Cliffs Natural Resources
) said last Friday that hedge fund Casablanca Capital has
rebuffed its offer of additional Board seats, which was made in
an effort to end a proxy war. The New York-based activist
investment firm is one of Cliffs' biggest shareholders with a
Cliffs, on Mar 7, offered to allow Casablanca to appoint two new
independent Directors to the company's Board and a third mutually
agreed upon Director to be named later. The Ohio-based company
noted that the decision was made in an attempt to avoid a costly
and distracting proxy battle.
Cliffs also postponed the record date of its annual shareholders'
meeting, originally scheduled to be held on May 13, 2014, in
order to accommodate Casablanca's request. The record date of the
meeting will be announced later.
Cliffs, in a separate statement, said that Casablanca is
nominating 6 director candidates for election to its 11-member
Board at its annual shareholders' meeting.
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However, Casablanca rejected Cliffs' settlement offer and stated
that it continues to seek full control of the company's Board and
replacement of its Chief Executive Officer Gary Halverson through
a proxy contest. Cliffs said that it is ready to engage with
Casablanca to resolve the matter.
) and Bank of America Merrill Lynch, a division of
Bank of America
), are acting as financial advisors to Cliffs while Jones Day and
Wachtell, Lipton, Rosen & Katz are serving as legal counsel.
Cliffs' shares fell as much as around 3% in the trading session
last Friday. The stock is down roughly 28% year-to-date and
around 23% over a year.
Cliffs came under pressure in Jan 2014 after Casablanca urged it
to spin off its overseas assets (including the Bloom Lake Mine in
Quebec), significantly cut costs and double its dividend to bump
up shareholder value. Casablanca noted that Cliffs has
significantly underperformed both its peer group and the broader
market in recent years.
Cliffs said last month that it would curtail Phase II expansion
at its Bloom Lake project amid an uncertain iron ore pricing
environment and high costs. The move will lead to a more than 50%
year-over-year reduction in capital spending for 2014. The
decrease will also result from Cliffs' decision to idle
production at its Wabush Scully Mine in Newfoundland and Labrador
by the end of first-quarter 2014.
Cliffs sees accelerating economic growth in the U.S. to support
domestic steel production and demand for steelmaking raw
materials. However, it expects pricing of its commodities to
remain volatile. The company remains committed to look for
alternative strategic options to boost shareholder value in the
Cliffs is a Zacks Rank #3 (Hold) stock.
Another mining company that is worth considering is
BHP Billiton Limited
), sporting a Zacks Rank #1 (Strong Buy).