A New York hedge fund has raised the heat on Cliffs Natural Resources, which owns or manages five regional mines, saying the publicly traded corporation has not worked hard enough to raise its stock value.
Casablanca Capital LP sent a letter to Cliffs Monday urging the firm to hold board elections by June 4. The fund, which hopes to install its own CEO and elect its own slate of board members, threatened to seek a special shareholders meeting if Cliffs doesn’t cooperate.
“More than a month has passed since we met in person with Cliffs and agreed to a framework for a settlement that would have brought a fresh perspective and valuable expertise to a board that has overseen a tremendous destruction of value,” Donald Drapkin, Chairman of Casablanca, said in a prepared statement.
Cliffs’ share price has declined from $65.70 on April 23, 2012, to $18.62 when the stock market closed Monday. Casablanca believes Cliffs’ stock would increase in value to $53 per share if the company spins off its international assets, doubles its dividend and converts its structure to a master limited partnership.
“The members of this board have not made any meaningful investment in the company’s shares. In fact, Cliffs’ Executive Chairman (James F. Kirsch) has never invested a dollar of his own money, but continues to stymie investors’ legitimate efforts to restore value at the company, in our view,” Drapkin wrote. “We believe the pitifully small steps that the board has taken to date have only been in response to Casablanca’s efforts. This board must be held accountable.”
Cliffs previously announced its 2014 capital spending will be halved compared with the prior year. In February, Cliffs also announced plans to shutter its high-cost Wabush mine in eastern Canada. But the merchant supplier of iron ore pellets is refusing to replace CEO Gary Halverson, defends its current board members and has not yet scheduled its annual meeting.
“The new record date will be announced in a future press release as will the annual meeting date,” Cliffs said in a Monday statement. “Further details regarding the annual meeting will be included in the company’s definitive proxy statement, which will be mailed to shareholders of record in advance of the meeting.”