations in respect of our long-term debt. We have a receivables
purchase and servicing agreement with a group of banks providing for an
aggregate financing commitment as of January 15, 1999 of $200.0 million,
inclusive of letters of credit. At December 31, 1998, letters of credit
aggregating $25.7 million were outstanding under this facility.
(3) Consists of tax-exempt industrial development bond obligations due in 2027
and 2028.
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DESCRIPTION OF OUTSTANDING INDEBTEDNESS
The Secured Notes
We have outstanding a total of $250.0 million principal amount of our secured
notes. The secured notes bear interest at annual rates ranging from 8.48% to
9.05%, with a weighted average rate of 8.72%. The principal of the secured
notes is payable in four consecutive annual installments of $62.5 million
commencing in December 2001 with the final installment due in December 2004.
The secured notes are secured by a first priority lien on the continuous cold
mill and hot dip galvanizing line at our Rockport Works and a first mortgage on
the approximately three acres of land upon which those two components have been
constructed. The secured notes may be prepaid, in whole or in part, at any
time, at our option, at 100% of their principal amount plus a customary "make-
whole" premium.
The secured notes are subject to the terms of a note purchase agreement
containing covenants substantially similar to those contained in the indenture
governing the notes to be issued in the exchange offer. Those covenants impose
limitations on, among other things,
.liens,
.sale/leaseback transactions,
.the incurrence of debt and the issuance of preferred equity interests by
our subsidiaries,
.transactions with affiliates,
.dividends and other restricted payments,
.sales of assets, including stock of subsidiaries,
.lines of business,
.restrictions on distributions from our subsidiaries and
.mergers and consolidations.
In addition, the note purchase agreement requires that we maintain
Consolidated Net Worth (as defined therein) of not less than the sum of $500.0
million plus an aggregate amount equal to 25% of Consolidated Net Income (as
defined) for each completed fiscal year beginning after December 31, 1996. We
also must maintain a ratio of Consolidated Debt (as defined) to Consolidated
Capitalization (as defined) of not more than .65 to 1.00 through December 31,
2001 and .55 to 1.00 thereafter until repayment in full of the secured notes.
The secured notes are subject to events of default that are substantially
similar to those applicable to the notes.
The 9 1/8% Notes
Our 9 1/8% Senior Notes Due 2006, of which $550.0 million aggregate principal
amount are outstanding, are non-callable prior to December 15, 2001.
Thereafter, the 9 1/8% notes are callable at our option at an initial
redemption price of 104.56% of their principal amount, declining annually
thereafter to 100% on and after December 15, 2004, together with accrued
interest to the redemption date. The 9 1/8% notes include change in control
repurchase provisions that are identical to those applicable to the notes that
are the subject of this exchange offer and have the benefit of a guarantee by
our parent company that is identical to its guarantee of the notes that are the
subject of this exchange offer. The indenture relating to the 9 1/8% notes
contains covenants substantially similar to those contained in the indenture
governing the notes that are the subject of this exchange offer, including
limitations on, among other things,
.liens,
.sale/leaseback transactions,
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.the incurrence of additional debt,
.the incurrence of debt and the issuance of equity interests by our
subsidiaries,
.restrictions on distributions from our subsidiaries,
.sales of assets, including subsidiary stock,
.dividends and other restricted payments,
.transactions with affiliates,
.lines of business,
.mergers and consolidations and
.activities and liabilities of our parent company.
The 9 1/8% notes also are subject to events of default that are identical to
those applicable to the notes that are the subject of this exchange offer.
Accounts Receivable Facility
A wholly-owned special purpose subsidiary of our company is party to a
receivables purchase and servicing agreement with a group of banks, providing
for an aggregate financing commitment from and after January 15, 1999 of $200.0
million, inclusive of letters of credit outstanding as of January 7, 1999 in
the aggregate amount of $35.7 million. The banks' commitments will expire
December 31, 2003. This subsidiary purchases our accounts receivable from us.
It funds those purchases with cash collections on the purchased accounts
receivable and the proceeds realized from selling interests in those accounts
receivable to the participating banks. We act as servicer of the accounts
receivable, including processing collections. At December 31, 1998, the
participating banks had no interests in any of our outstanding accounts
receivable and our special purpose subsidiary held a pool of eligible accounts
receivable that was sufficient to fully utilize the commitments of the banks.
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THE EXCHANGE OFFER
Purpose and Effect of the Exchange Offer
We sold $450.0 million of notes on February 10, 1999 in a private placement.
Those notes were not registered under the Securities Act. In this discussion,
and in the section of this prospectus entitled "Description of the Notes," we
sometimes refer to those notes as the "old notes" to more easily distinguish
them from the new registered notes to be issued in this exchange offer, which
we refer to in this discussion as the "new notes."
The initial purchasers of the old notes were Credit Suisse First Boston
Corporation and PNC Capital Markets, Inc. They have advised us that they
promptly resold the old notes to "qualified institutional buyers" in reliance
on Rule 144A under the Securities Act. When we sold the old notes to the
initial purchasers, we entered into the registration rights agreement, which
requires that we file a registration statement under the Securities Act with
respect to the new notes to be issued in the exchange offer and, upon the
effectiveness of the registration statement, offer to you and all other holders
of the old notes the opportunity to exchange your old notes for a like
principal amount of new notes. These new notes will be issued without a
restrictive legend and, except as set forth below, may be reoffered and resold
without restrictions or limitations under the Securities Act. After we complete
the exchange offer, our obligations with respect to the registration of the old
notes will terminate, except as provided in the last paragraph of this section.
As a result of the timely filing and effectiveness of the registration
statement of which this prospectus is a part, assuming we complete the exchange
offer by September 8, 1999, certain prospective increases in the interest rate
on the old notes that were provided for in the registration rights agreement
will not occur.
Under existing interpretations of the staff of the SEC contained in several
no action letters to third parties, we believe that the new notes to be issued
in the exchange offer will be freely transferable by a holder who receives them
in exchange for old notes, without further registration under the Securities
Act, provided that the holder represents to us that:
(1) it is not an "affiliate" of our company (such as a director,
executive officer or controlling stockholder of our company or our parent
company),
(2) it will be acquiring the new notes in the ordinary course of its
business, and
(3) it has not engaged in, does not intend to engage in, and has no
arrangement or understanding with any other person to participate in, a
distribution of the new notes.
However, we have not sought a no-action letter from the SEC with respect to
this exchange offer and we cannot assure you that the SEC's staff would make a
similar determination with respect to this exchange offer. Any holder of old
notes who is an "affiliate" of our company or who intends to participate in the
exchange offer for the purpose of distributing the new notes,
(1) will not be able to validly tender its old notes in the exchange
offer,
(2) will not be able to rely on the interpretations of the staff of the
SEC, and
(3) must comply with the registration and prospectus delivery
requirements of the Securities Act in connection with any offer or sale of
its old notes, unless such offer or sale is made pursuant to an exemption
from those requirements.
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In addition, each broker-dealer that receives new notes for its own account
in the exchange offer must acknowledge that it will deliver a prospectus in
connection with any resale of those notes. The letter of transmittal
accompanying this prospectus states that, by so acknowledging and by delivering
a prospectus, a broker-dealer will not be deemed to admit that it is acting in
the capacity of an "underwriter" within the meaning of Section 2(11) of the
Securities Act. This prospectus, as it may be amended or supplemented from time
to time, may be used by a broker-dealer in connection with resales of new notes
received in exchange for old notes that had been acquired by that broker-dealer
as a result of market-making or other trading activities. Pursuant to the
registration rights agreement, we have agreed to make this prospectus available
to any broker-dealer for use in connection with any such resale.
If you are not eligible to participate in the exchange offer, you can elect,
by so indicating on the letter of transmittal and providing certain additional
necessary information, to have your old notes included within the coverage of a
shelf registration statement pursuant to Rule 415 under the Securities Act. If
we have to file a shelf registration statement, we will be required to keep it
effective for a period of two years or such shorter period that will terminate
when all of the old notes covered by that shelf registration statement have
been resold. Other than as set forth in this paragraph, holders of old notes
will not have the right to require us to register their old notes under the
Securities Act.
Terms of the Exchange Offer
Upon satisfaction or waiver of the conditions of the exchange offer set forth
in this prospectus and in the accompanying letter of transmittal, we will
accept all old notes that are validly tendered and not withdrawn prior to 5:00
p.m. New York City time, on the expiration date. After authentication of the
new notes by the trustee, we will issue and deliver $1,000 principal amount of
new notes in exchange for each $1,000 principal amount of outstanding old notes
accepted in the exchange offer. You may tender some or all of your old notes
pursuant to the exchange offer in denominations of $1,000 and integral
multiples thereof.
By tendering old notes in exchange for new notes and by executing the letter
of transmittal, you will be required to represent that:
(1) you are not an "affiliate" of our company,
(2) any new notes that you receive in the exchange offer will be acquired
by you in the ordinary course of your business, and
(3) you have no intention to distribute, and have no arrangement or
understanding with any person to participate in the distribution of, the
new notes you acquire.
The form and terms of the new notes will be identical in all material
respects to the form and terms of the old notes, except that:
(1) the offering of the new notes has been registered under the
Securities Act,
(2) the new notes will not be subject to restrictions on resale, and
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<PAGE>
(3) certain provisions in the registration rights agreement relating to
an increase in the stated interest rate on the old notes provided for under
certain circumstances will become ineffective.
The new notes will evidence the same debt as the old notes and will be issued
under and entitled to the benefits of the same indenture as the old notes.
As of the date of this prospectus, $450,000,000 aggregate principal amount of
old notes is outstanding. In connection with the issuance of the old notes, we
arranged for the old notes to be issued and transferable in book-entry form
through the facilities of DTC, acting as a depositary. The new notes will also
be issuable and transferable in book-entry form through DTC.
This prospectus, together with the accompanying letter of transmittal, is
initially being sent to all registered holders of the old notes as of the close
of business on , 1999. The exchange offer is not conditioned upon any
minimum aggregate principal amount of old notes being tendered. However, the
exchange offer is subject to certain customary conditions which may be waived
by us, and to the terms and provisions of the registration rights agreement.
See "--Conditions to the Exchange Offer" for a detailed description of those
conditions.
We will be deemed to have accepted validly tendered old notes when, as and if
we have given oral or written notice thereof to the exchange agent. The
exchange agent will receive the new notes from us and deliver them to the
tendering holders.
If we do not accept any tendered old notes for exchange because of an invalid
tender or because the conditions to the exchange offer have not been met,
certificates for any such unaccepted old notes will be returned, at our cost,
to the tendering holder thereof as promptly as practicable after the expiration
date.
Holders who tender old notes in the exchange offer will not be required to
pay brokerage commissions or fees or, subject to the instructions in the letter
of transmittal, transfer taxes with respect to the exchange of their old notes
pursuant to the exchange offer. We will pay all charges and expenses, other
than certain applicable taxes, in connection with the exchange offer.
Expiration Date; Extensions; Amendments
The term "expiration date," as used in this prospectus, means 5:00 p.m., New
York City time, on , 1999, unless we, in our sole discretion, extend the
exchange offer, in which case the term "expiration date" shall mean the latest
date to which the exchange offer is extended. We may extend the exchange offer
at any time and from time to time by giving oral or written notice to the
exchange agent and by timely public announcement.
We reserve the right, in our sole discretion,
(1) to delay accepting any old notes for exchange,
(2) to extend the exchange offer,
(3) to terminate the exchange offer if the conditions set forth below
under "--Conditions to the Exchange Offer" shall not have been satisfied,
or
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<PAGE>
(4) to amend the terms of the exchange offer in any manner.
We will notify the exchange agent of any delay, extension, termination or
amendment by oral or written notice. In addition, we will promptly notify each
registered holder of old notes of any amendment. We will give to the exchange
agent written confirmation of any oral notice.
We acknowledge and undertake to comply with the provisions of Rule 14e-1(c)
under the Exchange Act, which requires us to pay the consideration offered, or
return the old notes surrendered for exchange, promptly after the termination
or withdrawal of the exchange offer.
Interest on the New Notes
Interest on the new notes will accrue from the last interest payment date on
which interest was paid on the old notes surrendered in exchange therefor or,
if no interest has been paid on the old notes, from February 10, 1999 (the date
of original issuance of the old notes).
Procedures for Tendering
If you wish to accept the exchange offer, you must complete, sign and date
the letter of transmittal, or a facsimile thereof, in accordance with the
instructions contained herein and therein. You must then mail or otherwise
deliver the letter of transmittal, or facsimile, together with the old notes to
be exchanged and any other required documentation, to Fifth Third Bank, as
exchange agent, at the address set forth herein and therein. You may also
effect a tender of old notes pursuant to the procedures for book-entry transfer
as provided for herein and therein.
Any financial institution that is a participant in DTC's Book-Entry Transfer
Facility system may make book-entry delivery of its old notes by causing DTC to
transfer those old notes into the exchange agent's account in accordance with
DTC's procedure for such transfer. Although delivery of old notes may be
effected through book-entry transfer into the exchange agent's account at DTC,
the letter of transmittal, or facsimile thereof, with any required signature
guarantees and any other required documents, must, in any case, be transmitted
to and received by the exchange agent at its address set forth herein under "--
Exchange Agent" prior to 5:00 p.m., New York City time, on the expiration date.
Delivery of documents to DTC in accordance with its procedures does not
constitute delivery to the exchange agent.
Only a holder in whose name old notes are registered may tender those old
notes in the exchange offer. To tender in the exchange offer, a holder must:
(1) complete, sign and date the letter of transmittal or a facsimile
thereof,
(2) have the signatures thereof guaranteed if required by the letter of
transmittal, and
(3) unless the tender is being effected pursuant to the procedure for
book-entry transfer, mail or otherwise deliver the letter of transmittal or
facsimile thereof, together with the old notes and other required
documents, to the exchange agent, prior to 5:00 p.m., New York City time,
on the expiration date.
If less than all of the old notes are tendered, a tendering holder should
fill in the amount of old notes being tendered in the appropriate box on the
letter of transmittal. The entire amount of old notes delivered to the exchange
agent will be deemed to have been tendered unless otherwise indicated.
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<PAGE>
The method of delivery of old notes and the letter of transmittal and all
other required documents to the exchange agent is at the election and risk of
the holders. Instead of delivery by mail, it is recommended that holders use an
overnight or hand delivery service. In all cases, sufficient time should be
allowed to ensure delivery to the exchange agent prior to the expiration date.
No letter of transmittal or old notes should be sent to us. You may request
that your broker, or a commercial bank, trust company or nominee, effect the
tender on your behalf, as set forth herein and in the letter of transmittal.
If your old notes are registered in the name of a broker, commercial bank,
trust company or other nominee and you wish to tender, you should contact the
registered holder promptly and instruct the registered holder to tender on your
behalf. If you wish to tender on your own behalf, prior to completing and
executing the letter of transmittal and delivering your old notes, you must
either make appropriate arrangements to register ownership of the old notes in
your name or obtain a properly completed bond power from the registered holder.
The transfer of record ownership may take considerable time.
Signatures on a letter of transmittal or a notice of withdrawal, as the case
may be, must be guaranteed by a member firm of a registered national securities
exchange or of the National Association of Securities Dealers, Inc., a
commercial bank or trust company having an office or correspondent in the
United States or an "eligible guarantor institution" within the meaning of Rule
17Ad-15 under the Exchange Act (each an "Eligible Institution"), unless the old
notes tendered pursuant thereto are tendered by a registered holder who has not
completed the box entitled "Special Registration Instructions" or "Special
Delivery Instruction" of the letter of transmittal or for the account of an
Eligible Institution. If the letter of transmittal is signed by a person other
than the registered holder listed therein, the old notes that are the subject
of that letter of transmittal must be endorsed or accompanied by appropriate
bond powers that authorize that person to tender the old notes on behalf of the
registered holder. The endorsement or bond powers must be signed in the name of
the registered holder as it appears on the old notes.
All questions as to the validity, form, eligibility, including time of
receipt, acceptance and withdrawal of the tendered old notes will be determined
by us in our sole discretion, and that determination will be final and binding.
We reserve the absolute right to reject any and all old notes not properly
tendered and to waive any irregularities or conditions of tender as to
particular old notes. Our interpretation of the terms and conditions of the
exchange offer, including the instructions in the letter of transmittal, will
be final and binding on all parties.
Any old notes received by the exchange agent that we determine are not
properly tendered or as to which the defects or irregularities have not been
cured or waived, will be returned by the exchange agent to the tendering
holder, as soon as practicable following the expiration date.
In addition, we reserve the right, in our sole discretion,
(1) to purchase or make offers for any old notes that remain outstanding
subsequent to the expiration date, and
(2) to the extent permitted by applicable law, to purchase old notes in
the open market, in privately negotiated transactions or otherwise.
The terms of any such purchases or offers may differ from the terms of the
exchange offer.
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<PAGE>
Conditions to the Exchange Offer
Notwithstanding any other term of the exchange offer, we will not be required
to accept any old notes for exchange, or to exchange new registered notes for
any old notes, and we may terminate or amend the exchange offer before the
acceptance of the old notes if:
(1) the exchange offer, or the making of any exchange by a holder,
violates any applicable law or any applicable interpretation of the staff
of the SEC, or
(2) any action or proceeding is instituted or threatened in any court or
by or before any governmental agency or body to enjoin or obtain damages in
respect of the exchange offer, or that can reasonably be expected to impair
our ability to proceed with the exchange offer.
If we determine that either of these events or circumstances has occurred or
exists, we may:
(1) refuse to accept any old notes and return to the holders any old
notes that have been tendered, or
(2) extend the exchange offer and retain all old notes tendered prior to
the original expiration date of the exchange offer, subject to the rights
of the holders of those notes to withdraw them, or
(3) waive the condition and accept all properly tendered old notes that
have not been withdrawn.
The exchange offer is not conditioned on any minimum aggregate principal
amount of old notes being tendered for exchange. Any extension of the exchange
offer shall be for not more than 60 days, and in no event shall the exchange
offer be extended beyond September 9, 1999.
Exchange Agent
Fifth Third Bank, the trustee under the indenture, has been appointed as
exchange agent for the exchange offer. In that capacity, the exchange agent has
no fiduciary duties and will be acting solely on the basis of our directions.
Requests for assistance and requests for additional copies of this prospectus
or of the letter of transmittal should be directed to the exchange agent
addressed as follows:
By registered or certified mail Fifth Third Bank
or by overnight courier: Attention: Geoff Clark
Corporate Trust Operations
ML 10AT66
38 Fountain Square Plaza
Cincinnati, Ohio 45263
By hand delivery: Fifth Third Bank
Attention: Geoff Clark
Corporate Trust Operations
580 Walnut Street - 4th Floor
Cincinnati, Ohio 45202
Facsimile transmission: (513) 744-8909
Information or confirmation by telephone: (513) 579-5320
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Delivery to an address or facsimile number other than those listed above will
not constitute a valid delivery.
Accounting Treatment
The exchange notes will be recorded at the same carrying value as the old
notes, as reflected in our accounting records on the date of the exchange.
Accordingly, no gain or loss for accounting purposes will be recognized by our
company as a result of the consummation of the exchange offer. The expenses of
the exchange offer will be amortized by us over the remaining term of the notes
issued in the exchange offer.
Consequences of Failure to Exchange
Holders of old notes who do not tender their notes in the exchange offer will
continue to hold those old notes and will be entitled to all the rights, and
subject to the limitations applicable thereto, under the indenture. All old
notes that are not tendered will continue to be subject to the restrictions on
resale set forth in the indenture. Accordingly, prior to the later of February
10, 2001 (two years from the date of original issue of the notes) or two years
after those old notes were last sold by us or one of our affiliates, those old
notes may be offered and resold only
(1) to us,
(2) pursuant to a registration statement that has been declared effective
under the Securities Act,
(3) in the United States to a "qualified institutional buyer" within the
meaning of Rule 144A in reliance upon the exemption from the registration
requirements of the Securities Act provided by Rule 144A,
(4) in the United States to an "Institutional Accredited Investor", as
defined in Rule 501(a)(1), (2), (3) or (7) promulgated under the Securities
Act, in a transaction that is exempt from the registration requirements of
the Securities Act,
(5) outside the United States to a foreign person in a transaction that
complies with the provisions of Regulation S under the Securities Act, or
(6) pursuant to any other available exemption from the registration
requirements of the Securities Act, in each case in accordance with
applicable state securities laws.
To the extent that old notes are tendered and accepted in the exchange
offer, the liquidity of the trading market for untendered old notes will be
adversely affected.
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<PAGE>
DESCRIPTION OF THE NOTES
The old notes were issued and the new notes will be issued under an indenture
dated as of February 10, 1999, among AK Steel, as issuer, AK Steel Holding
Corporation, as guarantor, and Fifth Third Bank, as trustee. A copy of the
indenture has been filed as an exhibit to the registration statement of which
this prospectus is a part. The terms of the notes include those stated in the
indenture and those made part of the indenture by reference to the Trust
Indenture Act of 1939. For convenience, and to more readily distinguish it from
AK Steel, we refer to AK Steel Holding Corporation in this description of the
notes as "Holding." All other capitalized terms used in this description are
defined under the caption "--Defined Terms."
The following description of the notes is only a summary of the material
provisions of the indenture. We urge you to read the indenture because that
document, and not this description, defines your rights as holders of the
notes. You may obtain a copy of the indenture by following the procedures set
forth under "Where You Can Find More Information."
Brief Description of the Notes and the Parent Company Guarantee
The notes are:
. senior unsecured obligations of AK Steel;
. equal in right of payment with all existing and future senior
unsecured Debt of AK Steel;
. senior in right of payment to all Subordinated Obligations;
. effectively junior to all secured obligations of AK Steel, including
the $250.0 million of its outstanding senior secured notes, to the
extent of the collateral securing those obligations; and
. unconditionally guaranteed by AK Steel's parent company, Holding.
The guarantee by Holding is:
. a senior unsecured obligation of Holding;
. equal in right of payment with all of its existing and future senior
unsecured Debt;
. senior in right of payment to all of its existing and future
subordinated Debt; and
. effectively junior to all of its secured obligations, to the extent
of the collateral securing those obligations.
At December 31, 1998, after giving pro forma effect to the issuance and sale
of the old notes and the application of the net proceeds therefrom to redeem
our outstanding 10 3/4% Senior Notes Due 2004, the aggregate principal amount
of AK Steel's outstanding senior Debt would have been approximately $1.27
billion, of which $250.0 million would have been secured. All but $20 million
of that debt is guaranteed by Holding.
Principal, Maturity and Interest
AK Steel will issue $450 million aggregate principal amount of the notes in
denominations of $1,000 and any integral multiple of $1,000. The notes will
mature on February 15, 2009.
Interest on the notes will accrue at the rate of 7 7/8% per annum and will be
payable semi-annually on February 15 and August 15 of each year, commencing on
August 15, 1999. AK Steel will make each interest payment to the holders of
record of the notes on the immediately preceding February 1 and August 1.
Interest on the notes will accrue from February 10, 1999 or, if interest has
already been paid, from the date it was most recently paid. Interest will be
computed on the basis of a 360-day year comprised of twelve 30-day months.
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<PAGE>
Optional Redemption
Except as set forth below, AK Steel will not be entitled to redeem the notes
at its option prior to February 15, 2004.
The notes will be redeemable at AK Steel's option, at any time on or after
February 15, 2004 as a whole or from time to time in part, upon not less than
30 nor more than 60 days' notice mailed to each holder of notes to be redeemed
at the holder's address appearing in the register, at the following redemption
prices (expressed as percentages of principal amount) if redeemed during the
12-month period beginning February 15 of the years indicated below:
<TABLE>
<CAPTION>
Redemption
Year Price
---- ----------
<S> <C>
2004.......................................................... 103.938%
2005.......................................................... 102.625%
2006.......................................................... 101.313%
2007 and thereafter........................................... 100.000%
</TABLE>
together in the case of any such redemption with accrued interest (if any) to
the redemption date.
Notwithstanding the foregoing, at any time and on more than one occasion
prior to February 15, 2002, AK Steel may redeem up to $157.5 million aggregate
principal amount of the notes with the proceeds of one or more Public Equity
Offerings, at a redemption price of 107.875% of the principal amount thereof
plus accrued interest to the redemption date; provided, that:
(1) at least $292.5 million aggregate principal amount of the notes remains
outstanding immediately after each such redemption (other than notes
held, directly or indirectly, by AK Steel or its Affiliates); and
(2) each such redemption occurs within 60 days after the completion of the
related Public Equity Offering.
If less than all of the notes are to be redeemed, the notes will be chosen
for redemption by the Trustee and the Depository on a pro rata basis or by lot
or by a method that complies with applicable legal and securities exchange
requirements.
Change in Control Offer
Under the Indenture, within 30 days following any Change in Control, AK Steel
must notify the Trustee and each holder in writing of the occurrence of the
Change in Control and must make an offer to repurchase (the "Change in Control
Offer") the notes for cash at a purchase price (the "Change in Control Payment
Price") equal to 101% of the principal amount thereof plus accrued and unpaid
interest thereon to and including the Change in Control Payment Date. The
"Change in Control Payment Date" may not be earlier than 45 days nor later than
60 days from the date the Change in Control Offer is mailed. AK Steel must
purchase all notes that are properly tendered in the Change in Control Offer
and not withdrawn in accordance with the procedures set forth in the Indenture.
The Change in Control Offer must describe, among other things, the procedures
that holders must follow to accept the Change in Control Offer.
If a Change in Control Offer is made, there can be no assurance that AK Steel
will have funds sufficient to pay the Change in Control Payment Price for all
the notes that might be delivered by holders seeking to accept the Change in
Control Offer. See the "Risk Factors" section of this prospectus under the
heading "Factors Relating to our Company--Our high level of debt may adversely
affect our financial and operating flexibility." The failure of AK Steel to
repurchase notes in accordance with this provision constitutes an Event of
Default. See "--Events of Default."
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<PAGE>
AK Steel will comply with the applicable tender offer rules, including Rule
14e-1 under the Exchange Act, and any other applicable securities laws or
regulations in connection with a Change in Control Offer. The existence of a
holder's right to require AK Steel to repurchase such holder's notes upon a
Change in Control may deter a third party from acquiring AK Steel in a
transaction that constitutes a Change in Control.
Parent Company Guarantee
AK Steel Holding Corporation will guarantee the payment and performance by AK
Steel of the Obligations and will pay all expenses (including, without
limitation, fees and disbursements of counsel) paid or incurred by the trustee
or the holders of the notes in enforcing their rights under that guarantee. The
guarantee will be a senior unsecured obligation of the guarantor and will rank
equally with its other senior unsecured Debt.
Holding's principal asset is the outstanding common stock of AK Steel, and
virtually all of Holding's operations are conducted through AK Steel. Under the
indenture, Holding has agreed not to engage in any activities other than owning
outstanding securities of AK Steel as well as those activities incidental to
its status as a public company, and not to incur any liabilities other than
those relating to its guarantee of the notes and certain other indebtedness of
AK Steel as well as those liabilities incidental to its status as a public
company. See "--Material Covenants--Restrictions on Activities of Holding."
At present, none of AK Steel's operations is conducted through Subsidiaries.
If in the future any operations of AK Steel are conducted through a Subsidiary
(other than a Non-Recourse Subsidiary), that Subsidiary will be required to
guarantee the payment and performance of the Obligations on the same terms as,
and on a basis that is joint and several with, Holding's guarantee.
Claims of creditors of AK Steel's Subsidiaries, including trade creditors,
will have priority over creditors and equity holders of AK Steel, including
holders of the notes. Although holders of the notes will be direct creditors of
any Subsidiary that guarantees the notes by virtue of that guarantee, existing
or future creditors of that Subsidiary could attempt to avoid or subordinate
guarantees of the notes, in whole or in part, under fraudulent conveyance laws.
To the extent any Subsidiary's guarantee is avoided as a fraudulent conveyance
or held unenforceable for any other reason, the holders of the notes would
cease to be creditors of that Subsidiary and would be solely creditors of AK
Steel and of any other Guarantor Subsidiary whose guarantee was not voided or
held unenforceable. Similarly, the notes will be effectively subordinated to
the creditors of AK Steel's subsidiaries to the extent those subsidiaries are
not Guarantor Subsidiaries.
Book-Entry, Delivery and Form
AK Steel will initially issue the notes in the form of one or more global
securities. The global securities will be deposited with, or on behalf of, DTC
and registered in the name of DTC or its nominee. Except as set forth below,
the global securities may be transferred, in whole and not in part, only by the
nominee to DTC or by DTC or the nominee to another nominee of DTC. Investors
may hold their beneficial interests in the global securities directly through
DTC if they have an account with DTC or indirectly through organizations which
have accounts with DTC.
DTC has advised AK Steel as follows: DTC is a limited-purpose trust company
and organized under the laws of the State of New York, a member of the Federal
Reserve System, a "clearing corporation" within the meaning of the New York
Uniform Commercial Code, and a "clearing
30
<PAGE>
agency" registered pursuant to the provisions of Section 17A of the Exchange
Act. DTC was created to hold securities of institutions that have accounts with
DTC ("participants") and to facilitate the clearance and settlement of
securities transactions among its participants in such securities through
electronic book-entry changes in accounts of the participants, thereby
eliminating the need for physical movement of securities certificates. DTC's
participants include securities brokers and dealers (which may include the
Initial Purchasers), banks, trust companies, clearing corporations and certain
other organizations. Access to DTC's book-entry system is also available to
others such as banks, brokers, dealers and trust companies that clear through
or maintain a custodial relationship with a participant, whether directly or
indirectly.
AK Steel expects that pursuant to procedures established by DTC, upon the
deposit of the global securities with DTC, DTC will credit to the accounts of
participants, on its book-entry registration and transfer system, the principal
amount of the notes represented by those global securities. Ownership of
beneficial interests in the global securities is limited to participants or
persons that may hold interests through participants. Ownership of beneficial
interests in the global securities will be shown on, and the transfer of those
ownership interests will be effected only through, records maintained by DTC
(with respect to participants' interests) and by those participants (with
respect to the owners of beneficial interests in the global securities other
than participants). The laws of some jurisdictions may require that certain
purchasers of securities take physical delivery of such securities in
definitive form. Those limits and laws may impair the ability to transfer or
pledge beneficial interests in the global securities.
So long as DTC, or its nominee, is the registered holder and owner of the
global securities, DTC or its nominee, as the case may be, will be considered
the sole legal owner and holder of the related notes for all purposes of those
notes and the Indenture. Except as set forth below, as an owner of a beneficial
interest in the global securities, you will not be entitled to have the notes
represented by the global securities registered in your name, will not receive
or be entitled to receive physical delivery of certificated notes in definitive
form and will not be considered to be the owner or holder of any notes
represented by the global securities. AK Steel understands that under existing
industry practice, if an owner of a beneficial interest in the global
securities desires to take any action that DTC, as the holder of the global
securities, is entitled to take, DTC would authorize the participants to take
that action, and that the participants would authorize beneficial owners owning
through such participants to take that action or would otherwise act upon the
instructions of beneficial owners owning through them.
Payment of principal of, premium, if any, and interest on notes represented
by the global securities registered in the name of and held by DTC or its
nominee will be made to DTC or its nominee, as the case may be, as the
registered owner and holder of the global securities in immediately available
funds.
AK Steel expects that DTC or its nominee, upon receipt of any payment of
principal of, premium, if any, or interest on the global securities, will
credit participants' accounts with payments in amounts proportionate to their
respective beneficial interests in the principal amount of the global
securities as shown on the records of DTC or its nominee. AK Steel also expects
that payments by participants to owners of beneficial interests in the global
securities held through such participants will be governed by standing
instructions and customary practices and will be the responsibility of such
participants. AK Steel does not have any responsibility or liability for any
aspect of the records relating to, or payments made on account of, beneficial
ownership interests in the global securities representing any Note or for
maintaining, supervising or reviewing any records relating to such
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beneficial ownership interests or for any other aspect of the relationship
between DTC and its participants or the relationship between such participants
and the owners of beneficial interests in the global securities owning through
such participants.
Unless and until exchanged in whole or in part for certificated notes in
definitive form, the global securities may not be transferred except as a whole
by DTC to a nominee of DTC or by a nominee of DTC to DTC or another nominee of
DTC.
Although DTC has agreed to the foregoing procedures in order to facilitate
transfers of interests in the global securities among participants of DTC, it
is under no obligation to perform or continue to perform those procedures, and
may discontinue those procedures at any time. Neither the trustee nor AK Steel
will have any responsibility for the performance by DTC or its participants or
indirect participants of their respective obligations under the rules and
procedures governing their operations.
Certificated Notes
The notes represented by the global securities are exchangeable for
certificated notes in definitive form of like tenor as such notes in
denominations of $1,000 and integral multiples thereof only in the following
limited circumstances:
(1) DTC notifies AK Steel that it is unwilling or unable to continue as
DTC for the global securities or if at any time DTC ceases to be a clearing
agency registered under the Exchange Act;
(2) AK Steel in its discretion at any time determines not to have all of
the notes represented by the global securities; or
(3) a default has occurred that entitles the holders of the notes to
accelerate their maturity and that default is continuing.
Any note that becomes exchangeable for a certificated note will be registered
in such names as DTC shall direct. Subject to the foregoing, the global
securities will not be exchangeable, except for global securities of the same
aggregate denomination that will be registered in the name of DTC or its
nominee.
Material Covenants
The indenture will contain the following material covenants on the part of AK
Steel and Holding:
Commission Reports. Even if Holding ceases to be subject to the reporting
requirements of Section 13 of the Exchange Act, Holding shall continue to file
with the SEC and provide the trustee and holders of the notes with the same
reports, information and other documents as are specified in Section 13 of the
Exchange Act.
Limitation on Liens. AK Steel shall not, and shall not permit any Subsidiary
to, create or permit to exist any lien upon any of its property or assets, now
owned or hereafter acquired, securing any obligation unless concurrently with
the creation of such lien effective provision is made to secure the notes
equally and ratably with such obligation for so long as such obligation is so
secured; provided that if such obligation is a Subordinated Obligation, the
lien securing such obligation shall
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<PAGE>
be subordinated and junior to the lien securing the notes with the same or
lesser relative priority as such Subordinated Obligation shall have with
respect to the notes. The preceding restriction shall not require AK Steel or
any Subsidiary to equally and ratably secure the notes if the lien consists of
the following:
(1) liens created by the indenture, liens existing as of the date on
which the old notes were originally issued and liens to secure Debt in
respect of AK Steel's outstanding Secured Notes Due 2004 as described under
"Description of Outstanding Indebtedness--The Secured Notes";
(2) Permitted Liens;
(3) liens to secure Debt issued by AK Steel for the purpose of financing
all or a part of the purchase price of assets or property acquired or
constructed after the date on which the notes were originally issued;
provided, however, that (a) the aggregate principal amount (or accreted
value in the case of Debt issued at a discount) of Debt so issued shall not
exceed the lesser of cost or fair market value, as determined in good faith
by the board of directors of Holding, of the assets or property so acquired
or constructed, (b) either (x) the Debt secured by such liens shall have
been permitted to be issued under clause (5) of "--Limitation on Debt" or
(y) additional Debt secured by such liens, at the time of determination on
a pro forma basis, would not exceed, in the case of Normal Replacement
Assets, 50%, or in the case of Special Assets, 100%, of the aggregate
principal amount of Debt which AK Steel would have been permitted to issue
at such time under the Consolidated EBITDA Coverage Ratio as set forth in
the first paragraph of "--Limitation on Debt" at an interest rate equal to
the rate of interest on the additional Debt to be secured by such liens and
(c) such liens shall not encumber any other assets or property of AK Steel
or any of its Subsidiaries other than such assets or property or any
improvement on such assets or property and shall attach to such assets or
property within 90 days of the construction or acquisition of such assets
or property;
(4) liens on the assets or property of a Subsidiary existing at the time
such Subsidiary became a Subsidiary and not issued as a result of (or in
connection with or in anticipation of) such Subsidiary becoming a
Subsidiary; provided, however, that such liens do not extend to or cover
any other property or assets of AK Steel or any of its other Subsidiaries;
(5) liens on the Inventory or accounts receivable of AK Steel or any
Significant Subsidiary that is a Guarantor Subsidiary securing Debt under
any Permitted Credit Facility; provided that any lien on Intangible
Property shall limit the rights of the holder of such Lien to the use of
such Intangible Property to manufacture, process and sell the Inventory
with respect to which such holder has a lien;
(6) liens securing industrial revenue or pollution control bonds issued
by AK Steel; provided, however, that (a) the aggregate principal amount of
Debt secured by such liens shall not exceed the lesser of cost or fair
market value, as determined in good faith by the board of directors of
Holding, of the assets or property so financed, and (b) such liens do not
encumber any other property or assets of AK Steel or any of its
Subsidiaries;
(7) liens securing Debt issued to exchange, extend, refinance, renew,
replace, defease or refund Debt which has been secured by a lien permitted
under the indenture and is permitted to be exchanged, extended, refinanced,
renewed, replaced, defeased or refunded under the Indenture; provided,
however, that such liens do not extend to or cover any property or assets
of AK Steel or any of its Subsidiaries not securing the Debt so exchanged,
extended, refinanced, renewed, replaced, defeased or refunded, and the
principal amount (or accreted value) of the Debt so secured is not
increased except as otherwise permitted pursuant to the indenture;
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<PAGE>
(8) liens on the Equity Interests, assets or property of a Non-Recourse
Subsidiary securing Non-Recourse Debt; or
(9) liens securing Debt which, together with all other Debt secured by
Liens (excluding Debt secured by liens permitted by clauses (1) through (8)
above) at the time of determination do not exceed the greater of (x) $100.0
million and (y) 5% of Consolidated Net Tangible Assets of Holding, in each
case, at any one time outstanding; provided, however, that the Attributable
Debt in connection with Sale/Leaseback Transactions permitted under clause
(3) of "--Limitation on Sale/Leaseback Transactions" will be included in
the determination and treated as Debt secured by a Lien not otherwise
permitted by clauses (1) through (8) above.
For the avoidance of ambiguity, it is understood that liens referred to in
clauses (1) through (9) of this covenant description may secure, in addition to
the principal of and premium (if any) on Debt referred to in such clauses,
interest and all other obligations on and in respect of such Debt.
Limitation on Sale/Leaseback Transactions. AK Steel shall not, and shall not
permit any Subsidiary to, enter into, Guarantee or otherwise become liable with
respect to any Sale/Leaseback Transaction unless at least one of the following
conditions is satisfied:
(1) the lease is between AK Steel and a Wholly Owned Guarantor
Subsidiary, or between Wholly Owned Guarantor Subsidiaries; provided,
however, that upon either (a) the transfer or other disposition by such
Wholly Owned Guarantor Subsidiary of any such lease to a Person other than
AK Steel or another Wholly Owned Guarantor Subsidiary or (b) the issuance,
sale, lease, transfer or other disposition of Equity Interests (including
by consolidation or merger) of such Wholly Owned Guarantor Subsidiary to a
Person other than AK Steel or another such Wholly Owned Guarantor
Subsidiary, the provisions of this clause (1) shall no longer be applicable
to such lease and such lease shall be deemed for purposes of this paragraph
to constitute the entering into of such Sale/Leaseback Transaction by the
parties thereto;
(2) AK Steel or such Subsidiary under clauses (2) through (8) of "--
Limitation on Liens" could create a Lien on the property to secure Debt in
an amount at least equal to the Attributable Debt in respect of such
Sale/Leaseback Transaction and AK Steel or such Subsidiary, as the case may
be, receives consideration at least equal to the fair market value, as
determined in good faith by the board of directors of Holding, of the
property transferred;
(3) AK Steel or such Subsidiary could create a lien under clause (9) of
"--Limitation on Liens" above on the property to secure Debt at least equal
to the Attributable Debt in respect of such Sale/Leaseback Transaction and
AK Steel or such Subsidiary, as the case may be, receives consideration at
least equal to the fair market value, as determined in good faith by the
board of directors of Holding, of the property transferred; or
(4) the Sale/Leaseback Transaction is treated as an Asset Disposition and
all the conditions of "--Limitation on Sales of Assets and Equity Interests
of Subsidiaries" are satisfied with respect to such Sale/Leaseback
Transaction (without giving effect to the exceptions for Net Available Cash
in amounts less than $25.0 million or $10.0 million, as set forth in the
last paragraph of "--Limitation on Sales of Assets and Equity Interests of
Subsidiaries").
Limitation on Debt. AK Steel shall not issue, directly or indirectly, any
Debt unless, immediately after giving effect to the issuance of such Debt and
the receipt and application of the proceeds thereof, the pro forma Consolidated
EBITDA Coverage Ratio would be greater than 2.5 to 1.0.
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Notwithstanding the foregoing limitation, AK Steel may issue the following
Debt:
(1) Debt issued by AK Steel pursuant to Permitted Credit Facilities and
guarantees by AK Steel of obligations in respect of bonds or notes (in an
aggregate principal amount not exceeding $60.0 million) payable solely from
the proceeds of (a) taxes payable by AK Steel on real or depreciable
personal property relating to the Rockport Works or (b) charges payable by
AK Steel for sewer and water services relating to the Rockport Works and,
to the extent that such taxes or charges are insufficient to make such
payments, payments under such guarantees (provided that the payments under
such bonds or notes or such guarantees are not required to be prefunded by
more than an aggregate amount equal to one year of debt service on such
bonds or notes and are not subject to acceleration by the express terms
thereof or otherwise);
(2) Debt issued by AK Steel owed to and held by a Wholly Owned
Subsidiary; provided, however, that any subsequent issuance or transfer of
any Equity Interests that results in such Wholly Owned Subsidiary ceasing
to be a Wholly Owned Subsidiary or any transfer of that Debt (other than to
another Wholly Owned Subsidiary) shall be deemed, in each case, to
constitute the issuance of that Debt by AK Steel;
(3) The notes;
(4) Debt (other than Debt described in clauses (1) or (2) of this
covenant description) outstanding on the date on which the notes were
originally issued;
(5) Debt issued by AK Steel, whether or not secured by a lien,
constituting all or a part of the purchase price of assets or property
acquired or constructed after the date on which the notes were originally
issued; provided, however, that Debt issued under this clause (5) in any
calendar year shall not exceed in aggregate principal amount the sum of (a)
$50.0 million for each of 1999, 2000 and 2001, and $35.0 million for each
calendar year from and including 2002 to and including 2008 plus (b) the
excess of the aggregate principal amount otherwise permitted to be issued
under this clause (5) in all previous calendar years to and including the
calendar year in which the notes were originally issued over the aggregate
principal amount actually issued by AK Steel during such period under this
clause (5);
(6) Refinancing Debt in respect of any Debt permitted pursuant to the
first paragraph of this covenant description or any Debt permitted pursuant
to clause (3), (4) or (5) of this covenant description or this clause (6);
(7) Obligations of AK Steel pursuant to (a) interest rate swap or similar
agreements designed to protect AK Steel against fluctuations in interest
rates in respect of Debt of AK Steel to the extent the notional principal
amount of such obligation does not exceed the aggregate principal amount of
the Debt to which such interest rate contracts relate, and (b) foreign
exchange or commodity hedge, exchange or similar agreements designed to
protect AK Steel against fluctuations in foreign currency exchange rates or
commodity prices in respect of foreign exchange or commodity exposures
incurred by AK Steel in the ordinary course of its business; or
(8) Debt (not otherwise permitted to be issued pursuant to clauses (1)
through (7) of this covenant description) in an aggregate principal amount
which, together with (a) any other outstanding Debt issued by AK Steel
pursuant to this clause (8) and (b) Debt issued and Preferred Equity
Interests then outstanding and issued by Subsidiaries pursuant to clause
(8) of "--Limitation on Debt and Preferred Equity Interests of
Subsidiaries," does not exceed $100.0 million at any one time outstanding.
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Notwithstanding the foregoing, AK Steel shall not issue any Refinancing Debt
in respect of Subordinated Obligations unless such Refinancing Debt shall be
subordinated to the notes to at least the same extent as such Subordinated
Obligations.
Limitation on Debt and Preferred Equity Interests of Subsidiaries. AK Steel
shall not permit any Subsidiary to issue, directly or indirectly, any Debt or
Preferred Equity Interests except:
(1) Debt or Preferred Equity Interests issued to and held by AK Steel or
a Wholly Owned Subsidiary; provided, however, that (a) any subsequent
issuance or transfer of any Equity Interests that results in any such
Wholly Owned Subsidiary ceasing to be a Wholly Owned Subsidiary or (b) any
subsequent transfer of such Debt or Preferred Equity Interests (other than
to AK Steel or a Wholly Owned Subsidiary) shall be deemed, in each case, to
constitute the issuance of such Debt or Preferred Equity Interests by the
issuer thereof;
(2) Debt or Preferred Equity Interests, other than any described in
clause (1) above, outstanding on the date on which the notes were
originally issued;
(3) Debt or Preferred Equity Interests of a Subsidiary issued and
outstanding on or prior to the date on which such Subsidiary became a
Subsidiary (other than Debt or Preferred Equity Interests issued as
consideration in, or to provide all or any portion of the funds or credit
support utilized to consummate, the transaction or series of related
transactions pursuant to which such Subsidiary became a Subsidiary);
(4) Debt or Preferred Equity Interests issued in exchange for, or the net
proceeds of which are used to extend, refinance, renew, replace, defease or
refund, Debt or Preferred Equity Interests referred to in clause (2) or (3)
of this covenant description; provided, however, (a) the principal amount
or liquidation value of such Debt or Preferred Equity Interests so issued
shall not exceed the principal amount of, and premiums, if any, and accrued
interest, or the liquidation value and premiums, if any, and accumulated
dividends, with respect to the Debt or Preferred Equity Interests so
exchanged, extended, refinanced, renewed, replaced, defeased or refunded by
application of the net proceeds of the Debt or Preferred Equity Interests
so issued and reasonable fees, expenses, commissions and costs incurred in
connection with the issuance of such Debt or Preferred Equity Interests and
(b) the Debt or Preferred Equity Interests so issued (x) shall have a
stated maturity later than the stated maturity of the Debt or Preferred
Equity Interests being exchanged, extended, refinanced, renewed, replaced,
defeased or refunded and (y) shall have an Average Life equal to or greater
than the remaining Average Life of the Debt or Preferred Equity Interests
being exchanged, extended, refinanced, renewed, replaced, defeased or
refunded;
(5) Non-Recourse Debt or Preferred Equity Interests of a Non-Recourse
Subsidiary issued after the date on which the notes were originally issued;
provided, however, that if any such Debt or Preferred Equity Interests
thereafter ceases to be Non-Recourse Debt or Preferred Equity Interests of
a Non-Recourse Subsidiary, then such event will be deemed to constitute the
issuance of such Debt or Preferred Equity Interests by the issuer thereof;
(6) Guarantees of the notes, the exchange notes or Refinancing Debt in
respect of Debt permitted as described in clause (3) of "--Limitation on
Debt" above;
(7) Guarantees issued by any Guarantor Subsidiary of any Debt issued by
AK Steel as permitted under "--Limitation on Debt" above; or
(8) Debt or Preferred Equity Interests not otherwise permitted to be
issued pursuant to clauses (1) through (7) above, which, together with (a)
any other outstanding Debt or Preferred
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Equity Interests issued pursuant to this clause (8) and (b) Debt issued by
AK Steel pursuant to clause (8) under "--Limitation on Debt," does not
exceed $60.0 million at any one time outstanding.
Limitation on Restricted Payments. Holding shall not, and shall not permit
any Subsidiary of Holding to, directly or indirectly:
(1) declare or pay any dividend or make any distribution on or in respect
of, or make any distribution to the holders of, Equity Interests of AK
Steel Holding Corporation (except dividends or distributions payable solely
in its Non-Convertible Equity Interests or in options, warrants or other
rights to acquire its Non-Convertible Equity Interests and except dividends
or distributions payable to a Wholly Owned Guarantor Subsidiary);
(2) purchase, redeem or otherwise acquire or retire for value any Equity
Interests of Holding;
(3) declare or pay any dividend or make any distribution on or in respect
of, or make any distribution to holders of, Equity Interests of any
Subsidiary of Holding (other than with respect to any such Equity Interests
held by Holding, AK Steel, any Wholly Owned Guarantor Subsidiary or any
Wholly Owned Non-Recourse Subsidiary) or purchase, redeem or otherwise
acquire or retire for value any Equity Interests of any Subsidiary of
Holding (other than such Equity Interests held by Holding, AK Steel, any
Wholly Owned Guarantor Subsidiary or any Wholly Owned Non-Recourse
Subsidiary);
(4) purchase, repurchase, redeem, defease or otherwise acquire or retire
for value, prior to scheduled maturity, scheduled repayment or scheduled
sinking fund payment, any Subordinated Obligations (other than the
purchase, repurchase or other acquisition of Subordinated Obligations
purchased in anticipation of satisfying a sinking fund obligation,
principal installment or final maturity, in each case due within one year
of the date of acquisition); or
(5) make any Investment other than Permitted Investments (any such
dividend, distribution, purchase, redemption, repurchase, defeasance, other
acquisition, retirement or Investment being herein referred to as a
"Restricted Payment") if:
(a) a Default shall have occurred and be continuing (or would result
therefrom);
(b) upon giving effect to such Restricted Payment, on a pro forma
basis, AK Steel is not able to issue an additional $1.00 of Debt
pursuant to the Consolidated EBITDA Coverage Ratio as set forth in the
first paragraph of "--Limitation on Debt"; or
(c) upon giving effect to such Restricted Payment, the aggregate
amount of such Restricted Payment and all other Restricted Payments
since October 1, 1996 would exceed the sum of:
(A) 50% of the Consolidated Net Income of Holding accrued during
the period (treated as one accounting period) from October 1, 1996
through the last full fiscal quarter for which quarterly or annual
financial statements are available prior to the date of such
Restricted Payment (or, in case such Consolidated Net Income shall
be a deficit, minus 100% of such deficit), plus
(B) the aggregate Net Cash Proceeds received by AK Steel from the
issue or sale of its Equity Interests (other than Redeemable Equity
Interests or Exchangeable Equity Interests) subsequent to October
1, 1996 (other than to a Subsidiary of AK Steel or an employee
stock ownership plan or similar trust), plus
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(C) the aggregate Net Cash Proceeds received by AK Steel from the
issue or sale of its Equity Interests (other than Redeemable Equity
Interests or Exchangeable Equity Interests) to an employee stock
ownership plan subsequent to October 1, 1996, provided, that, if
such employee stock ownership plan issues any Debt only to the
extent that any such proceeds are equal to any increase in the
Consolidated Net Worth of Holding resulting from principal
repayments made by such employee stock ownership plan with respect
to Debt issued by it to finance the purchase of such Equity
Interests, plus
(D) the amount by which consolidated Debt of AK Steel is reduced
on Holding's balance sheet upon the conversion or exchange (other
than by a Subsidiary), subsequent to October 1, 1996, of any Debt
of AK Steel or any of its Subsidiaries convertible or exchangeable
for Equity Interests (other than Redeemable Equity Interests or
Exchangeable Equity Interests) of AK Steel (less the amount of any
cash, or other property, distributed by AK Steel or any of its
Subsidiaries upon such conversion or exchange).
So long as no Default has occurred that is continuing (or would result
therefrom), the foregoing limitations on Restricted Payments shall not
prohibit:
(1) any purchase or redemption of Equity Interests of Holding or
Subordinated Obligations made by exchange for, or out of the proceeds of
the substantially concurrent sale of, Equity Interests of Holding (other
than Redeemable Equity Interests or Exchangeable Equity Interests and other
than Equity Interests issued or sold to a Subsidiary or an employee stock
ownership plan); provided, however, that (a) such purchase or redemption
shall be excluded in the calculation of the amount of Restricted Payments
and (b) the Net Cash Proceeds from such sale shall be excluded from clauses
(c)(B) and (c)(C) of the preceding paragraph;
(2) any purchase or redemption of Subordinated Obligations (other than
Redeemable Equity Interests) made by exchange for, or out of the proceeds
of the substantially concurrent sale of, Debt of AK Steel other than to a
Subsidiary; provided, however, that such Debt
(a) shall be subordinated to the notes to at least the same extent as
the Subordinated Obligations so exchanged, purchased or redeemed,
(b) shall have a stated maturity later than the stated maturity of
the notes and
(c) shall have an Average Life greater than the remaining Average
Life of the notes;
provided further, however, that such purchase or redemption shall be excluded
in the calculation of the amount of Restricted Payments;
(3) any purchase or redemption of Subordinated Obligations from Net
Available Cash to the extent permitted under "--Limitation on Sales of
Assets and Equity Interests of Subsidiaries"; provided, however, that such
purchase or redemption shall be excluded in the calculation of the amount
of Restricted Payments;
(4) dividends paid within 60 days after the date of declaration if at
such date of declaration such dividend would have complied with this
provision; provided, however, that at the time of payment of such dividend,
no Default shall have occurred and be continuing (or would result
therefrom); provided further, however, that such dividend shall be included
in the calculation of the amount of Restricted Payments;
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(5) any repurchase by Holding of employee stock granted under an employee
stock option plan; provided, however, that the aggregate amount of such
repurchase in any calendar year shall not exceed $1.0 million per employee
and the aggregate amount of all repurchases in any calendar year shall not
exceed $5.0 million (it being understood that the excess of any such
amounts permitted to be expended under this clause (5) during any calendar
year over the amount actually expended during such period shall not be
carried forward); provided further, however, that such repurchase shall be
included in the calculation of the amount of Restricted Payments; or
(6) any purchase, repurchase, redemption, defeasance or other acquisition
by any Non-Recourse Subsidiary of Non-Recourse Debt of such Non-Recourse
Subsidiary; provided, however, that the amount of such purchase,
repurchase, redemption, defeasance or other acquisition shall be excluded
in the calculation of the amount of Restricted Payments.
So long as none of the conditions described above in clauses (a) and (b) of
the first sentence of this covenant description exist, the foregoing
limitations on Restricted Payments shall not prohibit the declaration and
payment of one or more dividends on or before February 28, 2001 in an aggregate
amount not to exceed $50.0 million; provided, however, that all such dividends
shall be excluded in the calculation of the amount of Restricted Payments.
Limitation on Issuance and Sale of Equity Interests of Subsidiaries. AK Steel
shall not permit any Subsidiary to issue or sell any Equity Interests to any
Person, or permit any Person in either case, other than AK Steel and its
Subsidiaries, to own or hold an interest, other than any interest owned or held
on the date on which the notes were originally issued by a Person other than AK
Steel and its Subsidiaries, in any Equity Interests, of any Subsidiary (other
than a Non-Recourse Subsidiary or a JV Subsidiary); provided, however, that the
foregoing limitation shall not apply to (1) the sale of all but not less than
all of the Equity Interests of any Subsidiary made in accordance with "--
Limitation on Sales of Assets and Equity Interests of Subsidiaries," (2)
issuances of Preferred Equity Interests permitted pursuant to clauses (3), (5)
and (7) under the heading "--Limitation on Debt and Preferred Equity Interests
of Subsidiaries," and (3) the ownership or holding of an interest by any
Person, other than AK Steel and its Subsidiaries, in any Equity Interests of
any Subsidiary issued pursuant to clause (2) above.
Limitation on Restrictions on Distributions from Subsidiaries. AK Steel shall
not, and shall not permit any Subsidiary to, create or permit to exist or
become effective any consensual encumbrance or restriction on the ability of
any Subsidiary to (1) pay dividends or make any other distributions on its
Equity Interests or pay any Debt or other obligation owed to AK Steel or any
Subsidiary, (2) make any Investment in AK Steel or any Subsidiary or (3)
transfer any of its property or assets to AK Steel or any Subsidiary.
Notwithstanding the foregoing, AK Steel may, and may permit any Subsidiary of
AK Steel to, suffer to exist any such encumbrance or restriction:
(1) pursuant to an agreement in effect at or entered into on the date on
which the notes were originally issued;
(2) with respect to a Subsidiary pursuant to an agreement relating to any
Debt issued by such Subsidiary on or prior to the date on which such
Subsidiary became a Subsidiary (other than Debt issued as consideration in,
or to provide all or any portion of the funds utilized to consummate, the
transaction or series of related transactions pursuant to which such
Subsidiary became a Subsidiary) and outstanding on such date;
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(3) pursuant to an agreement effecting a refinancing of Debt issued
pursuant to an agreement referred to in clause (1) or (2) or contained in
any amendment to an agreement referred to in clause (1) or (2), provided,
however, that the encumbrances and restrictions contained in any such
refinancing agreement or amendment are no less favorable to the holders of
notes than encumbrances and restrictions contained in such agreements;
(4) consisting of customary nonassignment provisions in leases governing
leasehold interests to the extent such provisions restrict the transfer of
the lease;
(5) in the case of clause (3) of the preceding paragraph, restrictions
contained in security agreements securing Debt of a Subsidiary otherwise
permitted under the Indenture, to the extent such restrictions restrict the
transfer of the property subject to such security agreements; or
(6) relating to a Non-Recourse Subsidiary.
Limitation on Sales of Assets and Equity Interests of Subsidiaries. AK Steel
shall not, and shall not permit any Subsidiary (other than Non-Recourse
Subsidiaries) to, make any Asset Disposition unless:
(1) AK Steel or such Subsidiary receives consideration at the time of
such Asset Disposition at least equal to the fair market value, as
determined in good faith by the board of directors of Holding (including as
to the value of all non-cash consideration), of the shares and assets
subject to such Asset Disposition and at least 75% of such consideration is
in the form of cash or Cash Equivalents; and
(2) An amount equal to 100% of the Net Available Cash from such Asset
Disposition is applied by AK Steel or such Subsidiary, as the case may be,
(a) first, to the extent AK Steel elects (or is required by the terms
of any Debt), to prepay, repay or purchase Debt (other than any
Redeemable Equity Interests or Non-Recourse Debt) of AK Steel, such
Subsidiary or a Wholly Owned Guarantor Subsidiary (in each case other
than Debt owed to AK Steel or an Affiliate of AK Steel) within 60 days
from the later of the date of such Asset Disposition or the receipt of
such Net Available Cash;
(b) second, to the extent of the balance of such Net Available Cash
after application in accordance with clause (a), at AK Steel's
election, to the investment by AK Steel or such Subsidiary or any
Wholly Owned Guarantor Subsidiary in assets to replace the assets that
were the subject of such Asset Disposition or an asset that (as
determined by the board of directors of Holding) will be used in the
business of AK Steel and the Wholly Owned Guarantor Subsidiaries
existing on the date on which the notes were originally issued or in
businesses reasonably related thereto, in each case within the later of
one year from the date of such Asset Disposition or the receipt of such
Net Available Cash; and
(c) third, to the extent of the balance of such Net Available Cash
after application in accordance with clauses (a) and (b), to make an
offer to purchase notes at par;
provided, however, that in connection with any prepayment, repayment or
purchase of Debt pursuant to clause (a) above, AK Steel shall cause the related
loan commitment (if any) to be permanently reduced in an amount equal to the
principal amount so prepaid, repaid or purchased.
Notwithstanding the requirement in clause (1) above that at least 75% of
consideration consist of cash or Cash Equivalents, AK Steel and its
Subsidiaries may make one or more Asset Dispositions
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for which the consideration, in addition to the non-cash consideration
permitted by such clause, consists of or includes (A) non-cash consideration,
the aggregate fair market value (as determined in good faith by the board of
directors of Holding) of which, for all Asset Dispositions made after the date
on which the notes were originally issued, does not exceed $10.0 million, and
(B) non-cash consideration, the aggregate fair market value (as determined in
good faith by the board of directors of Holding) of which, for all Asset
Dispositions made after the date on which the notes were originally issued,
does not exceed $50.0 million, consisting of the cancellation of Debt of AK
Steel or any Subsidiary existing on the date on which the notes were originally
issued; provided, however, that in connection with any such cancellation of
Debt, AK Steel or such Subsidiary shall cause the related loan commitment (if
any) to be permanently reduced in an amount equal to the principal so canceled.
Notwithstanding the provisions of clause (2) above, in the event that the Net
Available Cash resulting from any Asset Disposition is less than $25.0 million,
the application of an amount equal to such Net Available Cash in accordance
with this Section may be deferred until such time as such Net Available Cash
from any prior or subsequent Asset Dispositions not otherwise applied in
accordance with this Section, is at least equal to $25.0 million. In the event
that the Net Available Cash resulting from any Asset Disposition, after giving
effect to clauses (a) and (b) above, is less than $10.0 million, the
application of such amount equal to such Net Available Cash to make an offer to
purchase notes in accordance with clause (c) may be deferred until such time as
such Net Available Cash, together with Net Available Cash from any prior or
subsequent Asset Dispositions not otherwise applied in accordance with this
Section, is at least equal to $10.0 million. Pending application of Net
Available Cash pursuant to this Section, such Net Available Cash shall be
invested in Cash Equivalents. To the extent any portion of the amount of Net
Available Cash remains after compliance with this Section, and provided that
all holders of notes have been given the opportunity to tender their notes for
repurchase as provided in clause (c) above, AK Steel may use such remaining
amount for general corporate purposes.
Limitation on Transactions with Affiliates. AK Steel shall not, and shall not
permit any Subsidiary to, conduct any business or enter into any transaction or
series of similar transactions (including the purchase, sale, lease or exchange
of any property or the rendering of any service) with any Affiliate of AK Steel
or any legal or beneficial owner of 5% or more of any class of Equity Interests
of Holding or with an Affiliate of any such owner (other than a Wholly Owned
Subsidiary or any employee stock ownership plan for the benefit of AK Steel or
a Subsidiary's employees) unless the terms of such business, transaction or
series of transactions are
(1) set forth in writing,
(2) not less favorable to AK Steel or such Subsidiary, as the case may
be, than terms that would be obtainable at the time for a comparable
transaction or series of similar transactions in arms-length dealings with
an unrelated third Person,
(3) if such business or transaction or series of transactions involves in
excess of (a) $5.0 million, the board of directors of Holding has, by
resolution, determined in good faith that such business or transaction or
series of transactions meets the criteria set forth in clause (2) above,
and (b) $25.0 million and as to which there are no disinterested directors,
AK Steel has obtained an opinion of a nationally recognized expert with
experience in appraising the terms and conditions of the type of business
or transaction or series of transactions stating that such business or
transaction or series of transactions is fair (from a financial point of
view) to AK Steel or such Subsidiary, as the case may be;
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provided, however, that the provisions of this paragraph do not apply to
performance of contractual obligations with respect to Eveleth Mines existing
as of the date of the indenture under which the notes were originally issued.
Lines of Business. AK Steel shall not, and shall not permit any of its
Subsidiaries to, enter into any business, either directly or through any
Subsidiary, except for those businesses in which AK Steel and its Subsidiaries
were engaged on the date on which the notes were originally issued or
businesses reasonably related thereto.
Restrictions on Activities of Holding. Holding (1) shall not engage in any
activities or hold any assets other than (a) holding 100% of the Equity
Interests of AK Steel and debt securities of AK Steel that were held by Holding
at the date of the indenture and (b) those activities incidental to maintaining
its status as a public company, and (2) will not incur any liabilities other
than liabilities relating to Holding's guarantee of the notes or any guarantees
by Holding of any Permitted Credit Facility, any other Debt of AK Steel or any
Debt of any Significant Subsidiary that is guaranteed by AK Steel and any other
obligations or liabilities incidental to holding 100% of the Equity Interests
of AK Steel and those liabilities incidental to its status as a public company;
provided, however, that, for purposes of this covenant, the term "liabilities"
shall not include any liability for the declaration and payment of dividends on
any Equity Interests of Holding; and provided further, however, that if Holding
merges into AK Steel, this covenant shall no longer be applicable.
Defined Terms
Certain terms to be defined in the indenture are summarized below. Reference
is made to the indenture for the formal definition of these terms, as well as
other terms used herein for which no definition is provided.
"Asset Disposition" means any sale, lease, transfer or other disposition (or
series of related sales, leases, transfers or dispositions) of Equity Interests
of a Subsidiary (other than directors' qualifying shares), property or other
assets (each referred to for the purposes of this definition as a
"disposition") by AK Steel or any of its Subsidiaries, including any
disposition by means of a merger, consolidation or similar transaction, other
than:
(1) a disposition by AK Steel or a Subsidiary to AK Steel or a Wholly
Owned Guarantor Subsidiary;
(2) a disposition of property or assets at fair market value (as
determined in good faith by the board of directors of Holding) in the
ordinary course of business;
(3) a disposition of obsolete assets in the ordinary course of business;
(4) a disposition that constitutes a Restricted Payment or a
Sale/Leaseback Transaction;
(5) a sale of accounts receivable under a Permitted Credit Facility; and
(6) a transfer of accounts receivable that constitutes a Permitted
Investment under clause (5) or (6) of the definition of Permitted
Investments.
"Attributable Debt" in respect of a Sale/Leaseback Transaction means, as of
the date of determination, the present value (discounted at the lower of the
interest rate of such Sale/Leaseback Transaction and the interest rate borne by
the notes, compounded annually) of the total obligations of the lessee for
rental payments during the remaining term of the lease included in such
Sale/Leaseback Transaction (including any period for which such lease has been
extended).
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"Average Life" means, as of the date of determination, with respect to any
Debt, the quotient obtained by dividing (x) the sum of the products of the
numbers of years from the date of determination to the dates of each successive
scheduled principal payment of such Debt multiplied by the amount of such
principal payment by (y) the sum of all such principal payments.
"Capital Lease Obligations" of a Person means any obligation which is
required to be classified and accounted for as a capital lease on the face of a
balance sheet of such Person prepared in accordance with generally accepted
accounting principles; the amount of such obligation shall be the capitalized
amount thereof, determined in accordance with generally accepted accounting
principles; and the stated maturity thereof shall be the date of the last
payment of rent or any other amount due under such lease prior to the first
date upon which such lease may be terminated by the lessee without payment of a
penalty.
"Cash Equivalents" means:
(1) Investments in U.S. government obligations maturing within 365 days
of the date of acquisition thereof;
(2) Investments in certificates of deposit or Eurodollar deposits
maturing within 365 days of the date of acquisition thereof issued by a
bank or trust company which is organized under the laws of the United
States or any state thereof and which has a combined capital and surplus of
at least $1.0 billion and rated at least A3 by Moody's Investors Service,
Inc.;
(3) Investments in repurchase agreements, involving Investments in U.S.
government obligations or other Cash Equivalents entered into with any
bank, trust company or investment bank rated at least A- and A-1 by
Standard & Poor's and at least A3 and P-1 by Moody's Investors Service,
Inc.;
(4) Investments in commercial paper maturing not more than 90 days from
the date of acquisition thereof and having one of the two highest ratings
obtainable from each of Standard & Poor's and Moody's Investors Service,
Inc. issued by a corporation (except AK Steel or an Affiliate of AK Steel)
that is organized under the laws of any state of the United States or the
District of Columbia; and
(5) Investments in money market accounts or funds whose assets consist
solely of cash or Cash Equivalents.
"Change in Control" means the occurrence of any of the following events:
(1) any "Person" (as such term is used in Sections 13(d) and 14(d) of the
Exchange Act) is or becomes the beneficial owner (as defined in Rules 13d-3
and 13d-5 under the Exchange Act, except that a Person shall be deemed to
have "beneficial ownership" of all shares that any such Person has the
right to acquire, whether such right is exercisable immediately or only
after the passage of time), directly or indirectly, of more than 40% of the
total voting power of the Voting Equity Interests of Holding; provided,
however, that the Person shall not be deemed the "beneficial owner" of
shares tendered pursuant to a tender or exchange offer made by that Person
or any Affiliate of that Person until the tendered shares are accepted for
purchase or exchange;
(2) during any period of two consecutive years, individuals who at the
beginning of such period constituted the board of directors of Holding
(together with any new directors whose election by such board of directors
of Holding, or whose nomination for election by the shareholders of
Holding, as the case may be, was approved by a vote of 66 2/3% of the
directors
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then still in office who were either directors at the beginning of such
period or whose election or nomination for election was previously so
approved) cease for any reason to constitute a majority of the board of
directors of Holding then in office; or
(3) Holding fails to own 100% of the Equity Interests of AK Steel;
provided, however, that it shall not be deemed a Change in Control if
Holding merges into AK Steel except that, in such case, AK Steel shall be
substituted for Holding for purposes of this definition of "Change in
Control" and this clause (3) shall no longer be applicable.
"Consolidated EBITDA Coverage Ratio" as of any date of determination means
the ratio of (x) the aggregate amount of EBITDA for the period of the most
recent four consecutive fiscal quarters ending at least 45 days prior to the
date of such determination to (y) Consolidated Interest Expense for such four
fiscal quarters; provided, however, that:
(1) if AK Steel or any Subsidiary has issued any Debt since the beginning
of such period that remains outstanding or if the transaction giving rise
to the need to calculate the Consolidated EBITDA Coverage Ratio is an
issuance of Debt, or both, EBITDA and Consolidated Interest Expense for
such period shall be calculated after giving effect on a pro forma basis to
such Debt as if such Debt had been issued on the first day of such period
and the discharge of any other Debt repaid, repurchased, defeased or
otherwise discharged with the proceeds of such new Debt as if such
discharge had occurred on the first day of such period;
(2) if since the beginning of such period AK Steel or any Subsidiary
shall have made any Asset Disposition, the EBITDA for such period shall be
reduced by an amount equal to the EBITDA (if positive) directly
attributable to the assets that are the subject of such Asset Disposition
for such period, or increased by an amount equal to the EBITDA (if
negative), directly attributable thereto for such period, and Consolidated
Interest Expense for such period shall be reduced by an amount equal to the
Consolidated Interest Expense directly attributable to any Debt of AK Steel
or any Subsidiary repaid, repurchased, defeased or otherwise discharged
with respect to AK Steel and its continuing Subsidiaries in connection with
such Asset Dispositions for such period (or, if the Equity Interests of any
Subsidiary are sold, the Consolidated Interest Expense for such period
directly attributable to the Debt of such Subsidiary to the extent AK Steel
and its continuing Subsidiaries are no longer liable for such Debt after
such sale);
(3) if since the beginning of such period AK Steel or any Subsidiary (by
merger or otherwise) shall have made an Investment in any Subsidiary (or
any Person that becomes a Subsidiary) or an acquisition of assets,
including any acquisition of assets occurring in connection with a
transaction causing a calculation to be made hereunder, that constitutes
all or substantially all of an operating unit of a business, EBITDA and
Consolidated Interest Expense for such period shall be calculated after
giving pro forma effect thereto (including the issuance of any Debt) as if
such Investment or acquisition occurred on the first day of such period;
and
(4) if since the beginning of such period any Person (that subsequently
became a Subsidiary or was merged with or into AK Steel or any Subsidiary
since the beginning of such period) shall have made any Asset Disposition
or any Investment that would have required an adjustment pursuant to clause
(2) or (3) above if made by AK Steel or a Subsidiary during such period,
EBITDA and Consolidated Interest Expense for such period shall be
calculated after giving pro forma effect thereto as if such Asset
Disposition or Investment occurred on the first day of such period.
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For purposes of this definition, whenever pro forma effect is to be given
to an acquisition of assets, the amount of income or earnings relating
thereto, and the amount of Consolidated Interest Expense associated with
any Debt issued in connection therewith, the pro forma calculations shall
be determined in good faith by a responsible financial or accounting
Officer of AK Steel. If any Debt bears a floating rate of interest and is
being given pro forma effect, the interest on such Debt shall be calculated
as if the rate in effect on the date of determination had been the
applicable rate for the entire period (taking into account any Interest
Rate Protection Agreement applicable to such Debt if such Interest Rate
Protection Agreement has a remaining term in excess of 12 months).
"Consolidated Interest Expense" means, for any period, the total interest
expense of Holding and its consolidated Subsidiaries (other than Non-Recourse
Subsidiaries), including:
(1) interest expense attributable to capital leases;
(2) amortization of debt discount and debt issuance cost;
(3) capitalized interest;
(4) non-cash interest payments;
(5) commissions, discounts and other fees and charges owed with respect
to letters of credit and bankers' acceptance financing;
(6) net costs under Interest Rate Protection Agreements (including
amortization of fees);
(7) Preferred Equity Interests dividends or distributions in respect of
all Preferred Equity Interests held by Persons other than AK Steel or a
Wholly Owned Subsidiary;
(8) interest allocated in connection with investments in discontinued
operations; and
(9) interest actually paid by Holding or any of its consolidated
Subsidiaries (other than Non-Recourse Subsidiaries) under any guarantee of
Debt or other obligation of any other Person.
"Consolidated Net Income" means, for any period, the net income (or loss) of
Holding and its consolidated Subsidiaries; provided, however, that there shall
not be included in such Consolidated Net Income:
(1) any net income (or loss) of any Person if such Person is not a
Subsidiary of AK Steel, except that AK Steel's equity in the net income of
any such Person for such period shall be included in such Consolidated Net
Income up to the aggregate amount of cash actually distributed by such
Person during such period to AK Steel or a Subsidiary (other than a Non-
Recourse Subsidiary) as a dividend or other distribution (subject, in the
case of a dividend or other distribution to a Subsidiary, to the
limitations contained in clause (3) below);
(2) any net income (or loss) of any Person acquired by AK Steel or a
Subsidiary in a pooling of interests transaction for any period prior to
the date of such acquisition;
(3) any net income of any Subsidiary if such Subsidiary is subject to
restrictions, directly or indirectly, on the payment of dividends or the
making of distributions by such Subsidiary, directly or indirectly, to AK
Steel, except that
(a) AK Steel's equity in the net income of any such Subsidiary for
such period shall be included in such Consolidated Net Income up to the
aggregate amount of cash actually
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distributed by such Subsidiary during such period to AK Steel or
another Subsidiary as a dividend or other distribution (subject, in the
case of a dividend or other distribution to another Subsidiary, to the
limitation contained in this clause) and
(b) AK Steel's equity in a net loss of any such Subsidiary for such
period shall be included in determining such Consolidated Net Income;
(4) any gain or loss realized upon the sale or other disposition of any
property, plant or equipment of AK Steel or its consolidated Subsidiaries
(including pursuant to any Sale/Leaseback Transaction) that is not sold or
otherwise disposed of in the ordinary course of business and any gain or
loss realized upon the sale or other disposition of any Equity Interests of
any Person;
(5) any net income (or loss) of any Non-Recourse Subsidiary, except that
AK Steel's equity in the net income of any such Non-Recourse Subsidiary for
such period shall be included in such Consolidated Net Income up to the
aggregate amount of cash actually distributed by such Non-Recourse
Subsidiary during such period to AK Steel as a dividend or other
distribution; and
(6) the cumulative effect of a change in accounting principles.
"Consolidated Net Tangible Assets" of any Person means the total assets of
such Person and its consolidated subsidiaries after deducting therefrom all
intangible assets, current liabilities (excluding any thereof which are by
their terms extendible or renewable at the option of the obligor thereon to a
time more than 12 months after the time as of which the amount thereof is being
computed) and minority interests, if any, in any assets of such Person's
subsidiaries.
"Consolidated Net Worth" of any Person means the total of the amounts shown
on the balance sheet of such Person and its consolidated subsidiaries,
determined on a consolidated basis in accordance with generally accepted
accounting principles, as of the end of the most recent fiscal quarter of such
Person ending at least 45 days prior to the taking of any action for the
purpose of which the determination is being made, as:
(1) the par or stated value of all outstanding Equity Interests of such
Person; plus
(2) paid-in capital or capital surplus relating to such Equity Interests;
plus
(3) any retained earnings or earned surplus; less (x) any accumulated
deficit, (y) any amounts attributable to Redeemable Equity Interests and
(z) any amounts attributable to Exchangeable Equity Interests.
"Debt" of any Person means, without duplication,
(1) the principal of and premium (if any) in respect of (a) indebtedness
of such Person for money borrowed and (b) indebtedness evidenced by notes,
debentures, bonds or other similar instruments for the payment of which
such Person is responsible or liable;
(2) all Capital Lease Obligations of such Person;
(3) all obligations of such Person issued or assumed as the deferred
purchase price of property, all conditional sale obligations of such Person
and all obligations of such Person under any title retention agreement (but
excluding trade accounts payable arising in the ordinary course of
business);
(4) all obligations of such Person for the reimbursement of any obligor
on any letter of credit, banker's acceptance or similar credit transaction
(other than obligations with respect to
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letters of credit securing obligations (other than obligations described in
clauses (1) through (3) above) entered into in the ordinary course of
business of such Person to the extent such letters of credit are not drawn
upon or, if and to the extent drawn upon, such drawing is reimbursed no
later than the third business day following receipt by such Person of a
demand for reimbursement following payment on the letter of credit);
(5) the amount of all obligations of such Person with respect to the
redemption, repayment or other repurchase of any Redeemable Equity
Interests (but excluding any accrued dividends);
(6) all obligations of such Person under interest rate swap or similar
agreements, or foreign currency or commodity hedge, exchange or similar
agreements of such Person;
(7) all obligations of the type referred to in clauses (1) through (6) of
other Persons and all dividends of other Persons for the payment of which,
in either case, such Person is responsible or liable, directly or
indirectly, as obligor, guarantor or otherwise, including by means of any
guarantee; and
(8) all obligations of the type referred to in clauses (1) through (7) of
other Persons secured by any lien on any property or asset of such Person
(whether or not such obligation is assumed by such Person), the amount of
such obligation being deemed to be the lesser of the value of such property
or assets or the amount of the obligation so secured.
"Default" means any event which is, or after notice or passage of time or
both would be, an Event of Default.
"Defaulting Subsidiary" means any Subsidiary of AK Steel (other than a Non-
Recourse Subsidiary) with respect to which a Default has occurred.
"EBITDA" for any period means the Consolidated Net Income of Holding for such
period (but without giving effect to adjustments, accruals, deductions or
entries resulting from purchase accounting, extraordinary losses or gains and
any gains or losses from any Asset Dispositions), plus
(1) the following to the extent deducted in calculating such Consolidated
Net Income:
(a) income tax expense,
(b) Consolidated Interest Expense,
(c) depreciation expense,
(d) amortization expense,
(e) the non-cash portion of postretirement benefits other than
pensions and
(f) special charges taken after December 31, 1996 in respect of which
Holding has delivered to the trustee (x) an officers' certificate
setting forth estimates, made in good faith by a responsible financial
or accounting officer of Holding, of the cash costs estimated, at the
time such special charges are recorded, to be paid during any period
for such special charges and containing an undertaking of Holding to
deliver to the trustee, as soon as practicable after Holding determines
that such estimates are not appropriate, a supplemental officers'
certificate setting forth appropriate adjustments to such estimates and
(y) together with any officers' certificate or supplemental officers'
certificate referred to in clause (x), a report prepared by Holding's
independent auditors setting forth the procedures performed by such
auditors in connection with such special charges and the related cash
costs estimated to be paid during any period for such charges
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minus
(2) to the extent not deducted in calculating such Consolidated Net
Income, cash costs estimated to be paid during such period for special
charges taken during any period as set forth in the officers' certificate
most recently delivered to the trustee in respect of such special charges
pursuant to clause (1)(f) of this definition.
"Equity Interests" means any and all shares, interests, rights to purchase,
warrants, options, participations or other equivalents of or interests in
(however designated) corporate stock or other equity participations, including
partnership interests, whether general or limited, including any Preferred
Equity Interests.
"Exchangeable Equity Interests" of any Person means any Equity Interest which
is exchangeable for or convertible into another security (other than any Equity
Interest of such Person which is neither an Exchangeable Equity Interest nor a
Redeemable Equity Interest).
"Guarantor Subsidiary" means any Subsidiary (other than a Non-Recourse
Subsidiary) that executes a supplement to the indenture pursuant to which such
Subsidiary jointly and severally unconditionally guarantees the due and
punctual payment and performance of the Obligations and assumes the other
obligations of a Guarantor Subsidiary pursuant to the indenture, in the manner
provided by the indenture.
"Interest Rate Protection Agreement" means any interest rate swap agreement,
interest rate cap agreement or other financial agreement or arrangement
designed to protect AK Steel or any Subsidiary against fluctuations in interest
rates.
"Inventory" of any Person means any and all inventory of any kind of such
Person, including without limitation any or all of the following: inventory,
merchandise, goods and other tangible personal property that are held for sale
or lease by such Person; all materials used or consumed in the business of such
Person, but excluding from the foregoing equipment of such Person; all
trademarks, servicemarks, trade names and similar intangible property owned or
used by such Person in its business, together with the goodwill of the business
symbolized thereby and all rights relating thereto ("Intangible Property"); and
all books and records relating to the foregoing and the proceeds thereof.
"Investment" in any Person means any loan or advance to, any acquisition of
Equity Interests, equity interest, obligation or other security of, or capital
contribution or other investment in, such Person.
"Issue" means issue, assume, guarantee, incur or otherwise become liable for;
provided, however, that any Debt or Equity Interests of a Person existing at
the time such Person becomes a Subsidiary (whether by merger, consolidation,
acquisition or otherwise) shall be deemed to be issued by such Subsidiary at
the time it becomes a Subsidiary.
"JV Subsidiary" means a Guarantor Subsidiary which (1) was created or became
a Subsidiary after the date on which the notes were originally issued and (2)
has not acquired any assets directly or indirectly from AK Steel or any
Subsidiary, other than (a) cash constituting a Restricted Payment or (b)
assets, in an Asset Disposition, which were acquired by AK Steel and its
Subsidiaries within one year prior to such Asset Disposition.
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"Net Available Cash" from an Asset Disposition means cash payments received
(including any cash payments received by way of deferred payment of principal
pursuant to a note or installment receivable or otherwise, but only as and when
received, but excluding any other consideration received in the form of
assumption by the acquiring Person of Debt or other obligations relating to
such properties or assets or received in any other noncash form) therefrom, in
each case net of all legal, title and recording tax expenses, commissions and
other fees and expenses incurred, and all Federal, state, provincial, foreign
and local taxes required to be accrued as a liability under generally accepted
accounting principles, as a consequence of such Asset Disposition, and in each
case net of all payments made on any Debt that is secured by any assets subject
to such Asset Disposition, in accordance with the terms of any lien upon or
other security agreement of any kind with respect to such assets, or which must
by its terms, or in order to obtain a necessary consent to such Asset
Disposition, or by applicable law be repaid out of the proceeds from such Asset
Disposition, and net of all distributions and other payments required to be
made to minority interest holders in Subsidiaries or joint ventures as a result
of such Asset Disposition.
"Net Cash Proceeds" with respect to any issuance or sale of Equity Interests
means the cash proceeds of such issuance or sale net of attorneys' fees,
accountants' fees, underwriters' or placement agents' fees, discounts or
commissions and brokerage, consultant and other fees actually incurred in
connection with such issuance or sale and net of taxes paid or payable as a
result thereof.
"Non-Convertible Equity Interests" means, with respect to any Person, any
non-convertible Equity Interests of such Person and any Equity Interests of
such Person convertible solely into non-convertible Equity Interests of such
Person; provided, however, that Non-Convertible Equity Interests shall not
include any Redeemable Equity Interests or Exchangeable Equity Interests.
"Non-Recourse Debt" means Debt or that portion of Debt (1) issued to a Person
other than Holding, AK Steel or any Subsidiary (other than a Non-Recourse
Subsidiary) and (2) no default with respect to which (including any rights
which the holders thereof may have to take enforcement action against a Non-
Recourse Subsidiary) would permit (upon notice, lapse of time or both) any
holder of any other Debt of Holding, AK Steel or any Subsidiary (other than a
Non-Recourse Subsidiary) to declare a default on such other Debt or cause the
payment thereof to be accelerated or payable prior to its stated maturity.
"Non-Recourse Subsidiary" means a Subsidiary of AK Steel in respect of any
obligation of which neither Holding, AK Steel nor any Subsidiary (other than
another Non-Recourse Subsidiary) has issued a Guarantee, and which
(1) has not acquired any assets directly or indirectly from Holding, AK
Steel or any Subsidiary (other than (a) cash constituting a Restricted
Payment and (b) Accounts Receivable that have been sold or otherwise
transferred to such Subsidiary in an Accounts Receivable financing for AK
Steel or such other Subsidiary),
(2) only owns properties acquired after the date on which the notes were
originally issued and
(3) has no Debt other than Non-Recourse Debt and Debt issued to AK Steel
or a Significant Subsidiary which constitutes a Permitted Investment under
clause (5) of the definition of Permitted Investment.
"Normal Replacement Assets" means any assets other than Special Assets.
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"Obligations" means the principal of, premium, if any, and interest on the
notes and all other amounts due and payable under the indenture and the notes
and all other obligations and liabilities of AK Steel whether direct or
indirect, absolute or contingent, due or to become due, now existing or
hereafter issued, which may arise under, out of or in connection with the
indenture and the notes or any other documents made, delivered or given in
connection therewith, whether on account of principal, premium, if any,
interest, reimbursement obligations, fees, indemnities, costs, expenses
(including without limitation all fees and disbursements of counsel to the
trustee or the holders for which AK Steel has become obligated pursuant to the
terms of the indenture) or otherwise whether or not an allowable claim against
AK Steel under the Bankruptcy Law or otherwise enforceable against AK Steel,
and including, in any event, interest and other liabilities accruing or arising
after the filing by or against AK Steel of a petition under the Bankruptcy Law
or that would have so accrued or arisen but for the filing of such a petition.
"Permitted Credit Facility" or "Facilities" means any agreement or agreements
providing for
(1) the making of a loan or loans or the advancing of credit,
(2) the sale of accounts receivable of AK Steel or any Significant
Subsidiary under any asset securitization facility or other financing
facility for the financing of accounts receivable of AK Steel or any
Significant Subsidiary or
(3) the issuance of letters of credit and/or the creation of bankers'
acceptances,
under which the aggregate amount that may be issued or otherwise obtained,
in the case of clauses (1), (2) and (3), is based upon eligible accounts
receivable and eligible Inventory and the aggregate principal amount of
Debt, or (in the case of clause (2)) aggregate Investments outstanding,
excluding Permitted Investments under clause (5) or (6) of the definition
of "Permitted Investments" in respect of any such asset securitization
facility, shall not at any time exceed the greater of (a) $75.0 million and
(b) an amount equal to
(w) 100% of the book value of the consolidated accounts receivable of
AK Steel and its Significant Subsidiaries that are Guarantor
Subsidiaries or Non-Recourse Subsidiaries, plus
(x) 100% of the book value (excluding last-in-first-out reserves) of
the consolidated Inventory of AK Steel and its Subsidiaries that are
Guarantor Subsidiaries, minus
(y) the aggregate principal amount of outstanding Debt secured by any
accounts receivable or Inventory of AK Steel or any of its
Subsidiaries, other than Debt outstanding under any Permitted Credit
Facility, minus
(z) other outstanding Investments (other than Debt under a Permitted
Credit Facility or Debt described in clause (y) above or Permitted
Investments under clause (5) and (6) of the definition of "Permitted
Investments") under any asset securitization or similar facility in
respect of accounts receivable or Inventory of AK Steel or any of its
Subsidiaries.
"Permitted Investments" means:
(1) Cash Equivalents;
(2) Investments in AK Steel or a Wholly Owned Guarantor Subsidiary (or
any Person which will become a Wholly Owned Guarantor Subsidiary as a
result of such Investment);
(3) loans and reasonable advances to employees of AK Steel or its
Subsidiaries for travel, entertainment and relocation expenses in the
ordinary course of business;
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(4) Investments in obligations the interest on which is excluded from
income for Federal or state income tax purposes and that have been issued
or guaranteed by any state of the United States of America, the District of
Columbia or the Commonwealth of Puerto Rico or any political subdivision,
agency, authority or instrumentality of any of the foregoing, provided,
that at the date of acquisition of any such obligation (a) its remaining
life to maturity shall be less than one year and (b) the issuer or
guarantor thereof shall have one of the two highest short-term debt ratings
obtainable from each of Standard & Poor's and Moody's Investors Service,
Inc.;
(5) Investments resulting from the transfer of accounts receivable of AK
Steel or its Significant Subsidiaries that are Guarantor Subsidiaries to a
Non-Recourse Subsidiary, the only business of which is the acquisition and
financing of such Accounts Receivable under a Permitted Credit Facility;
(6) Investments resulting from the transfer of Accounts Receivable of AK
Steel or its Significant Subsidiaries that are Guarantor Subsidiaries (or
Non-Recourse Subsidiaries) to a trust, the only purpose of which is the
acquisition and financing of such accounts receivable, provided that the
aggregate amount of outstanding Debt issued by such trust to, and
outstanding Investments in such trust made by, Persons other than AK Steel
and its Significant Subsidiaries that are Guarantor Subsidiaries or Non-
Recourse Subsidiaries shall not at any time exceed the greater of $75.0
million and an amount equal to
(w) 85% of the book value of the consolidated accounts receivable of
AK Steel and its Significant Subsidiaries that are Guarantor
Subsidiaries or Non-Recourse Subsidiaries, plus
(x) 100% of the book value (excluding last-in-first-out reserves) of
the consolidated Inventory of AK Steel and its Subsidiaries that are
Guarantor Subsidiaries, minus
(y) the aggregate principal amount of outstanding Debt secured by any
accounts receivable or Inventory of AK Steel or any of its
Subsidiaries, other than to the extent included in clause (z) below,
minus
(z) other outstanding Investments (other than Investments in such
trust) under any asset securitization or similar facility in respect of
accounts receivable or Inventory of AK Steel or any of its
Subsidiaries; and
(7) until December 31, 1999, Investments, not to exceed $200.0 million at
any time, in publicly traded debt obligations issued or guaranteed by a
corporation (other than AK Steel) organized under the laws of any state of
the United States of America and subject to the reporting requirements of
Section 13 or 15(d) of the Exchange Act, provided that
(a) such debt obligations are acquired by AK Steel in the open market
and not directly from the issuer thereof or an affiliate of such issuer
or from an underwriter thereof,
(b) such debt obligations, at the date of acquisition thereof by AK
Steel, shall have a remaining life to maturity of not more than five
years, shall provide for payments of principal and interest solely in
cash and shall be rated at least BB by Standard & Poor's and Ba2 by
Moody's Investors Service, Inc. and
(c) not more than $15.0 million of such Investments at any time shall
consist of debt obligations issued or guaranteed by the same
corporation and not more than 20% of such
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Investments at any time shall consist of debt obligations issued or
guaranteed by corporations within the same industry (as determined by
Primary Standard Industrial Classification Code).
"Permitted Liens" means, with respect to any Person:
(1) pledges or deposits by such Person under workers' compensation laws,
unemployment insurance laws or similar legislation, or good faith deposits
in connection with bids, tenders, contracts (other than for the payment of
Debt) or leases to which such Person is a party, or deposits to secure
public or statutory obligations of such Person or deposits or cash or
United States government bonds to secure surety or appeal bonds to which
such Person is a party, or deposits as security for contested taxes or
import duties or for the payment of rent, in each case incurred in the
ordinary course of business;
(2) liens imposed by law, such as carriers', warehousemen's and
mechanics' liens, in each case for sums not yet due or being contested in
good faith by appropriate proceedings; or other liens arising out of
judgments or awards against such Person with respect to which such Person
shall then be proceeding with an appeal or other proceedings for review or
time for appeal has not yet expired;
(3) liens for property taxes not yet subject to penalties for non-payment
or which are being contested in good faith by appropriate proceedings;
(4) liens in favor of issuers of surety bonds or letters of credit issued
pursuant to the request of and for the account of such Person in the
ordinary course of its business; provided, however, that such letters of
credit do not constitute Debt;
(5) survey exceptions, encumbrances, easements or reservations of, or
rights of others for, licenses, rights of way, sewers, electric lines,
telegraph and telephone lines and other similar purposes, or zoning or
other restrictions as to the use of real properties or liens incidental to
the conduct of the business of such Person or to the ownership of its
properties which were not incurred in connection with Debt and which do not
in the aggregate materially adversely affect the value of said properties
or materially impair their use in the operation of the business of such
Person;
(6) liens securing an Interest Rate Protection Agreement so long as the
related Debt is, and is permitted to be under the Indenture, secured by a
Lien on the same property securing the Interest Rate Protection Agreement;
and
(7) leases and subleases of real property which do not interfere with the
ordinary conduct of the business of AK Steel or any of its Subsidiaries,
and which are made on customary and usual terms applicable to similar
properties.
"Person" means any individual, company, limited liability company,
partnership, joint venture, association, joint-stock company, trust,
unincorporated organization, government or any agency or subdivision thereof or
any other entity.
"Preferred Equity Interests" as applied to the Equity Interests of any Person
means Equity Interests of any class or classes (however designated) which is
preferred as to the payment of dividends or distributions, or as to the
distribution of assets upon any voluntary or involuntary liquidation or
dissolution of such Person, over Equity Interests of any other class of such
Person.
"Public Equity Offering" means an underwritten primary public offering of
common stock of Holding pursuant to an effective registration statement under
the Securities Act.
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"Redeemable Equity Interests" means any Equity Interest that by its terms or
otherwise is required to be redeemed on or prior to the first anniversary of
the stated maturity of the notes or is redeemable at the option of the holder
thereof at any time on or prior to the first anniversary of the stated maturity
of the notes.
"Refinancing Debt" means Debt issued by AK Steel issued in exchange for, or
the net proceeds of which are used to extend, refinance, renew, replace,
defease or refund, any Debt of AK Steel, including Debt that is issued by AK
Steel in exchange for, or the net proceeds of which are used to extend,
refinance, renew, replace, defease or refund, Refinancing Debt; provided,
however, that (1) the principal amount of the Debt so issued shall not exceed
the principal amount of, and premiums, if any, and accrued interest with
respect to, the Debt so exchanged, extended, refinanced, renewed, replaced,
defeased or refunded by application of the net proceeds of the Debt so issued,
and reasonable fees, expenses, commissions and costs incurred in connection
with the issuance of such Debt and (2) the Debt so issued (a) shall not mature
prior to the Stated Maturity of the Debt so exchanged, extended, refinanced,
renewed, replaced, defeased or refunded and (b) shall have an Average Life
equal to or greater than the remaining Average Life of the Debt so exchanged,
extended, refinanced, renewed, replaced, defeased or refunded.
"Sale/Leaseback Transaction" means an arrangement relating to property now
owned or hereafter acquired whereby AK Steel or a Subsidiary transfers such
property to a Person and AK Steel or a Subsidiary leases it from such Person.
"Significant Subsidiary" means
(1) any domestic Subsidiary of AK Steel (other than a Non-Recourse
Subsidiary) that, at the time of determination, either (a) had assets that,
as of the date of the Holding's most recent quarterly consolidated balance
sheet, constituted at least 5% of Holding's total assets on a consolidated
basis as of such date, or (b) had revenues for the 12-month period ending
on the date of Holding's most recent quarterly consolidated statement of
income which constituted at least 5% of Holding's total revenues on a
consolidated basis for such period,
(2) any foreign Subsidiary (other than a Non-Recourse Subsidiary) of AK
Steel that at the time of determination either (a) had assets which, as of
the date of Holding's most recent quarterly consolidated balance sheet,
constituted at least 5% of Holding's total assets on a consolidated basis
as of such date, in each case determined in accordance with generally
accepted accounting principles or (b) had revenues for the 12-month period
ending on the date of Holding's most recent quarterly consolidated
statement of income which constituted at least 5% of Holding's total
revenues on a consolidated basis for such period, or
(3) any Subsidiary (other than a Non-Recourse Subsidiary) of AK Steel
that, if merged with all Defaulting Subsidiaries of AK Steel, would at the
time of determination either (a) have had assets which, as of the date of
Holding's most recent quarterly consolidated balance sheet, would have
constituted at least 10% of Holding's total assets on a consolidated basis
as of such date or (b) have had revenues for the 12-month period ending on
the date of Holding's most recent quarterly consolidated statement of
income which would have constituted at least 10% of Holding's total
revenues on a consolidated basis for such period (each such determination
being made in accordance with generally accepted accounting principles).
"Special Assets" means a capital asset, or series of related capital assets,
with an aggregate purchase price in excess of $20.0 million that enhances the
competitiveness or productivity of the business of AK Steel and its
Subsidiaries or is required so that AK Steel and its Subsidiaries will be able
to remain in compliance with all material requirements of applicable law.
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"Subordinated Obligation" means any Debt of AK Steel (whether outstanding on
the date on which the notes were originally issued or thereafter issued) which
is subordinate or junior in right of payment to the notes.
"Subsidiary" of any Person means any corporation, association, partnership or
other business entity of which more than 50% of the total voting power of
Equity Interests or other interests (including partnership interests) entitled
(without regard to the occurrence of any contingency) to vote in the election
of directors, managers or trustees thereof is at the time owned or controlled,
directly or indirectly, through one or more intermediaries, or both, by such
Person. Unless otherwise qualified, all references to a "Subsidiary" or to
"Subsidiaries" shall refer to a Subsidiary or Subsidiaries of AK Steel.
"Voting Equity Interests" of a corporation or other entity means all classes
of Equity Interests of a corporation or other entity then outstanding and
normally entitled to vote in the election of directors or other governing body
of such corporation or other entity.
"Wholly Owned Guarantor Subsidiary" means any Wholly Owned Subsidiary that is
a Guarantor Subsidiary.
"Wholly Owned Subsidiary" of a Person means a Subsidiary of such Person
(other than a Non-Recourse Subsidiary) all the Equity Interests (other than
non-voting, money market preferred shares) of which (other than directors'
qualifying shares) are owned by such Person or another Wholly Owned Subsidiary
of such Person. Unless otherwise qualified, all references to a "Wholly Owned
Subsidiary" or to "Wholly Owned Subsidiaries" shall refer to a Wholly Owned
Subsidiary or Wholly Owned Subsidiaries of AK Steel.
Events of Default
The following will be Events of Default under the indenture:
(1) default in any payment of interest on any note when the same becomes
due and payable, and such default continues for a period of 30 days;
(2) default in the payment of the principal of any note when the same
becomes due and payable at its stated maturity, upon redemption, upon
declaration or otherwise;
(3) failure to redeem or purchase notes when required pursuant to the
indenture and the notes;
(4) failure to (a) comply with the covenant described under "--When AK
Steel or Any of Its Subsidiaries May Merge or Transfer Assets," (b) make or
consummate an Offer in accordance with the provisions of "--Material
Covenants--Limitation on Sales of Assets and Equity Interests of
Subsidiaries" or (c) make or consummate a Change in Control Offer in
accordance with the provisions of "--Change in Control Offer";
(5) failure to observe or comply with any of the agreements in the notes
or the Indenture (other than those referred to in clauses (1), (2), (3) or
(4) above), which continues for 60 days after there has been given to AK
Steel by the trustee or to AK Steel and the trustee by the holders of at
least 25% in principal amount of notes then outstanding a written notice
specifying such failure;
(6) Debt of AK Steel or any Significant Subsidiary is not paid within any
applicable grace period after final maturity or is accelerated by the
holders thereof because of a default, and the total amount of such Debt
unpaid or accelerated exceeds $10.0 million or its foreign currency
equivalent;
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(7) any guarantee of the notes issued by Holding or any Significant
Subsidiary ceases to be in full force and effect other than in accordance
with its terms, or Holding or any Significant Subsidiary or any Person
acting on behalf of Holding or such Significant Subsidiary shall deny or
disaffirm its obligations under its guarantee of the notes;
(8) certain events in bankruptcy, insolvency or reorganization with
respect to Holding, AK Steel or any Significant Subsidiary; and
(9) any judgment or decree for the payment of money in excess of $10.0
million is rendered against Holding, AK Steel or any Significant Subsidiary
and is not discharged and either (a) an enforcement proceeding has been
commenced by any creditor upon such judgment or decree or (b) there is a
period of 60 days following such judgment during which such judgment or
decree is not discharged, waived or the execution thereof stayed.
If an Event of Default shall occur and be continuing, either the trustee or
the holders of at least 25% in principal amount of the notes then outstanding
may accelerate the maturity of all notes and thereupon the principal of,
premium, if any, and any accrued and unpaid interest on the notes shall become
due and payable immediately; provided, that in the case of any bankruptcy,
insolvency or reorganization Event of Default, such amount shall become
immediately due and payable without any declaration or other act on the part of
the trustee or any holder. The holders of at least a majority in principal
amount of the then outstanding notes may, under certain circumstances, rescind
such acceleration and its consequences if the rescission would not conflict
with any judgment or decree and if all Events of Default, other than the
nonpayment of accelerated principal of, premium, if any, and interest on notes,
have been cured or waived as provided in the indenture. The holders of at least
a majority in principal amount of the then outstanding notes may waive any past
default under the Indenture, except a default in the payment of principal,
premium or interest on a note or default with respect to certain covenants
under the Indenture.
Subject to provisions for the indemnification of the trustee, the holders of
at least a majority in principal amount of the notes will have the right to
direct the time, method and place of conducting any proceeding for any remedy
available to the trustee or exercising any trust or power conferred on the
trustee, subject to certain limitations contained in the indenture.
No holder of any note will have any right to pursue any remedy with respect
to the indenture or the notes unless:
(1) that holder shall have previously given to the trustee written notice
of a continuing Event of Default;
(2) the holders of at least 25% in principal amount of the notes shall
have made written request to the trustee to pursue the remedy;
(3) that holder shall have offered the trustee reasonable indemnity
against any liability;
(4) the trustee shall have failed to comply with the request within 60
days after the receipt of such request and the offer of indemnity; and
(5) no written direction inconsistent with such request shall have been
given to the trustee during such 60-day period by the holders of at least a
majority in principal amount of the notes.
AK Steel, Holding as guarantor and any other guarantor of the notes will be
required to furnish to the trustee annually a statement as to the performance
by AK Steel and such guarantor of certain of the obligations under the
indenture and as to any default in such performance. Upon becoming
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aware of any default, AK Steel and each guarantor of the notes will be required
to deliver an officers' certificate to the trustee setting forth the details of
such default and the action which Holding, AK Steel or any other guarantor
proposes to take with respect thereto.
Modification and Waiver
Amendments of the indenture or the notes may be made by AK Steel, the
guarantors of the notes and the trustee with the consent of the holders of at
least a majority in principal amount of the notes; provided, however, that no
such modification or amendment may, without the consent of the holder of each
note affected thereby:
(1) reduce the amount of notes whose holders must consent to an
amendment;
(2) reduce the rate or extend the interest payment time of any note;
(3) reduce the principal amount of or extend the stated maturity of any
note;
(4) reduce the premium payable upon redemption or change the time at
which any note may be redeemed;
(5) change the currency of payment of any note;
(6) make any change in the provisions concerning waiver of Defaults by
holders of the notes or the rights of holders to receive payments of
principal or interest;
(7) make any change in provisions regarding Change in Control; or
(8) make any change in this provision.
Without the consent of any holder of the notes, AK Steel, the guarantors of
the notes and the trustee may amend the indenture or the notes:
(1) to cure any ambiguity, omission, defect or inconsistency;
(2) to comply with, among other things, the provisions discussed under
"--When AK Steel or Any of Its Subsidiaries May Merge or Transfer Assets";
(3) to provide for uncertificated notes in addition to or in place of
certificated notes as provided in the indenture;
(4) to add guarantees with respect to the Securities;
(5) to add to the covenants of AK Steel or the guarantors for the benefit
of the holders or to surrender any right or power conferred upon AK Steel
or the guarantors in the indenture;
(6) to reflect the release or addition of a guarantor pursuant to the
terms of the indenture;
(7) to comply with any requirements of the SEC in connection with
qualifying the indenture under the Trust Indenture Act; or
(8) to make any change that does not adversely affect the rights of any
holder of the notes.
When AK Steel or Any of Its Subsidiaries May Merge or Transfer Assets
AK Steel shall not
(1) consolidate with or merge with or into any other Person,
(2) permit any other Person to consolidate with or merge into (a) AK
Steel or (b) any of its Subsidiaries in a transaction in which such
Subsidiary (or successor Person) remains (or becomes) a Subsidiary,
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(3) directly or indirectly, transfer, convey, sell, lease or otherwise
dispose of all or substantially all of its properties and assets,
(4) directly or indirectly, (a) acquire Equity Interests or other
ownership interests of any other Person, other than as a Permitted
Investment as defined in clause (5) of the definition of Permitted
Investments, such that such Person becomes a Subsidiary or (b) purchase,
lease or otherwise acquire all or substantially all of the property and
assets of any Person or any existing business (whether existing as a
separate entity, subsidiary, division, unit or otherwise) of any Person, or
(5) permit any of its Subsidiaries to enter into any such transaction
unless:
(a) AK Steel or such Subsidiary shall be the continuing entity or the
resulting, surviving or transferee Person (if not AK Steel or such
Subsidiary) shall be a Person organized and existing under the laws of
the United States of America, any State thereof or the District of
Columbia and such Person shall expressly assume, by an indenture
supplemental to the indenture, executed and delivered to the trustee,
all the obligations of AK Steel or such Subsidiary, as the case may be,
under the notes and the indenture;
(b) Immediately after giving effect to such transaction (and treating
any Debt which becomes an obligation of the resulting, surviving or
transferee Person or any Subsidiary as a result of such transaction as
having been issued by such Person or such Subsidiary at the time of
such transaction), no Default shall have occurred and be continuing;
(c) Immediately after giving effect to such transaction, on a pro
forma basis, AK Steel (or the resulting, surviving or transferee Person
(if not AK Steel)) would be able to issue at least $1.00 of Debt
pursuant to the Consolidated EBITDA Coverage Ratio set forth in the
first paragraph of "--Material Covenants--Limitation on Debt";
(d) Immediately after giving effect to such transaction, Holding
shall have Consolidated Net Worth which is not less than the
Consolidated Net Worth of Holding immediately prior to such
transaction;
(e) Each guarantor, unless it is the other party to the transactions
described above, shall expressly confirm, by an indenture supplemental
to the indenture, executed and delivered to the trustee, that its
guarantee shall apply to such Person's obligations under the notes; and
(f) AK Steel shall have delivered to the trustee an officers'
certificate and an opinion of counsel, each stating that such
consolidation, merger or transfer and such supplemental indentures (if
any) comply with the indenture;
provided, however, that clauses (c) and (d) shall not apply to
(x) the consolidation or merger of any Wholly Owned Subsidiary with
or into any other Wholly Owned Subsidiary or AK Steel,
(y) the transfer, conveyance, sale, lease or other disposal
(including any disposition by means of a merger, consolidation or
similar transaction) of all or substantially all of the properties or
assets of a Non-Recourse Subsidiary or a Subsidiary which is not a
Significant Subsidiary or
(z) the merger of Holding into AK Steel.
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If after the date on which the old notes were originally issued any Person
shall become a Subsidiary (other than a Non-Recourse Subsidiary), that Person
shall
(1) unconditionally guarantee, by an indenture supplemental to the
indenture, executed and delivered to the trustee, all of AK Steel's
obligations under the notes on the terms set forth in the indenture and
(2) deliver to the trustee an opinion of counsel stating that such
supplemental indenture has been duly authorized and constitutes the
enforceable obligations of such Person.
Defeasance
AK Steel at any time may terminate all its obligations under the notes and
the indenture ("legal defeasance"), except for certain obligations, including
those relating to the defeasance trust and obligations to register the transfer
or exchange of the notes, to replace mutilated, destroyed, lost or stolen notes
and to maintain a registrar and paying agent in respect of the notes. AK Steel
at any time may terminate its obligations under the covenants described under
"--Material Covenants" and "--Change in Control Offer" above ("covenant
defeasance"). AK Steel may exercise the legal defeasance option notwithstanding
the prior exercise of the covenant defeasance option. If AK Steel exercises the
legal defeasance option, payment of the notes may not be accelerated because of
an Event of Default. If AK Steel exercises the covenant defeasance option,
payment of the notes may not be accelerated because of certain Events of
Default by AK Steel specified in clause (4) or (5) of the first paragraph of
"--Events of Default" above.
In order to exercise its defeasance options, AK Steel must irrevocably
deposit in trust (the "defeasance trust") with the trustee money or U.S.
Government Obligations for the payment of principal of, premium, if any, and
interest on the notes to maturity or redemption, as the case may be, and must
comply with certain other conditions, including delivery to the trustee of an
opinion of counsel to the effect that holders of the notes will not recognize
income, gain or loss for federal income tax purposes as a result of such
defeasance and will be subject to federal income tax on the same amounts, in
the same manner and at the same times as would have been the case if such
defeasance had not occurred (and, in the case of legal defeasance only, such
opinion of counsel must be based on a ruling of the Internal Revenue Service or
other change in applicable federal income tax law).
Concerning the Trustee
The trustee may become owner or pledgee of notes and may otherwise deal with
either Holding or Affiliates of Holding with the same rights it would have if
it were not trustee.
The Indenture provides that in case an Event of Default shall occur and be
continuing, the Trustee will exercise the rights and powers vested in it by the
Indenture and use the same degree of care and skill in their exercise as a
prudent Person would exercise or use under the circumstances in the conduct of
such Person's own affairs.
Fifth Third Bank also serves as trustee under the indenture governing AK
Steel's 9 1/8% Senior Notes Due 2006, and as transfer agent for Holding's
common stock.
Governing Law
The rights and duties of AK Steel, Holding and the trustee under the
indenture, the notes and Holding's guarantee of the notes are governed by the
laws of the State of New York.
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FEDERAL INCOME TAX CONSEQUENCES
The following is a summary of the material United States federal income tax
consequences generally applicable to the exchange offer. The statements of
United States tax law set forth below are based on the laws, regulations and
administrative and judicial decisions applicable as of the date of this
prospectus, and are subject to any changes in relevant United States
authorities occurring after that date. Any such changes, which could be
retroactive, could affect the continuing validity of this discussion.
The exchange of old notes for new notes in the exchange offer will not be a
taxable exchange for U.S. federal income tax purposes. As a result, there will
be no federal income tax consequences to a holder exchanging an old
unregistered note for a new registered note in the exchange offer. A holder
should have the same adjusted basis and holding period in the new note as it
had in the old note immediately before the exchange.
The preceding paragraph summarizes certain of the material U.S. federal
income tax consequences associated with the exchange of the old notes for
registered notes in the exchange offer. This summary applies only to those
persons who are the initial holders of old notes, who acquired old notes for
cash and who hold old notes as capital assets, and assumes that the old notes
were not issued with "original issue discount," as defined in the Internal
Revenue Code of 1986. This summary also does not address the U.S. federal
income tax consequences of the exchange of notes not held as capital assets
within the meaning of Section 1221 of the Code, or the U.S. federal income tax
consequences to investors subject to special treatment under the U.S. federal
income tax laws, such as dealers in securities or foreign currency, tax-exempt
entities, banks, thrifts, insurance companies, persons that hold the notes as
part of a "straddle," a "hedge" against currency risk or a "conversion
transaction," persons that have a "functional currency" other than the U.S.
dollar and investors in pass-through entities. It also does not address any
consequences arising under U.S. federal gift and estate taxes or under the tax
laws of any state, local or foreign jurisdiction.
Persons considering the exchange of old notes for registered notes in the
exchange offer should consult their own tax advisors concerning the application
of United States federal income tax laws, as well as the laws of any state,
local, or other taxing jurisdiction applicable to their particular situations.
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PLAN OF DISTRIBUTION
Each broker-dealer that receives new registered notes for its own account
pursuant to the exchange offer must acknowledge that it will deliver a
prospectus in connection with any resale of those notes. This prospectus, as it
may be amended or supplemented from time to time, may be used by a broker-
dealer in connection with resales of registered notes received in exchange for
old notes that had been acquired as a result of market-making or other trading
activities. We have agreed that, for a period of 180 days after the expiration
date of the exchange offer, we will make this prospectus, as it may be amended
or supplemented, available to any broker-dealer for use in connection with any
such resale.
We will not receive any proceeds from any sales of notes by broker-dealers.
Notes received by broker-dealers for their own account pursuant to the exchange
offer may be sold from time to time in one or more transactions in the over-
the-counter market, in negotiated transactions, through the writing of options
on those notes or a combination of those methods, at market prices prevailing
at the time of resale, at prices related to prevailing market prices or at
negotiated prices. Any such resale may be made directly to purchasers or to or
through brokers or dealers who may receive compensation in the form of
commissions or concessions from any such selling broker-dealer or the
purchasers of any such notes. Any broker-dealer that resells notes that it
received for its own account pursuant to the exchange offer and any broker or
dealer that participates in a distribution of those notes may be deemed to be
an "underwriter" within the meaning of the Securities Act and any profit on any
such resale of those notes and any commission or concessions received by any
participating broker or dealer may be deemed to be underwriting compensation
under the Securities Act. The letter of transmittal states that, by
acknowledging that it will deliver and by delivering a prospectus, a broker-
dealer will not be deemed to admit that it is an "underwriter" within the
meaning of the Securities Act.
LEGAL MATTERS
The validity of the notes offered hereby will be passed upon for us by Weil,
Gotshal & Manges LLP, New York, New York.
EXPERTS
The financial statements incorporated in this prospectus by reference from AK
Steel Holding Corporation's Annual Report on Form 10-K for the year ended
December 31, 1998 have been audited by Deloitte & Touche LLP, independent
auditors, as stated in their report, which also is incorporated herein by
reference, and have been so incorporated in reliance upon the report of that
firm given upon their authority as experts in accounting and auditing.
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FORWARD-LOOKING STATEMENTS
This prospectus includes "forward-looking statements" within the meaning of
Section 27A of the Securities Act and Section 21E of the Exchange Act. All
statements in this prospectus, including statements in the 1998 Annual Report
on Form 10-K of AK Steel Holding Corporation that we have incorporated in this
prospectus by reference, other than statements of historical fact, including,
without limitation, the statements under "Prospectus Summary--Rockport Works"
and the statements in the 1998 Annual Report on Form 10-K under "Management's
Discussion and Analysis of Financial Condition and Results of Operations--
Liquidity and Capital Resources," regarding AK Steel's profitability, financial
position, liquidity and capital requirements, as well as the anticipated
product mix, costs, tonnage capabilities, performance characteristics and
benefits of Rockport Works, are forward-looking statements. The words
"estimate," "project," "believe," "anticipate," "intend," "expect" and similar
expressions used in this prospectus and the 1998 Annual Report on Form 10-K are
intended to identify forward-looking statements. Although we believe that the
expectations reflected in those forward-looking statements are reasonable, we
cannot assure you that those expectations will prove to have been correct.
Important factors that could cause actual results to differ materially from
management's expectations are disclosed in this prospectus, including, without
limitation, under "Risk Factors." These factors include, but are not
necessarily limited to, the following:
. the effect of unplanned outages with respect to our operations;
. the highly cyclical nature of the domestic steel industry and many of the
markets supplied by us and the effect of that cyclicality on prices and volume;
. the potential impact of strikes or work stoppages at facilities of our
customers and suppliers;
. the sensitivity of our results to changes in the prices obtained by us for
our products;
. intense competition due to world steel overcapacity, new domestic capacity
over the next several years and imports;
. the high capital requirements associated with integrated steel facilities;
. the significant costs associated with environmental controls and
remediation expenditures and the uncertainty of future environmental control
requirements;
. employment matters, including costs and uncertainties associated with our
collective bargaining agreements, and employee postretirement obligations;
. our highly leveraged capital structure;
. the effect of our customers and suppliers not becoming Year 2000 compliant
in a timely manner;
. the effect of existing and possible future lawsuits filed against us; and
. general economic and business conditions, including changes in the
condition of the capital markets and equity markets.
All subsequent written and oral forward-looking statements by or attributable
to AK Steel or persons acting on our behalf are expressly qualified in their
entirety by these factors.
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[LOGO]
AK Steel Corporation
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PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 20. Indemnification of Directors and Officers
AK Steel Corporation and AK Steel Holding Corporation ("Holding") are each
Delaware corporations. Subsection (b)(7) of Section 102 of the Delaware
General Corporation Law (the "DGCL"), enables a corporation in its original
certificate of incorporation or an amendment thereto to eliminate or limit the
personal liability of a director to the corporation or its stockholders for
monetary damages for violations of the director's fiduciary duty, except (i)
for any breach of the director's duty of loyalty to the corporation or its
stockholders, (ii) for acts or omissions not in good faith or which involve
intentional misconduct or a knowing violation of law, (iii) pursuant to
Section 174 of the DGCL (providing for liability of directors for unlawful
payment of dividends or unlawful stock purchases or redemptions) or (iv) for
any transaction from which a director derived an improper personal benefit.
The Certificate of Incorporation of each of AK Steel and Holding has
eliminated the personal liability of its directors to the fullest extent
permitted by law.
Subsection (a) of Section 145 of the DGCL empowers a corporation to
indemnify any director or officer, or former director or officer, who was or
is a party or is threatened to be made a party to any threatened, pending or
completed action, suit or proceeding, whether civil, criminal, administrative
or investigative (other than an action by or in the right of the corporation)
by reason of the fact that such person is or was a director or officer of the
corporation, or is or was serving at the request of the corporation as a
director, officer, employee or agent of another corporation, partnership,
joint venture, trust or other enterprise, against expenses (including
attorneys' fees), judgments, fines and amounts paid in settlement actually and
reasonably incurred in connection with such action, suit or proceeding
provided that such director or officer acted in good faith in a manner
reasonably believed to be in, or not opposed to, the best interests of the
corporation, and, with respect to any criminal action or proceeding, provided
further that such director or officer had no reasonable cause to believe his
conduct was unlawful.
Subsection (b) of Section 145 empowers a corporation to indemnify any
director or officer, or former director or officer, who was or is a party or
is threatened to be made a party to any threatened, pending or completed
action or suit by or in the right of the corporation to procure a judgment in
its favor by reason of the fact that such person acted in any of the
capacities set forth above, against expenses (including attorneys' fees)
actually and reasonably incurred in connection with the defense or settlement
of such action or suit provided that such director or officer acted in good
faith and in a manner he reasonably believed to be in, or not opposed to, the
best interests of the corporation, except that no indemnification may be made
in respect of any claim, issue or matter as to which such director or officer
shall have been adjudged to be liable to the corporation unless and only to
the extent that the Court of Chancery or the court in which such action or
suit was brought shall determine upon application that, despite the
adjudication of liability but in view of all of the circumstances of the case,
such director or officer is fairly and reasonably entitled to indemnity for
such expenses which the Court of Chancery or such other court shall deem
proper.
Section 145 further provides that to the extent a director or officer of a
corporation has been successful in the defense of any action, suit or
proceeding referred to in subsections (a) or (b) or in the defense of any
claim, issue or matter therein, he shall be indemnified against expenses
(including attorneys' fees) actually and reasonably incurred by him in
connection therewith; that indemnification and advancement of expenses
provided for, by, or granted pursuant to, Section 145 shall not be deemed
exclusive of any other rights to which the indemnified party may be entitled;
and empowers the corporation to purchase and maintain insurance on behalf of
any person who is or was a director or officer of the corporation, or is or
was serving at the request of the corporation as a director, officer, employee
or agent of another corporation, partnership, joint venture, trust or other
enterprise against any liability asserted against him or incurred by him in
any such capacity, or arising out of his status as such, whether or not the
corporation would have the power to indemnify him against such liabilities
under Section 145.
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Article Seven of the Certificate of Incorporation of each of AK Steel and
Holding states that the corporation shall indemnify any person who was or is a
party or is threatened to be made a party to, or testifies in, any threatened,
pending, or completed action, suit or proceeding, whether civil, criminal,
administrative or investigative in nature, by reason of the fact that such
person is or was a director, officer or employee of the corporation, or is or
was serving at the request of the corporation as a director, officer or
employee of another corporation, partnership, joint venture, trust or other
enterprise, against expenses (including attorneys' fees), judgments, fines and
amounts paid in settlement actually and reasonably incurred by him in
connection with such action, suit or proceeding to the full extent permitted
by law, and the corporation may adopt by-laws or enter into agreements with
any such person for the purpose of providing such indemnification.
Item 21. Exhibits and Financial Statement Schedules.
(a) Exhibits
<TABLE>
<CAPTION>
Exhibit
Number Description
------- -----------
<C> <S>
4.1 --Indenture, dated as of December 17, 1996 (the "1996 Indenture"),
relating to AK Steel's 9 1/8% Senior Notes Due 2006 (including form of
notes) (incorporated herein by reference to Exhibit 4.1 to AK Steel's
Registration Statement on Form S-4, No. 333-19781 ("Registration No. 333-
19781")).
4.2 --Indenture, dated as of February 10, 1999, relating to AK Steel's 7 7/8%
Senior Notes Due 2009 (incorporated herein by reference to Exhibit 1 to
Holding's Current Report on Form 8-K dated February 17, 1999.
4.3 --Form of Note Purchase Agreement, dated as of December 17, 1996, with
respect to AK Steel's Senior Secured Notes Due 2004 (incorporated herein
by reference to Exhibit 4.5 to Registration No. 333-19781).
5 --Opinion of Weil, Gotshal & Manges LLP.*
10.1 --Form of Executive Officer Severance Agreement (incorporated herein by
reference to Exhibit 10.4 to Holding's Annual Report on Form 10-K for the
year ended December 31, 1997).
10.2 --Form of Executive Officer Severance Agreement of Richard M. Wardrop, Jr.
(incorporated herein by reference to Exhibit 10.5 to Holding's Annual
Report on Form 10-K for the year ended December 31, 1997).
10.3 --Form of Executive Officer Severance Agreement of James L. Wareham
(incorporated herein by reference to Exhibit 10.6 to Holding's Annual
Report on Form 10-K for the year ended December 31, 1997).
10.4 --Annual Management Incentive Plan (incorporated herein by reference to
Exhibit 10.7 to Holding's Annual Report on Form 10-K for the year ended
December 31, 1998).
10.5 --Stock Incentive Plan (incorporated herein by reference to Exhibit 10.8
to Holding's Annual Report on Form 10-K for the year ended December 31,
1998).
10.6 --Executive Minimum and Supplemental Retirement Plan (incorporated herein
by reference to Exhibit 10.17 to Holding's Registration Statement on Form
S-1, No. 333-83792 ("Registration No. 33-83792")).
</TABLE>
II-2
<PAGE>
<TABLE>
<CAPTION>
Exhibit
Number Description
------- -----------
<C> <S>
10.7 --Registration Rights Agreement, dated as of April 7, 1994, among
Holding and certain subsidiaries of Kawasaki (incorporated herein
by reference to Exhibit 10.19 to Registration No. 33-83792).
10.8 --Receivables Purchase Agreement, dated as of December 1, 1994 by
and between AK Steel and AK Acquisition Receivables Ltd., as
successor to AK Steel Receivables, Inc. (incorporated herein by
reference to Exhibit 10.23 to Registration No. 33-86678).
10.9 --Purchase and Servicing Agreement, dated as of December 1, 1994,
among AK Acquisition Receivables Ltd., as successor to AK Steel
Receivables Inc., AK Steel, the institutions from time to time
party thereto and PNC Bank, Ohio, National Association
(incorporated herein by reference to Exhibit 10.24 to Registration
No. 33-86678).
10.10 --Amendment No. 1 to the Purchase and Servicing Agreement, dated as
of November 17, 1995, among AK Steel, AK Acquisition Receivables
Ltd., as successor to AK Steel Receivables, Inc., the purchasers
party thereto and PNC Bank, Ohio, National Association
(incorporated herein by reference to Exhibit 10.11(a) to
Registration No. 333-19781).
10.11 --Consent, Amendment and Assumption Agreement to the Receivables
Purchase Agreement and the Purchase and Servicing Agreement, dated
as of December 31, 1996, among AK Steel, AK Steel Receivables
Inc., AK Acquisition Receivables Ltd., AKSR Investments, Inc., the
purchasers party thereto and PNC Bank, Ohio, National Association
(incorporated herein by reference to Exhibit 10.11(b) to
Registration No. 333-19781).
10.12 --Letter Agreement dated July 31, 1995, between Holding and
Kawasaki (incorporated herein by reference to Exhibit 10 to Post-
Effective Amendment No. 2 on Form S-3 to Holding's Registration
Statement on Form S-1, Registration No. 33-86678).
10.13 --Deferred Compensation Plan for Management (incorporated herein by
reference to Exhibit 10.29 to Holding's Annual Report on Form 10-K
for the year ended December 31, 1995.
10.14 --Deferred Compensation Plan for Directors (incorporated herein by
reference to Exhibit 10.30 to Holding's Annual Report on Form 10-K
for the year ended December 31, 1995.
10.15 --Amendment, dated July 10, 1997, to the Receivables Purchase
Agreement and the Purchase and Servicing Agreement (incorporated
herein by reference to Exhibit 10.15 to Holding's Annual Report on
Form 10-K for the year ended December 31, 1997).
10.16 --Rights Agreement, dated as January 23, 1996, between Holding and
The Bank of New York as predecessor to Fifth Third Bank, as Rights
Agent, with respect to Holding's Stockholder Rights Plan
(incorporated by reference to Exhibit 1 to Holding's Registration
Statement on Form 8-A under the Securities Exchange Act of 1934,
as filed with the Commission on February 5, 1996).
10.17 --Substitution of Fifth Third Bank as Successor Rights Agent and
Amendment No. 1, dated September 15, 1997, to Rights Agreement
dated as of January 23, 1996 (incorporated herein by reference to
Exhibit 4.1 to Holding's Current Report on Form 8-K, dated
September 15, 1997).
10.18 --Instrument of Resignation, Appointment and Acceptance, dated as
of September 15, 1997, with respect to resignation of The Bank of
New York as Trustee and the appointment of The Fifth Third Bank as
Successor Trustee under the 1996 Indenture (incorporated herein by
reference to Exhibit 4.3 to Holding's Current Report on Form 8-K,
dated September 15, 1997).
</TABLE>
II-3
<PAGE>
<TABLE>
<CAPTION>
Exhibit
Number Description
------- -----------
<C> <S>
10.19 --Long Term Performance Plan (incorporated herein by reference to
Exhibit 10.23 to the Registrant's Annual Report on Form 10-K for
the year ended December 31, 1998).
10.20 --First Amendment, dated July 17, 1997, to Executive Minimum and
Supplemental Retirement Plan (incorporated herein by reference to
Exhibit 10.25 to Holding's Annual Report on Form 10-K for the year
ended December 31, 1997).
10.21 --Second Amendment, dated September 18, 1997, to Executive Minimum
and Supplemental Retirement Plan (incorporated herein by reference
to Exhibit 10.26 to Holding's Annual Report on Form 10-K for the
year ended December 31, 1997).
12 --Ratio of Earnings to Combined Fixed Charges.*
23.1 --Consent of Deloitte & Touche LLP.*
23.2 --Consent of Weil, Gotshal & Manges LLP (included in Exhibit 5).*
24 --Power of Attorney (included on signature pages).
25 --Statement of Eligibility on Form T-1 of Fifth Third Bank.*
99.1 --Form of Letter of Transmittal.*
</TABLE>
- --------
* Filed herewith.
(b) Schedules
All schedules are omitted as the required information is presented in
Holding's consolidated financial statements or related notes or such schedules
are not applicable.
Item 22. Undertakings.
(a) Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to directors, officers and controlling persons of
the registrants pursuant to the foregoing provisions, or otherwise, the
registrants have been advised that in the opinion of the Securities and
Exchange Commission such indemnification is against public policy as expressed
in the Act and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by a
registrant of expenses incurred or paid by a director, officer or controlling
person of that registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, the registrants will, unless
in the opinion of their counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question whether
such indemnification is against public policy as expressed in the Act and will
be governed by the final adjudication of such issue.
(b) Each of the undersigned registrants hereby undertakes to respond to
requests for information that is incorporated by reference into the Prospectus
pursuant to Item 4, 10(b), 11 or 13 of this form, within one business day of
receipt of such request, and to send the incorporated documents by first class
mail or other equally prompt means. This includes information contained in
documents filed subsequent to the effective date of the Registration Statement
through the date of responding to the request.
(c) Each of the undersigned registrants hereby undertakes to supply by means
of a post-effective amendment all information concerning a transaction, and
the company being acquired involved therein, that was not the subject of and
included in the Registration Statement when it became effective.
II-4
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended, AK
Steel Corporation has duly caused this Registration Statement to be signed on
its behalf by the undersigned, thereunto duly authorized, in the City of
Middletown, State of Ohio.
Date: April 1, 1999 AK STEEL CORPORATION
/s/ James L. Wainscott
By: _________________________________
James L. Wainscott
Vice President, Treasurer
and Chief Financial Officer
Power of Attorney
KNOW ALL MEN BY THESE PRESENTS that each person whose signature appears
below hereby constitutes Richard M. Wardrop, Jr., James L. Wainscott and
Donald B. Korade, and each of them, such person's true and lawful attorneys-
in-fact and agents, with full power of substitution, to sign for such person
and in such person's name, place and stead, in any and all capacities, any and
all amendments, (including post-effective amendments) to this Registration
Statement, and to file the same with the Securities and Exchange Commission,
granting unto each of said attorneys-in-fact and agents full power and
authority to do and perform each and every act and thing requisite to be done,
as fully to all intents and purposes as such person might or could do
personally, hereby ratifying and confirming all that said attorneys-in-fact
and agents, or any of them, or their respective substitutes, may lawfully do
or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, as amended, this
Registration Statement and the foregoing Power of Attorney has been signed by
the following persons in the capacities and on the dates indicated.
Signature Title Date
/s/ Richard M. Wardrop, Jr. Chairman and Chief April 1, 1999
- ------------------------------------- Executive Officer
Richard M. Wardrop, Jr. (Principal
Executive Officer)
/s/ James L. Wainscott Vice President, April 1, 1999
- ------------------------------------- Treasurer and Chief
James L. Wainscott Financial Officer
(Principal
Financial Officer)
/s/ Donald B. Korade Controller April 1, 1999
- ------------------------------------- (Principal
Donald B. Korade Accounting Officer)
Director
- -------------------------------------
Allen Born
II-5
<PAGE>
Signature Title Date
/s/ John A. Georges Director April 1, 1999
- -------------------------------------
John A. Georges
/s/ Bonnie G. Hill Director April 1, 1999
- -------------------------------------
Dr. Bonnie G. Hill
/s/ Robert H. Jenkins Director April 1, 1999
- -------------------------------------
Robert H. Jenkins
/s/ Lawrence A. Leser Director April 1, 1999
- -------------------------------------
Lawrence A. Leser
Director
- -------------------------------------
Robert E. Northam
/s/ Cyrus Tang Director April 1, 1999
- -------------------------------------
Cyrus Tang
/s/ James A. Thomson Director April 1, 1999
- -------------------------------------
James A. Thomson, Ph.D.
II-6
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended, AK
Steel Holding Corporation has duly caused this Registration Statement to be
signed on its behalf by the undersigned, thereunto duly authorized, in the
City of Middletown, State of Ohio.
Date: April 1, 1999
AK STEEL HOLDING CORPORATION
/s/ James L. Wainscott
By: _________________________________
James L. Wainscott
Vice President, Treasurer andChief
Financial Officer
Power of Attorney
KNOW ALL MEN BY THESE PRESENTS that each person whose signature appears
below hereby constitute Richard M. Wardrop, Jr., James L. Wainscott and Donald
B. Korade, and each of them, such person's true and lawful attorneys-in-fact
and agents, with full power of substitution, to sign for such person and in
such person's name, place and stead, in any and all capacities, any and all
amendments, (including post-effective amendments) to this Registration
Statement, and to file the same with the Securities and Exchange Commission,
granting unto each of said attorneys-in-fact and agents full power and
authority to do and perform each and every act and thing requisite to be done,
as fully to all intents and purposes as such person might or could do
personally, hereby ratifying and confirming all that said attorneys-in-fact
and agents, or any of them, or their respective substitutes, may lawfully do
or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, as amended, this
Registration Statement and the foregoing Power of Attorney has been signed by
the following persons in the capacities and on the dates indicated.
Signature Title Date
/s/ Richard M. Wardrop, Jr. Chairman and April 1, 1999
- ------------------------------------- ChiefExecutive
Richard M. Wardrop, Jr. Officer (Principal
Executive Officer)
/s/ James L. Wainscott Vice President, April 1, 1999
- ------------------------------------- Treasurer and Chief
James L. Wainscott Financial Officer
(Principal
Financial Officer)
/s/ Donald B. Korade Controller April 1, 1999
- ------------------------------------- (Principal
Donald B. Korade Accounting Officer)
Director
- -------------------------------------
Allen Born
/s/ John A. Georges Director April 1, 1999
- -------------------------------------
John A. Georges
/s/ Bonnie G. Hill Director April 1, 1999
- -------------------------------------
Dr. Bonnie G. Hill
II-7
<PAGE>
Signature Title Date
/s/ Robert H. Jenkins Director April 1, 1999
- -------------------------------------
Robert H. Jenkins
/s/ Lawrence A. Leser Director April 1, 1999
- -------------------------------------
Lawrence A. Leser
Director
- -------------------------------------
Robert E. Northan
/s/ Cyrus Tang Director April 1, 1999
- -------------------------------------
Cyrus Tang
/s/ James A. Thomson Director April 1, 1999
- -------------------------------------
James A. Thomson, Ph.D.
II-8
<PAGE>
EXHIBIT 5
WEIL, GOTSHAL & MANGES LLP
A LIMITED LIABILITY PARTNERSHIP
INCLUDING PROFESSIONAL CORPORATIONS
767 FIFTH AVENUE
NEW YORK, NY 10153
212-310-8000
(FAX) 212-310-8007
April 1, 1999
AK Steel Corporation
AK Steel Holding Corporation
703 Curtis Street
Middletown, Ohio 45043
Ladies and Gentlemen:
We have acted as counsel to each of AK Steel Corporation, a Delaware
corporation ("AK Steel"), and AK Steel Holding Corporation, a Delaware
corporation ("AK Holding"), in connection with the filing with the Securities
and Exchange Commission pursuant to the Securities Act of 1933, as amended, of a
Registration Statement on Form S-4 with respect to $450,000,000 aggregate
principal amount of AK Steel's 7-7/8% Senior Notes Due 2009 (the "Notes") to be
issued under an Indenture, dated as of February 10, 1999 (the "Indenture"), by
and among AK Steel, AK Holding, as guarantor, and Fifth Third Bank, as trustee
(the "Trustee"). The Notes will be unconditionally guaranteed on a senior basis
by AK Holding pursuant to a guarantee contained in the Indenture (the
"Guarantee").
In so acting, we have examined originals or copies, certified or
otherwise identified to my satisfaction, of the Registration Statement, the
Indenture, the form of Note set forth in the Indenture, and such corporate
records, agreements, documents and other instruments, and such certificates or
comparable documents of public officials and of officers and representatives of
each of AK Steel and AK Holding, and have made such inquiries of those officers
and representatives as we have deemed relevant and necessary as a basis for the
opinions hereinafter set forth.
<PAGE>
AK Steel Corporation
AK Steel Holding Corporation
April 1, 1999
Page 2
In such examination, we have assumed the genuineness of all
signatures, the legal capacity of natural persons, the authenticity of all
documents submitted to us as originals, the conformity to original documents of
all documents submitted to us as certified or photostatic copies and the
authenticity of the originals of such latter documents. As to all questions of
fact material to this opinion that have not been independently established, we
have relied upon certificates or comparable documents of officers and
representatives of each of AK Steel and AK Holding. In addition, we have assumed
that the Notes will be executed and delivered substantially in the form examined
by me.
Based on the foregoing, and subject to the qualifications stated herein,
we are of the opinion that:
1. The Notes have been duly authorized for issuance and, when duly
executed by AK Steel, authenticated by the Trustee pursuant to the terms of the
Indenture and delivered in exchange for securities of like tenor and principal
amount in accordance with the terms of the Indenture and as contemplated by the
Registration Statement, will be validly issued and will constitute the legally
binding obligations of AK Steel entitled to the benefits of the Indenture in
accordance with their terms, subject to applicable bankruptcy, insolvency,
fraudulent conveyance, reorganization, moratorium and similar laws affecting
creditors' rights and remedies generally, and subject, as to enforceability, to
general principles of equity.
2. The Guarantee has been duly authorized and will constitute the
legally binding obligation of AK Holding, enforceable against it in accordance
with its terms, subject to applicable bankruptcy, insolvency, fraudulent
conveyance, reorganization, moratorium and similar laws affecting creditors'
rights and remedies generally, and subject, as to enforceability, to general
principles of equity.
The opinions herein are limited to the laws of the State of New York
and the corporate laws of the State of Delaware, and we express no opinion as to
the effect on the matters covered by this opinion of the laws of any other
jurisdiction.
<PAGE>
AK Steel Corporation
AK Steel Holding Corporation
April 1, 1999
Page 3
We hereby consent to the filing of a copy of this opinion letter as
an exhibit to the Registration Statement. We also consent to any and all
references to our firm under the caption "Legal Matters" in the Prospectus that
is part of the Registration Statement.
Very truly yours,
/s/ WEIL, GOTSHAL & MANGES LLP
<PAGE>
Exhibit 12
RATIO OF EARNINGS TO COMBINED FIXED CHARGES
(dollars in millions)
<TABLE>
<CAPTION>
Year Ended December 31,
-----------------------------------
1994 1995 1996 1997 1998
------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C>
Pretax Income............................. $152.0 $281.5 $237.0 $241.5 $176.2
Interest expense.......................... 48.2 35.6 39.8 76.3 56.0
Interest factor in rent expense........... 0.8 1.1 1.0 1.1 1.2
Distributed income of less than 50% owned
affiliates............................... (2.3) -- -- -- --
------ ------ ------ ------ ------
Total earnings............................ $198.7 $318.2 $277.8 $318.9 $233.4
Combined fixed charges:
Preferred dividends..................... $ 4.0 $ 16.0 $ 18.0 $ 12.3 $ --
Interest expense........................ 48.2 35.6 39.8 76.3 56.0
Capitalized interest credit............. 2.6 4.7 1.7 20.9 59.3
Interest factor in rent expense......... 0.8 1.1 1.0 1.1 1.2
------ ------ ------ ------ ------
Total combined fixed charges............ $ 55.6 $ 57.4 $ 60.5 $110.6 $116.5
Ratio of earnings to combined fixed
charges.................................. 3.6 5.5 4.6 2.9 2.0
</TABLE>
<PAGE>
EXHIBIT 23.1
INDEPENDENT AUDITORS' CONSENT
We consent to the incorporation by reference in this Registration Statement of
AK Steel Holding Corporation and AK Steel Corporation on Form S-4 of our report
dated January 20, 1999, appearing in the Annual Report on Form 10-K of AK Steel
Holding Corporation for the year ended December 31, 1998, and to the reference
to us under the heading "Experts" in the Prospectus, which is part of this
Registration Statement.
Deloitte & Touche LLP
Cincinnati, Ohio
April 1, 1999
<PAGE>
FORM T-1 File No. ____
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Statement of Eligibility Under the
Trust Indenture Act of 1939 of a Corporation
Designated to Act as Trustee
CHECK IF AN APPLICATION TO DETERMINE ELIGIBILITY OF A TRUSTEE
PURSUANT TO SECTION 305(B)(2)
FIFTH THIRD BANK
- --------------------------------------------------------------------------------
(Exact name of trustee as specified in its charter)
Ohio
- --------------------------------------------------------------------------------
(Jurisdiction of incorporation or organization if not a national bank)
31-0854433
- --------------------------------------------------------------------------------
(I.R.S. Employer Identification No.)
38 Fountain Square Plaza, Cincinnati, Ohio
- --------------------------------------------------------------------------------
(Address of principal executive offices)
45263
- --------------------------------------------------------------------------------
(Zip Code)
Paul L. Reynolds, 5th and Walnut Streets
Cincinnati, Ohio, 45263 (513) 579-5300
- --------------------------------------------------------------------------------
(Name, address and telephone number of agent for service)
AK STEEL CORPORATION
- --------------------------------------------------------------------------------
(Exact name of obligor as specified in its charter)
Delaware
- --------------------------------------------------------------------------------
(State or other jurisdiction of incorporation or organization)
31-1401455
- --------------------------------------------------------------------------------
(I.R.S. Employer Identification No.)
703 Curtis Street, Middletown, Ohio
- --------------------------------------------------------------------------------
(Address of principal executive offices)
45043
- --------------------------------------------------------------------------------
(Zip Code)
7 7/8% Senior Notes Due 2009
- --------------------------------------------------------------------------------
(Title of the indenture securities)
<PAGE>
ITEM 1. GENERAL INFORMATION.
Furnish the following information as to the trustee -
(a) Name and address of each examining or supervising authority
to which it is subject.
Ohio Superintendent of Banks
State Office Tower
30 E. Broad Street
Columbus, Ohio 43215
Federal Reserve Bank of Cleveland
East Sixth Street and Superior Avenue
Cleveland, Ohio 44101
Federal Deposit Insurance Corporation,
Washington, D.C.
(b) Whether it is authorized to exercise corporate trust powers.
Yes.
ITEM 2. AFFILIATIONS WITH OBLIGOR.
If the obligor is an affiliate of the trustee, describe each
such affiliation.
None.
ITEMS 3, 4, 5, 6, 7, 8, 9, 10, 11, 12, 14 AND 15 ARE NOT APPLICABLE BY VIRTUE OF
THE ANSWER TO ITEM 13.
ITEM 13. DEFAULTS BY THE OBLIGOR.
(a) State whether there is or has been a default with respect to the
securities under this indenture. Explain the nature of any such default.
None.
(b) If the Trustee is a trustee under another indenture under which any
other securities, or certificates of interest or participation in any other
securities, of the obligor are outstanding, or is trustee for more than one
outstanding series of securities under the indenture, state whether there has
been a default under any such indenture or series, identify the indenture or
series affected, and explain the nature of any such default.
None.
2
<PAGE>
ITEM 16. LIST OF EXHIBITS.
List below all exhibits filed as a part of this statement of
eligibility. (Exhibits identified in parentheses, on file with the
Commission, are incorporated herein by reference as exhibits hereto.)
(1) A copy of the Certificate of Incorporation of the trustee as now
in effect.
(2) A copy of the certificate of authority of the trustee to commence
business. (Included in Exhibit 1)
(3) A copy of the authorization of the trustee to exercise corporate
trust powers.
(4) A copy of the existing code of regulations of the trustee
incorporating amendments to date.
(5) A copy of each indenture referred to in Item 4.
(6) The consent of the trustee required by Section 321 (b) of the
Trust Indenture Act of 1939.
(7) A copy of the latest report of condition of the trustee published
pursuant to law or the requirements of its supervising or
examining authority.
(8) A copy of any order pursuant to which the foreign trustee is
authorized to act as sole trustee under indentures qualified
or to be qualified under the Act.
(9) Foreign trustees are required to file a consent to service of
process of Form F-X
3
<PAGE>
SIGNATURE
Pursuant to the requirements of the Trust Indenture Act of
1939, the trustee, Fifth Third Bank, a corporation organized and existing under
the laws of the State of Ohio, has duly caused this statement of eligibility and
qualification to be signed on its behalf by the undersigned, thereunto duly
authorized, all in the City of Cincinnati and the State of Ohio, on the 1st day
of April, 1999.
FIFTH THIRD BANK
By: /s/ Gregory R. Hahn
------------------------
Gregory R. Hahn
Assistant Vice President
and Senior Trust Officer
4
<PAGE>
EXHIBIT 1
CERTIFICATE OF INCORPORATION
OF THE TRUSTEE AS NOW IN EFFECT
CERTIFICATE OF AMENDED ARTICLES OF INCORPORATION
OF
FIFTH THIRD BANK
F.K.A. The Fifth Third Bank
George A. Schaefer, Jr., President and Paul L. Reynolds, Assistant
Secretary, of the above named Ohio banking corporation do hereby certify that in
a writing signed by all the shareholders who would be entitled to notice of a
meeting held for that purpose, the following resolution to amend the Articles
was adopted:
RESOLVED, that the Articles of Incorporation, as amended, of The Fifth Third
Bank, (the "Company"), be and the same hereby are amended so that Article First
thereof shall henceforth be and read as follows:
FIRST: The name of said Corporation shall be "Fifth Third Bank'.
IN WITNESS WHEREOF, the above named officers, acting for and on behalf of
the corporation, have hereto subscribed their names this 4th day of October
1998.
By: /s/ George A. Schaefer, Jr.
---------------------------------------
George A. Schaefer, Jr., President
By: /s/ Paul L. Reynolds
---------------------------------------
Paul L. Reynolds, Assistant Secretary
Approved this 2nd day of November, 1999.
/s/ W. Curtis Stitt
- ------------------------------------
W. Curtis Stitt, Superintendent
Division of Financial Institutions
5
<PAGE>
CERTIFICATE OF AMENDMENT
TO
ARTICLES OF INCORPORATION
OF
THE FIFTH THIRD BANK
George A. Schaefer, Jr., President and Phillip C. Long, Secretary to
The Fifth Third Bank, an Ohio banking corporation, with its principal office
located at Cincinnati, Hamilton County, Ohio, do hereby certify that a duly
called meeting of the Board of Directors held on May 18, 1993, at which a quorum
was present and at a special meeting of the shareholder on May 18, 1993, the
following resolution to amend the Third Amended Articles of Incorporation which
adopted by affirmative vote of all the Directors in attendance and by an
unanimous vote of the sole shareholder.
RESOLVED, that Article FOURTH of the Third Amendment Articles of
Incorporation be and is hereby amended in its entirety to read as
follows:
FOURTH: The maximum number of shares with the corporation is authorized
to have outstanding shall be Thirty-Two Thousand (32,000) shares with a
par value of Two Thousand Two Hundred Dollars ($2,200.00) per share.
IN WITNESS WHEREOF, said George A. Schaefer, Jr., President and Phillip
C. Long, Secretary of The Fifth Third Bank, acting for and on behalf of said
corporation have hereunto subscribed their names this 18th day of May , 1993.
/s/ George A. Schaefer, Jr.
----------------------------------------
George A. Schaefer, Jr., President
Approved this 16th day of June, 1993
/s/ Allison M. Meeks
- -----------------------------
Allison M. Meeks, Superintendent
/s/ Phillip C. Long
----------------------------------------
Phillip C. Long, Secretary
6
<PAGE>
THIRD AMENDED ARTICLES OF INCORPORATION
OF
THE FIFTH THIRD BANK
FIRST: The name of said Corporation shall be "The Fifth Third Bank".
SECOND: The place in Ohio where its principal office is to be located
is Cincinnati, Hamilton County, and its principal business there transacted.
THIRD: Said Corporation is formed for the purposes of (a) receiving
on deposit or in trust, moneys, securities and other valuable property, on such
terms as may be agreed, and of doing the business of a savings bank and of a
trust company; (b) of disposing of box vaults for safekeeping of valuables by
lease or otherwise; (c) of investing and loaning the funds of the company and
those received by it on deposit or in trust; (d) of doing a commercial banking
business; and, (e) of doing the business of a special plan bank, and in
furtherance of said purposes, to exercise all the powers of which may be
lawfully exercised by a corporation formed therefore, and to do all things
necessary to incident thereto.
FOURTH: The maximum number of shares which the corporation is
authorized to have outstanding shall be Thirty-Two Thousand (32,000) shares with
a par value of One Thousand Nine Hundred Dollars ($1,900.00) per share.
FIFTH: These Amended Articles of Incorporation supersede and take the
place of the existing Articles of Incorporation.
7
<PAGE>
EXHIBIT 2
CERTIFICATE OF AUTHORITY OF THE
TRUSTEE TO COMMENCE BUSINESS
(INCLUDED IN EXHIBIT 1)
8
<PAGE>
EXHIBIT 3
A COPY OF THE AUTHORIZATION OF THE TRUSTEE
TO EXERCISE CORPORATE TRUST POWERS
[See Attached]
9
<PAGE>
STATE OF OHIO
DIVISION OF FINANCIAL INSTITUTIONS
This is to certify that Fifth Third Bank, Cincinnati, Ohio, organized under the
laws of the State of Ohio has complied with the laws relating to trust companies
under Section 1111.04 of the Ohio Revised Code and is qualified to exercise
trust powers in Ohio.
Witness my hand at Columbus, Ohio, this 1/st/ day of March, 1999.
/s/ F. Scott O'Donnell
-------------------------
F. SCOTT O'DONNELL
Superintendent
Division of Financial
Institutions
10
<PAGE>
EXHIBIT 4
A COPY OF THE EXISTING CODE OF REGULATIONS OF THE TRUSTEE
INCORPORATING AMENDMENTS TO DATE
[See Attached]
11
<PAGE>
CODE OF REGULATIONS OF FIFTH THIRD BANK
ARTICLE I
STOCKHOLDERS
SECTION 1. MEETINGS. The annual meeting of the Stockholders shall be
held at the principal office of the Company at such hour, as may be fixed in the
notice of such meeting, and on such date, not earlier than the second Tuesday of
January or later than the third Tuesday of April of each year, as shall be fixed
by the Board of Directors and communicated in writing to the Shareholders not
later than twenty (20) days prior to such meeting.
SECTION 2. QUORUM. Stockholders, whether in person or by lawful
proxies, representing a majority in amount of the outstanding stock of the
Company, shall constitute a quorum at any stockholders' meeting. If there be
less than a majority in amount of such stock at any meeting, the meeting may be
adjourned from time to time.
ARTICLE II
DIRECTORS
SECTION 1. NUMBER. The Board of Directors shall be composed of eighteen
(18) persons unless this number is changed by: (1) the Shareholders in
accordance with the laws of Ohio or (2) the vote of a majority of the Directors
in office. The Directors may increase the number to not more than twenty-four
(24) persons and may decrease the number to not less than fifteen (15) persons.
Any Director's office created by the Directors by reason of an increase in their
number may be filled by action of a majority of the Directors in office.
SECTION 2. TERM. Directors shall hold office until the expiration of
the term for which they were erected, and shall continue in office until their
respective successors shall have been duly elected and qualified.
SECTION 3. QUALIFICATIONS AND COMPENSATION. No person shall serve as a
Director who is not the owner of record of at least Five Hundred ($500.00)
Dollars par value of stock of the Company. Each Director shall be entitled to
receive such compensation for attendance at meetings of the Board of Directors
of Committees thereof as the Board of Directors may, from time to time, fix.
SECTION 4. REPLACEMENT OR REMOVAL. Directors may be replaced or removed
as provided by Ohio Law, provided that Directors may be removed without cause
only by an affirmative vote of not less than two-thirds (b) of the outstanding
shares of the Company.
SECTION 5. VACANCIES. Any vacancy occurring in the Board of Directors
may be filled by the Board of Directors until an election to fill such vacancy
is had.
SECTION 6. QUORUM. A majority of the whole authorized number of
Directors, as the same shall be established from time to time in accordance with
Section 1 of this Code of Regulations, shall constitute a quorum for a meeting
of the Directors, except that a majority of the Directors in office constitute a
quorum for the filling of a vacancy or vacancies of the Board.
12
<PAGE>
SECTION 7. ELECTION OF OFFICERS. The Board of Directors at the first
meeting after the election of Directors may elect one of its own number Chairman
of the Board and one of its own number Vice Chairman of the Board; and it shall
elect one of its own number President. It may also elect one or more vice
presidents (one or more of whom may be designated Executive Vice President
and/or Senior Vice President and/or Vice President and Trust Officer), a
Cashier, a Secretary, and a Treasurer, and it may appoint such other officers as
the Board may deem advisable. Any two of said offices may be held by the same
person. Officers so elected shall hold office during the term of the Board by
whom they are elected, subject to the power of the Board to remove them at its
discretion. They shall be bonded in such amount and with such survey or sureties
as the Board of Directors shall require.
SECTION 8. MEETINGS OF THE BOARD. Regular meetings of the Board of
Directors shall be held on the third Tuesday of each month, or at such other
times as may be determined by the Board of Directors. Except as otherwise
provided by law, any business may be transacted at any regular meeting of the
Board of Directors. Special meetings shall be held upon the call of the Chairman
of the Board, if one be elected, or by the President, or in their absence, by a
Vice President or any three (3) Directors.
SECTION 9. NOTICE OF MEETINGS. The Secretary shall give notice of
each meeting of the Board of Directors, whether regular or special, to each
member of the Board.
SECTION 10. COMMITTEES.
SECTION 10.1 EXECUTIVE COMMITTEE. The Board of Directors shall appoint
any Executive Committee consisting of at least three (3) members, all of whom
may be members of the Board of Directors, or at least one (1) of whom shall be a
Director, the remainder to be officers of the Bank. Such Executive Committee
shall serve until their successors are appointed. A majority of the members of
said Committee shall constitute a quorum. The Executive Committee shall conduct
the business of the Company and shall have all the powers of the Board of
Directors when said Board is not in session, except that of declaring a
dividend. The Secretary of the Company shall keep a record of the Committee's
proceedings, which, signed by the Chairman of the Committee, shall be presented
at the meetings of the Committee and at the meetings of the Board of Directors.
SECTION 10.2 OTHER COMMITTEES. The Board of Directors shall appoint a
Trust Committee of which the Vice President and Trust Officer and at least three
(3) of its members who are not officers of the Company shall be members. The
Vice President and Trust Officer shall be Chairman of the Trust Committee. In
addition thereto, the Chairman of the Board, Chief Executive Officer, may
appoint such additional Committees, by and with the approval of the Board of
Directors, as may be deemed desirable or necessary.
Each such Committee, so appointed, shall have such powers and perform
such duties, not inconsistent with law, as may be delegated to it by the Board
of Directors.
SECTION 11. INDEMNIFICATION. The Company shall indemnify each Director
and each Officer of the Company, and each person employed by the Company who
serves at the written request of the President of the Company as a director,
trustee, officer, employee or agent of another corporation, domestic or foreign,
non-profit or for profit, partnership, joint venture, trust or other
13
<PAGE>
enterprise, to the full extent permitted by Ohio law. The term "Officer" as used
in this Section shall include the Chairman of the Board and the Vice Chairman of
the Board if such offices are filled, the President, each Vice President, the
Treasurer, the Secretary, the Cashier, the Controller, the Auditor, the Counsel
and any other person who is specifically designated as an "Officer" within the
operation of this Section by action of the Board of Directors. The Company may
indemnify assistant Officers, employees and others by action of the Board of
Directors to the extent permitted by Ohio law.
ARTICLE III
OFFICERS
SECTION 1. POWERS AND DUTIES. The Chairman of the Board if the office
be filled, otherwise the Vice Chairman of the Board, if the office be filled,
otherwise the President shall preside at all meetings of the Stockholders, the
Board of Directors, and the supervision and control over the business of the
Company and shall serve at the pleasure of the Board of Directors. In the
absence or disability of any of the foregoing officers, their respective duties
shall be performed by the Chairman of the Board, the Vice Chairman of the Board,
the President, or by a Vice President specifically designated by the Board of
Directors, in the order named.
The Secretary, or in his absence or disability, the Assistant
Secretary, shall act, ex officio, as Secretary of all meetings of the
Stockholders, the Board of Directors and the Executive Committee. The other
officers of the Company shall have such powers and duties as usually and
customarily attach to their offices.
ARTICLE IV
CERTIFICATES OF STOCK
SECTION 1. FORM. Certificates for shares of stock shall be signed by
the Chairman of the Board, or by the President, or by one of the Vice
Presidents, and by the Secretary or Treasurer or by the Cashier or an Assistant
Cashier, shall contain such statements as are required by law, and shall
otherwise be in such form as the Board of Directors may, from time to time,
require.
SECTION 2. TRANSFERS. Shares shall be transferable on the books of the
Company by the holders thereof in person or by duly authorized attorney upon
surrender of the certificates therefor with duly executed assignment endorsed
thereon or attached thereto.
SECTION 3. CLOSING OF TRANSFER BOOKS. The books for transfer of the
stock of the Company shall be closed for at least five (5) days preceding the
annual meeting of stockholders, and may be closed by order of the Board of
Directors, or Executive Committee, for a like period before any other meeting of
the Stockholders.
ARTICLE V
AMENDMENTS
14
<PAGE>
These regulations may be changed, and new regulations adopted by the
assent thereto in writing of two-thirds (b) of the Stockholders of the Company
in number an in amount; or by a majority of such Stockholders in number and in
amount, at a meeting held for that purpose, notice of which has been given by
the President, the Secretary, or any two (2) Directors personally or by written
notice, to each Stockholders, and by publication once a week for four (4)
consecutive weeks in some newspaper of general circulation in Hamilton County,
Ohio, or in such other manner as may then be authorized by the laws of Ohio.
15
<PAGE>
EXHIBIT 5
A COPY OF EACH INDENTURE REFERRED TO IN ITEM 4
(NOT APPLICABLE)
16
<PAGE>
EXHIBIT 6
THE CONSENT OF THE TRUSTEE REQUIRED BY SECTION 321 (B)
OF THE TRUST INDENTURE ACT OF 1939
[See Attached]
17
<PAGE>
EXHIBIT 6 TO FORM T-1
CONSENT OF TRUSTEE
Pursuant to the requirements of Section 321(b) of the Trust Indenture
Act of 1939 in connection with the proposed issuance of Senior Notes of AK Steel
Corporation, Fifth Third Bank hereby consents that reports of examination by
Federal, State, Territorial or District Authorities may be furnished by such
authorities to the Securities and Exchange Commission upon request therefor.
FIFTH THIRD BANK
By:/s/ Gregory R. Hahn
---------------------
Gregory R. Hahn,
Assistant Vice President
and Senior Trust Officer
<PAGE>
EXHIBIT 7
A COPY OF THE LATEST REPORT OF CONDITION OF THE TRUSTEE
PUBLISHED PURSUANT TO LAW OR THE REQUIREMENTS
OF ITS SUPERVISING OR EXAMINING AUTHORITY
[See Attached]
<PAGE>
REPORT OF CONDITION
Consolidated Report of Condition of FIFTH THIRD BANK of CINCINNATI, OHIO and
Foreign and Domestic Subsidiaries, a member of the Federal Reserve System, at
the close of business on December 31, 1998, published in accordance with a call
made by the Federal Reserve Bank of this District pursuant to the provisions of
the Federal Reserve Act.
ASSETS
<TABLE>
<CAPTION>
Thousands
of Dollars
<S> <C>
Cash and balances due from depository institutions:
Noninterest-bearing balances and
currency and coin................................................................................ 502,214
Interest-bearing balances........................................................................ 996
Securities:
Held-to-maturity securities.......................................................................... 4,916
Available-for-sale securities........................................................................ 2,853,814
Federal funds sold and securities purchased ......................................................... //////////
under agreements to resell ...................................................................... 325,900
Loans and lease financing receivables:
Loans and lease, net of unearned income.......................................................... 7,469,628
LESS: Allowance for loan and lease losses........................................................ 106,477
LESS: Allocated transfer risk reserve............................................................ 0
Loans and leases, net of unearned income, allowance,
and reserve...................................................................................... 7,363,151
Trading Assets ...................................................................................... 8,950
Premises and fixed assets (including capitalized leases)............................................. 138,579
Other real estate owned.............................................................................. 1,030
Investments in unconsolidated subsidiaries and
associated companies............................................................................. 0
Customers' liability to this bank on
acceptances outstanding.......................................................................... 46,686
Intangible assets.................................................................................... 70,182
Other assets......................................................................................... 409,458
Total assets......................................................................................... 11,727,876
</TABLE>
<PAGE>
LIABILITIES
<TABLE>
<S> <C>
Deposits:
In domestic offices.............................................................................. 5,134,343
Noninterest-bearing.............................................................................. 1,538,081
Interest-bearing................................................................................. 3,596,262
In foreign offices, Edge and Agreement subsidiaries,
and IBFs:........................................................................................ 353,824
Noninterest-bearing.............................................................................. 0
Interest-bearing................................................................................. 353,824
Federal funds purchased and securities sold under agreements
to repurchase.................................................................................... 3,742,117
Demand notes issued to the U.S. Treasury.............................................................. 2,768
Trading liabilities................................................................................... 0
Other borrowed money (including mortgage indebtedness and obligations under capitalized leases):
................................................................................................. //////////
With a remaining maturity of one year or less.................................................... 100,542
With a remaining maturity of more than one year through three years........................... 202,000
With a remaining maturity of more than three years............................................... 0
Not applicable
Bank's liability on acceptances executed and outstanding.............................................. 47,161
Subordinated notes and debentures..................................................................... 847,752
Other liabilities..................................................................................... 427,687
Total liabilities..................................................................................... 10,858,194
EQUITY CAPITAL
Perpetual preferred stock and related surplus......................................................... 0
Common stock.......................................................................................... 70,400
Surplus............................................................................................... 212,048
Undivided profits and capital reserves................................................................ 566,331
Net unrealized holding gains (losses) on
available-for-sale securities.................................................................... 20,902
Cumulative foreign currency translation adjustments................................................... 0
Total equity capital.................................................................................. 896,628
Total liabilities and equity capital.................................................................. 11,727,876
</TABLE>
<PAGE>
EXHIBIT 8
A COPY OF ANY ORDER PURSUANT TO WHICH THE FOREIGN TRUSTEE IS AUTHORIZED TO ACT
AS SOLE TRUSTEE UNDER INDENTURES QUALIFIED OR TO BE QUALIFIED UNDER THE ACT
(NOT APPLICABLE)
<PAGE>
EXHIBIT 9
FOREIGN TRUSTEES ARE REQUIRED TO FILE A CONSENT TO SERVICE OF
PROCESS OF FORM F-X
(NOT APPLICABLE)
<PAGE>
LETTER OF TRANSMITTAL
AK STEEL CORPORATION
Offer to Exchange its 7 7/8% Senior Notes Due 2009, which are fully and
unconditionally guaranteed by AK Steel Holding Corporation and have
been registered under the Securities Act, for its 7 7/8% Senior
Notes Due 2009, which are fully and unconditionally
guaranteed by AK Steel Holding Corporation and have
not been so registered.
Pursuant to the Prospectus, dated , 1999
THE EXCHANGE OFFER WILL EXPIRE AT 5:00 P.M. NEW YORK CITY TIME, ON ,
1999, UNLESS EXTENDED (THE "EXPIRATION DATE"). TENDERS MAY BE WITHDRAWN
PRIOR TO 5:00 P.M., NEW YORK CITY TIME, ON THE EXPIRATION DATE.
Fifth Third Bank, Exchange Agent
By Mail or Overnight By Hand Delivery: By Facsimile:
Courier:
Fifth Third Bank Fifth Third Bank (513) 744-8909
Attention: Geoff Clark Attention: Geoff Clark
Corporate Trust Operations Corporate Trust Confirm by Telephone:
ML 10AT66 Operations
580 Walnut Street -- 4th
38 Fountain Square Plaza Floor
Cincinnati, Ohio 45202 (513) 579-5320
Cincinnati, Ohio 45263
DELIVERY OF THIS INSTRUMENT TO AN ADDRESS OTHER THAN AS SET FORTH ABOVE, OR
TRANSMISSION OF INSTRUCTIONS VIA FACSIMILE OTHER THAN AS SET FORTH ABOVE, WILL
NOT CONSTITUTE A VALID DELIVERY.
The undersigned acknowledges that he or she has received and reviewed the
Prospectus, dated , 1999 (the "Prospectus"), of AK Steel Corporation, a
Delaware corporation ("AK Steel"), and this Letter of Transmittal (the
"Letter"), which together constitute AK Steel's offer (the "Exchange Offer")
to exchange up to $450,000,000 aggregate principal amount of AK Steel's 7 7/8%
Senior Notes Due 2009 (the "New Notes"), which have been registered under the
Securities Act of 1933 (the "Securities Act"), for a like principal amount of
AK Steel's issued and outstanding 7 7/8% Senior Notes Due 2009 (the "Old
Notes"), which have not been so registered. Both the Old Notes and the New
Notes are fully and unconditionally guaranteed by AK Steel Holding
Corporation.
For each Old Note accepted for exchange, the registered holder of such Old
Note (collectively with all other registered holders of Old Notes, the
"Holders") will receive a New Note having a principal amount equal to that of
the surrendered Old Note. Accordingly, registered holders of New Notes on the
relevant record date for the first interest payment date following the
consummation of the Exchange Offer will receive interest accruing from the
most recent date to which interest has been paid or, if no interest has been
paid, from February 10, 1999. Old Notes accepted for exchange will cease to
accrue interest from and after the date of consummation of the Exchange Offer.
Holders whose Old Notes are accepted for exchange will not receive any payment
in respect of accrued interest on such Old Notes otherwise payable on any
interest payment date the record date for which occurs on or after
consummation of the Exchange Offer.
This Letter is to be completed by a Holder of Old Notes either if
certificates are to be forwarded herewith or if a tender of certificates for
Old Notes, if available, is to be made by book-entry transfer to the account
maintained by the Exchange Agent at The Depository Trust Company (the "Book-
Entry Transfer Facility") pursuant to the procedures set forth in "The
Exchange Offer--Procedures for Tendering" section of the Prospectus. Holders
of Old Notes whose certificates are not immediately available, or who are
unable to deliver their certificates or confirmation of the book-entry tender
of their Old Notes into the Exchange Agent's account at the Book-Entry
Transfer Facility (a "Book-Entry Confirmation") and all other documents
required by this Letter to the Exchange Agent on or prior to the Expiration
Date, must tender their Old Notes according to the guaranteed delivery
procedures set forth in Instruction 1 hereto. Delivery of documents to the
Book-Entry Transfer Facility does not constitute delivery to the Exchange
Agent.
The undersigned has completed the appropriate boxes below and signed this
Letter to indicate the action the undersigned desires to take with respect to
the Exchange Offer.
<PAGE>
PLEASE READ THE ACCOMPANYING INSTRUCTIONS CAREFULLY
Ladies and Gentlemen:
Upon the terms and subject to the conditions of the Exchange Offer, the
undersigned hereby tenders to AK Steel the aggregate principal amount of Old
Notes indicated below. Subject to, and effective upon, the acceptance for
exchange of the Old Notes tendered hereby, the undersigned hereby sells,
assigns and transfers to, or upon the order of AK Steel all right, title and
interest in and to such Old Notes as are being tendered hereby.
The undersigned hereby represents and warrants that the undersigned has full
power and authority to tender, sell, assign and transfer the Old Notes
tendered hereby and that AK Steel will acquire good and unencumbered title
thereto, free and clear of all liens, restrictions, charges and encumbrances
and not subject to any adverse claim when the same are accepted by AK Steel.
The undersigned hereby further represents that any New Notes acquired in
exchange for Old Notes tendered hereby will have been acquired in the ordinary
course of business of the person receiving such New Notes, whether or not such
person is the undersigned, that neither the Holder of such Old Notes nor any
such other person has an arrangement or understanding with any person to
participate in the distribution of such New Notes and that neither the Holder
of such Old Notes nor any such other person is an "affiliate" (as defined in
Rule 405 under the Securities Act) of AK Steel.
The undersigned also acknowledges that this Exchange Offer is being made in
reliance on interpretations by the staff of the Securities and Exchange
Commission (the "SEC"), as set forth in no-action letters issued to third
parties, that the New Notes issued pursuant to the Exchange Offer in exchange
for the Old Notes may be offered for resale, resold and otherwise transferred
by a Holder thereof (other than a Holder that is an "affiliate" of AK Steel
within the meaning of Rule 405 under the Securities Act) without compliance
with the registration and prospectus delivery provisions of the Securities
Act, provided that such New Notes are acquired in the ordinary course of such
Holder's business and such Holder has no arrangement with any person to
participate in a distribution of such New Notes. However, the SEC has not
considered the Exchange Offer in the context of a no-action letter and there
can be no assurance that the staff of the SEC would make a similar
determination with respect to the Exchange Offer as in other circumstances. If
the undersigned is not a broker-dealer, the undersigned represents that it is
not engaged in, and does not intend to engage in, a distribution of New Notes
and has no arrangement or understanding to participate in a distribution of
New Notes. If any Holder is an affiliate of AK Steel, is engaged in or intends
to engage in, or has any arrangement or understanding with any person to
participate in, a distribution of the New Notes to be acquired pursuant to the
Exchange Offer, such Holder could not rely on the applicable interpretations
of the staff of the SEC and must comply with the registration and prospectus
delivery requirements of the Securities Act in connection with any resale
transaction. If the undersigned is a broker-dealer that will receive New Notes
for its own account in exchange for Old Notes that were acquired as a result
of market-making activities or other trading activities, it acknowledges that
it will deliver a prospectus meeting the requirements of the Securities Act in
connection with any resale of such New Notes. However, by so acknowledging and
by delivering a prospectus, the undersigned will not be deemed to admit that
it is an "underwriter" within the meaning of the Securities Act.
The undersigned will, upon request, execute and deliver any additional
documents deemed by AK Steel to be necessary or desirable to complete the
sale, assignment and transfer of the Old Notes tendered hereby. All authority
conferred or agreed to be conferred in this Letter and every obligation of the
undersigned hereunder shall be binding upon the successors, assigns, heirs,
executors, administrators, trustees in bankruptcy and legal representatives of
the undersigned and shall not be affected by, and shall survive, the death or
incapacity of the undersigned. This tender may be withdrawn only by written
notice from the undersigned to the Exchange Agent, received prior to 5:00
p.m., New York City time, on the Expiration Date. Such written notice, if not
by an Eligible Institution, will have the signature guaranteed by an Eligible
Institution, and shall specify the name and number of the account at the Book-
Entry Transfer Facility to be credited with the withdrawn notes. If the
certificates have been delivered to the Exchange Agent, then the withdrawal
notice must set forth the serial numbers of the particular certificates to be
withdrawn.
Unless otherwise indicated herein in the box entitled "Special Issuance
Instruction" below, please issue the New Notes (and, if applicable, substitute
certificates representing Old Notes for any Old Notes not exchanged) in the
name of the undersigned or, in the case of a book-entry delivery of Old Notes,
please credit the account indicated above maintained at the Book-Entry
Transfer Facility. Similarly, unless otherwise indicated under the box
entitled "Special Delivery Instructions" below, please send the New Notes
(and, if applicable, substitute certificates representing Old Notes for any
Old Notes not exchanged) to the undersigned at the address shown above in the
box entitled "Description of Old Notes."
<PAGE>
THE UNDERSIGNED, BY COMPLETING THE BOX BELOW ENTITLED "DESCRIPTION OF OLD
NOTES DELIVERED" BELOW AND SIGNING THIS LETTER, WILL BE DEEMED TO HAVE
TENDERED OLD NOTES AS SET FORTH IN SUCH BOX.
List below the Old Notes to which this Letter relates. If the space provided
below is inadequate, the certificate numbers and principal amount of Old Notes
should be listed on a separate signed schedule affixed hereto.
<TABLE>
<CAPTION>
DESCRIPTION OF OLD NOTES DELIVERED
- ----------------------------------------------------------------
Name(s)
and
Address of
Registered
Holder
(Please
fill in, Certificate Aggregate Principal Amount
if blank) Number(s)* Principal Amount Tendered**
- ----------------------------------------------------------------
- ----------------------------------------------------------------
- ----------------------------------------------------------------
- ----------------------------------------------------------------
- ----------------------------------------------------------------
- ----------------------------------------------------------------
<S> <C> <C> <C>
Totals:
</TABLE>
- -------------------------------------------------------------------------------
* Need not be completed if Old Notes are being tendered by book-entry
transfer.
** Unless otherwise indicated in this column, a holder will be deemed to
have tendered ALL of the Old Notes represented by the listed
certificates. See Instruction 2. Old Notes tendered hereby must be in
denominations of principal amount of $1,000 and any integral multiple
thereof. See Instruction 1.
[_] CHECK HERE IF TENDERED OLD NOTES ARE BEING DELIVERED BY BOOK-ENTRY
TRANSFER MADE TO THE ACCOUNT MAINTAINED BY THE EXCHANGE AGENT WITH THE
BOOK-ENTRY TRANSFER FACILITY AND COMPLETE THE FOLLOWING:
Name of Tendering Institution ______________________________________________
Account Number __________________Transaction Code Number __________________
[_] CHECK HERE IF TENDERED OLD NOTES ARE BEING DELIVERED PURSUANT TO A NOTICE
OF GUARANTEED DELIVERY PREVIOUSLY SENT TO THE EXCHANGE AGENT AND COMPLETE
THE FOLLOWING:
Name of Registered Holder __________________________________________________
Window Ticket Number (if any) ______________________________________________
Date of Execution of Notice of Guaranteed Delivery _________________________
Name of Institution Which Guaranteed Delivery ______________________________
If Delivered by Book-Entry Transfer, Complete the Following:
Account Number __________________Transaction Code Number ___________________
[_] CHECK HERE IF YOU ARE A BROKER-DEALER AND WISH TO RECEIVE ADDITIONAL
COPIES OF THE PROSPECTUS AND ANY AMENDMENTS OR SUPPLEMENTS THERETO. (UNLESS
OTHERWISE SPECIFIED, 10 ADDITIONAL COPIES WILL BE FURNISHED.)
Name _______________________________________________________________________
Address ____________________________________________________________________
<PAGE>
SPECIAL ISSUANCE INSTRUCTIONS (See SPECIAL DELIVERY INSTRUCTIONS
Instructions 3 and 4) (See Instructions 3 and 4)
To be completed ONLY if certif- To be completed ONLY if certif-
icates for Old Notes not ex- icates for Old Notes not ex-
changed and/or New Notes are to changed and/or New Notes are to
be issued in the name of someone be sent to someone other than
other than the person or persons the person or persons whose sig-
whose signature(s) appear(s) on nature(s) appear(s) on this Let-
this Letter below, or if Old ter below or to such person or
Notes delivered by book-entry persons at an address other than
transfer which are not accepted shown in the box entitled "De-
for exchange are to be returned scription of Old Notes" on this
by credit to an account main- Letter above.
tained at the Book-Entry Trans-
fer Facility other than the ac-
count indicated above.
Mail New Notes and/or Old Notes
to:
Name ____________________________
Issue New Notes and/or Old Notes (Please Type or Print)
to: _________________________________
Name ____________________________ Address _________________________
(Please Type or Print) _________________________________
_________________________________ (Zip Code)
Address _________________________
_________________________________
(Zip Code)
(Complete Substitute Form W-9)
[_]Credit unexchanged Old Notes
delivered by book-entry
transfer to the Book-Entry
Transfer Facility account set
forth below.
_________________________________
(Book-Entry Transfer Facility)
IMPORTANT: THIS LETTER OR A FACSIMILE HEREOF (TOGETHER WITH THE CERTIFICATES
FOR OLD NOTES OR A BOOK-ENTRY CONFIRMATION AND ALL OTHER REQUIRED DOCUMENTS OR
THE NOTICE OF GUARANTEED DELIVERY) MUST BE RECEIVED BY THE EXCHANGE AGENT
PRIOR TO 5:00 P.M., NEW YORK CITY TIME, ON THE EXPIRATION DATE.
<PAGE>
PLEASE READ THIS ENTIRE LETTER OF TRANSMITTAL CAREFULLY BEFORE COMPLETING ANY
BOX ABOVE
PLEASE SIGN HERE
(TO BE COMPLETED BY ALL TENDERING HOLDERS)
(Complete Accompanying Substitute Form W-9 on reverse side)
Dated: ____________________, 1999
X ___________________________________,
X ___________________________________,
Signature(s)
Area Code and Telephone Number: _________________________
If a holder is tendering any Old Notes, this letter must be signed by
the registered holder(s) as the name(s) appear(s) on the certificate(s)
for the Old Notes or by any person(s) authorized to become registered
holder(s) by endorsements and documents transmitted herewith. If signature
is by a trustee, executor, administrator, guardian, officer or other
person acting in a fiduciary or representative capacity, please set forth
full title. See Instruction 3.
Name:______________________________________________________________________
___________________________________________________________________________
(Please Type or Print)
Capacity (full title):_____________________________________________________
Address:___________________________________________________________________
___________________________________________________________________
Telephone:_________________________________________________________________
SIGNATURE GUARANTEE (If required by Instruction 3)
Signature(s) Guaranteed by an Eligible Institution: _______________________
(Authorized Signature)
___________________________________________________________________________
(Title)
___________________________________________________________________________
(Name and Firm)
Dated: ______________________________________________________________, 1999
<PAGE>
INSTRUCTIONS
Forming part of the terms and conditions of the Offer to Exchange
the 7 7/8% Senior Notes Due 2009 of AK Steel Corporation, which are fully and
unconditionally guaranteed by AK Steel Holding Corporation and have been
registered under the Securities Act, for the outstanding 7 7/8% Senior Notes
Due 2009 of AK Steel Corporation, which are fully and unconditionally
guaranteed by AK Steel Holding Corporation and have not been so registered.
1. Delivery of this Letter and Notes; Guaranteed Delivery Procedures.
This Letter is to be completed by holders of Old Notes either if
certificates are to be forwarded herewith or if tenders are to be made
pursuant to the procedures for delivery by book-entry transfer set forth in
"The Exchange Offer--Procedures for Tendering" section of the Prospectus.
Certificates for all physically tendered Old Notes, or Book-Entry
Confirmation, as the case may be, as well as a properly completed and duly
executed Letter (or manually signed facsimile hereof) and any other documents
required by this Letter, must be received by the Exchange Agent at the address
set forth herein on or prior to the Expiration Date, or the tendering holder
must comply with the guaranteed delivery procedures set forth below. Old Notes
tendered hereby must be in denominations of principal amount of $1,000 and any
integral multiple thereof.
Holders whose certificates for Old Notes are not immediately available or
who cannot deliver their certificates and all other required documents to the
Exchange Agent on or prior to the Expiration Date, or who cannot complete the
procedure for book-entry transfer on a timely basis, may tender their Old
Notes pursuant to the guaranteed delivery procedures. Pursuant to such
procedures, a tender may be effected if (i) such tender is made through an
Eligible Institution, (ii) on or prior to 5:00 p.m., New York City time, on
the Expiration Date, the Exchange Agent receives from such Eligible
Institution a properly completed and duly executed Letter (or a facsimile
thereof) and Notice of Guaranteed Delivery, substantially in the form provided
by AK Steel (by telegram, telex, facsimile transmission, mail or hand
delivery), setting forth the name and address of the holder of Old Notes and
the amount of Old Notes tendered, stating that the tender is being made
thereby and guaranteeing that within three New York Stock Exchange ("NYSE")
trading days after the date of execution of the Notice of Guaranteed Delivery,
the certificates for all physically tendered Old Notes, in proper form for
transfer, or a Book-Entry Confirmation, as the case may be, and any other
documents required by this Letter will be deposited by the Eligible
Institution with the Exchange Agent, and (iii) the certificates for all
physically tendered Old Notes, in proper form for transfer, or Book-Entry
Confirmation, as the case may be, and all other documents required by this
Letter, are deposited by the Eligible Institution within three NYSE trading
days after the date of execution of the Notice of Guaranteed Delivery.
The method of delivery of this Letter, the Old Notes and all other required
documents is at the election and risk of the tendering holders, but the
delivery will be deemed made only when actually received or confirmed by the
Exchange Agent. If Old Notes are sent by mail, it is suggested that the
mailing be registered mail, properly insured, with return receipt requested,
and made sufficiently in advance of the Expiration Date to permit delivery to
the Exchange Agent prior to 5:00 p.m., New York City time, on the Expiration
Date.
See "The Exchange Offer" section of the Prospectus.
2. Partial Tenders (not applicable to noteholders who tender by book-entry
transfer).
If less than all of the Old Notes evidenced by a submitted certificate are
to be tendered, the tendering holder(s) should fill in the aggregate principal
amount of Old Notes to be tendered in the box above entitled "Description of
Old Notes--Principal Amount Tendered." A reissued certificate representing the
balance of nontendered Old Notes will be sent to such tendering holder, unless
otherwise provided in the appropriate box of this Letter, promptly after the
Expiration Date. All of the Old Notes delivered to the Exchange Agent will be
deemed to have been tendered unless otherwise indicated.
3. Signatures on this Letter, Bond Powers and Endorsements, Guarantee of
Signatures.
If this Letter is signed by the registered holder of the Old Notes tendered
hereby, the signature must correspond exactly with the name as written on the
face of the certificates without any change whatsoever.
If any tendered Old Notes are owned of record by two or more joint owners,
all of such owners must sign this Letter.
<PAGE>
If any tendered Old Notes are registered in different names on several
certificates, it will be necessary to complete, sign and submit as many
separate copies of this letter as there are different registrations of
certificates.
When this letter is signed by the registered holder or holders of the Old
Notes specified herein and tendered hereby, no endorsements of certificates or
separate bond powers are required. If however, the New Notes are to be issued,
or any untendered Old Notes are to be reissued, to a person other than the
registered holder, then endorsements of any certificates transmitted hereby or
separate bond powers are required. Signatures on such certificates(s) must be
guaranteed by an Eligible Institution.
If this letter is signed by a person other than the registered holder or
holders of any certificate(s) specified herein, such certificate(s) must be
endorsed accompanied by appropriate bond powers, in either case signed exactly
as the name or names of the registered holder or holders appear(s) on the
certificate(s) and signatures on such certificate(s) must be guaranteed by an
Eligible Institution.
If this Letter or any certificates or bond powers are signed by trustees,
executors, administrators, guardians, attorneys-in-fact, officers of
corporations or others acting in a fiduciary or representative capacity, such
persons should so indicate when signing, and, unless waived by the Company,
proper evidence satisfactory to the Company of their authority to so act must
be submitted.
Endorsements on certificates for Old Notes or signatures on bond powers
required by this Instruction 3 must be guaranteed by a financial institution
(including most banks, savings and loan associations and brokerage houses)
that is a participant in the Securities Transfer Agents Medallion Program, the
New York Stock Exchange Medallion Signature Program or the Stock Exchanges
Medallion Program (each, an "Eligible Institution").
Signatures on this Letter need not be guaranteed by an Eligible Institution,
provided the Old Notes are tendered: (i) by a registered holder of Old Notes
(which term, for purposes of the Exchange Offer, includes any participant in
the Book-Entry Transfer Facility system whose name appears on a security
position listings as the holder of such Old Notes) who has not completed the
box entitled "Special Issuance Instructions" or "Special Delivery
Instructions" on this Letter, or (ii) for the account of an Eligible
Institution.
4. Special Issuance and Delivery Instructions.
Tendered holders of Old Notes should indicate in the applicable box the name
and address to which New Notes issued pursuant to the Exchange Offer and/or
substitute certificates evidencing Old Notes not exchanged are to be issued or
sent, if different from the name or address of the person signing this Letter.
In the case of issuance in a different name, the employer identification or
social security number of the person named must also be indicated. Noteholders
tendering Old Notes by book-entry transfer may request that Old Notes not
exchanged be credited to such account maintained at the Book-Entry Transfer
Facility as such noteholder may designate hereon. If no such instructions are
given, such Old Notes not exchanged will be returned to the name and address
of the person signing this Letter.
5. Transfer Taxes.
The Company will pay all transfer taxes, if any, applicable to the transfer
of Old Notes to it or its order pursuant to the Exchange Offer. If, however,
New Notes and/or substitute Old Notes not exchanged are to be delivered to, or
are to be registered or issued in the name of, any person other than the
registered holder of the Old Notes tendered hereby, or if tendered Old Notes
are registered in the name of any person other than the person signing this
Letter, or if a transfer tax is imposed for any reason other than the transfer
of Old Notes to the Company or its order pursuant to the Exchange Offer, the
amount of any such transfer taxes (whether imposed on the registered holder or
any other persons) will be payable by the tendering holder. If satisfactory
evidence of payment of such taxes or exemption therefrom is not submitted
herewith, the amount of such transfer taxes will be billed to such tendering
holder and the Exchange Agent will retain possession of an amount of New Notes
with a face amount equal to the amount of such transfer taxes due by such
tendering holder pending receipt by the Exchange Agent of the amount of such
taxes.
Except as provided in this Instruction 5, it will not be necessary for
transfer tax stamps to be affixed to the Old Notes specified in this Letter.
<PAGE>
6. Waiver of Conditions.
The Company reserves the absolute right to waive satisfaction of any or all
conditions enumerated in the Prospectus.
7. No Conditional Tenders.
No alternative, conditional, irregular or contingent tenders will be
accepted. All tendering holders of Old Notes, by execution of this Letter,
shall waive any right to receive notice of the acceptance of their Old Notes
for exchange.
Although the Company intends to notify holders of defects or irregularities
with respect to tenders of Old Notes, neither the Company, the Exchange Agent
nor any other person shall incur any liability for failure to give any such
notice.
8. Mutilated, Lost, Stolen or Destroyed Old Notes.
Any holder whose Old Notes have been mutilated, lost, stolen or destroyed
should contact the Exchange Agent at the address indicated above for further
instructions.
9. Withdrawal of Tenders.
Tenders of Old Notes may be withdrawn at any time prior to 5:00 p.m., New
York City time, on the Expiration Date.
For a withdrawal of a tender of Old Notes to be effective, a written or
facsimile transmission notice of withdrawal must be received by the Exchange
Agent at its address set forth above prior to 5:00 p.m., New York City time,
on the Expiration Date. Any such notice of withdrawal must (i) specify the
name of the person having deposited the Old Notes to be withdrawn (the
"Depositor"), (ii) identify the Old Notes to be withdrawn (including the
certificate number or numbers and principal amount of such Old Notes), (iii)
be signed by the holder in the same manner as the original signature on this
Letter (including any required signature guarantees) or be accompanied by
documents of transfer sufficient to have the trustee under the Indenture
register the transfer of such Old Notes into the name of the person
withdrawing the tender and (iv) specify the name in which any such Old Notes
are to be registered, if different from that of the Depositor. All questions
as to the validity, form and eligibility (including time of receipt) of such
notices will be determined by the Company, whose determination shall be final
and binding on all parties. Any Old Notes so withdrawn will be deemed not to
have been validly tendered for exchange for purposes of the Exchange Offer.
Any Old Notes that have been tendered for exchange but which are not exchanged
for any reason will be returned to the holder thereof without cost to such
holder as soon as practicable after withdrawal, rejection of tender or
termination of the Exchange Offer. Properly withdrawn Old Notes may be
retendered by following the procedures described above at any time on or prior
to 5:00 p.m., New York City time, on the Expiration Date.
10. Requests for Assistance or Additional Copies.
Questions relating to the procedure for tendering, as well as requests for
additional copies of the Prospectus, this Letter and other related documents
may be directed to the Exchange Agent, at (513) 579-5320.
<PAGE>
IMPORTANT TAX INFORMATION
Under current federal income tax law, a holder of New Notes is required to
provide the Company (as payor) with such holder's correct taxpayer
identification number ("TIN") on Substitute Form W-9 or otherwise establish a
basis for exemption from backup withholding to prevent backup withholding on
any New Notes delivered pursuant to the Exchange Offer and any payments
received in respect of the New Notes. If a holder of New Notes is an
individual, the TIN is such holder's social security number. If the Company is
not provided with the correct taxpayer identification number, a holder of New
Notes may be subject to a $50 penalty imposed by the Internal Revenue Service.
Accordingly, each prospective holder of New Notes to be issued pursuant to
Special Issuance Instructions should complete the attached Substitute Form W-
9. The Substitute Form W-9 need not be completed if the box entitled Special
Issuance Instructions has not been completed.
Certain holders of New Notes (including, among others, all corporations and
certain foreign individuals) are not subject to these backup withholding and
reporting requirements. Exempt prospective holders of New Notes should
indicate their exempt status on Substitute Form W-9. A foreign individual may
qualify as an exempt recipient by submitting to the Company, through the
Exchange Agent, a properly completed Internal Revenue Service Form W-8 (which
the Exchange Agent will provide upon request) signed under penalty of perjury,
attesting to the holder's exempt status. See the enclosed Guidelines for
Certification of Taxpayer Identification Number on Substitute Form W-9 for
additional instructions.
If backup withholding applies, the Company is required to withhold 31% of
any payment made to the holder of New Notes or other payee. Backup withholding
is not an additional federal income tax. Rather, the federal income tax
liability of persons subject to backup withholding will be reduced by the
amount of tax withheld. If withholding results in an overpayment of taxes, a
refund may be obtained from the Internal Revenue Service.
Purpose of Substitute Form W-9
To prevent backup withholding on any New Notes delivered pursuant to the
Exchange Offer and any payments received in respect of the New Notes, each
prospective holder of New Notes to be issued pursuant to Special Issuance
Instructions should provide the Company, through the Exchange Agent, with
either: (i) such prospective holder's correct TIN by completing the form
below, certifying that the TIN provided on Substitute Form W-9 is correct (or
that such prospective holder is awaiting a TIN) and that (A) such prospective
holder has not been notified by the Internal Revenue Service that he or she is
subject to backup withholding as a result of a failure to report all interest
or dividends or (B) the Internal Revenue Service has notified such prospective
holder that he or she is no longer subject to backup withholding; or (ii) an
adequate basis for exemption.
What Number to Give the Exchange Agent
The prospective holder of New Notes to be issued pursuant to Special
Issuance Instructions is required to give the Exchange Agent the TIN (e.g.,
social security number or employer identification number) of the prospective
record owner of the New Notes. If the New Notes will be held in more than one
name or are not held in the name of the actual owner, consult the enclosed
Guidelines for Certification of Taxpayer Identification Number on Substitute
Form W-9 for additional guidance regarding which number to report.
To prevent backup withholding, each tendering holder of Old Notes must
provide its correct TIN by completing the Substitute Form W-9 set forth below,
certifying that the TIN provided is correct (or that such holder is awaiting a
TIN) and that (i) the holder is exempt from backup withholding, or (ii) the
holder has not been notified by the Internal Revenue Service that such holder
is subject to backup withholding as a result of a failure to report all
interest or dividends or (iii) the Internal Revenue Service has notified the
holder that such holder is no longer subject to backup withholding. If the
tendering holder of Old Notes is a nonresident alien or foreign entity not
subject to backup withholding, such holder must give the Company a completed
Form W-8, Certificate of Foreign Status. These forms may be obtained from the
Exchange Agent. If the Old Notes are in more than one name or are not in the
name of the actual owner, such holder should consult the W-9 Guidelines for
information on which TIN to report. If such holder does not have a TIN, such
holder should consult the W-9 Guidelines for instructions on applying for a
TIN, check the box in Part 2 of the Substitute Form W-9 and write "applied
for" in lieu of its TIN. Note: Checking this box and writing "applied for" on
the form means that such holder has already applied for a TIN or that such
holder intends to apply for one in the near future. If such holder does not
provide its TIN to the Company within 60 days, backup withholding will begin
and continue until such holder furnishes its TIN to the Company.
<PAGE>
TO BE COMPLETED BY ALL TENDERING HOLDERS
(SEE INSTRUCTION 5)
PAYOR'S NAME: FIFTH THIRD BANK
PART I--PLEASE PROVIDE YOUR
TIN IN THE BOX AT RIGHT AND TIN: _________________
CERTIFY BY SIGNING AND Social Security Number
DATING BELOW. or Employer
Identification Number
SUBSTITUTE --------------------------------------------------------
FORM W-9 PART II--TIN Applied for [_]
CERTIFICATION--UNDER PENALTIES OF PERJURY, I CERTIFY
THAT:
DEPARTMENT OF --------------------------------------------------------
THE TREASURY (1) The number shown on this form is my correct
INTERNAL Taxpayer Identification Number (or I am waiting
REVENUE for a number to be issued to me);
SERVICE (2) I am not subject to backup withholding either
because: (a) I am exempt from backup
withholding, or (b) I have not been notified by
the Internal Revenue Service (the "IRS") that I
am subject to backup withholding as a result of
failure to report all interest or dividends, or
(c) the IRS has notified me that I am no longer
subject to backup withholding; and
PAYOR'S REQUEST (3) any other information provided on this form is
FOR TAXPAYER true and correct.
IDENTIFICATION
NUMBER ("TIN")
AND CERTIFICATION
Signature: _____________ Date: ______
- --------------------------------------------------------------------------------
You must cross out item (2) of the above certification if you have been
notified by the IRS that you are subject to backup withholding because of
underreporting of interest or dividends on your tax return and you have not
been notified by the IRS that you are no longer subject to backup
withholding.
YOU MUST COMPLETE THE FOLLOWING CERTIFICATE IF YOU CHECKED THE BOX IN PART 2 OF
SUBSTITUTE FORM W-9
CERTIFICATE OF AWAITING TAXPAYER IDENTIFICATION NUMBER
I certify under penalties of perjury that a taxpayer identification number
has not been issued to me, and either (a) I have mailed or delivered an
application to receive a taxpayer identification number to the appropriate
Internal Revenue Service Center or Social Security Administration Office or
(b) I intend to mail or deliver an application in the near future. I
understand that if I do not provide a taxpayer identification number by the
time of the exchange, 31 percent of all reportable payments made to me
thereafter will be withheld until I provide a number.
______________________________________ ____________________________________
Signature Date
