Casablanca Capital the beneficial owner of approximately
5.2% of Cliffs Natural Resources Inc. CLF, today sent a letter to the
Cliffs Board of Directors urging it to hold the Company's annual meeting of
shareholders on or before June 4, 2014. Should the Company fail to set a
prompt date for the annual meeting, Casablanca intends to commence a consent
solicitation to call a Special Meeting of shareholders for the election of the
Company's Board of Directors.
“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,” said Donald Drapkin, Chairman of Casablanca. “The members of this
Board have not made any meaningful investment in the Company's shares. In
fact, Cliffs' Executive Chairman 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. 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.”
The letter Casablanca today sent to the Cliffs Board follows:
April 21, 2014
Members of Cliffs Natural Resources, Inc. Board of Directors
In care of:
James F. Kirsch
Executive Chairman
Cliffs Natural Resources Inc.
200 Public Square, Suite 3300
Cleveland, OH 44114
Members of the Board:
We are writing to request that Cliffs hold its annual meeting of shareholders
on or before June 4, 2014. Should the Board fail to set a prompt date for the
annual meeting, Casablanca intends to commence a consent solicitation to call
a Special Meeting of shareholders for the election of the Board of Directors,
in accordance with the Company's regulations and consistent with the rights of
shareholders under Ohio law.
Casablanca has spent over a month working within an agreed-upon framework to
reach a settlement that would have provided a meaningful voice for
shareholders and accelerated a desperately-needed process to restore value at
Cliffs. Although we are bound to keep the details of our discussions private,
we can state that Casablanca offered significant concessions as part of an
agreement in principle. Despite our good-faith efforts, we have been thwarted
by foot-dragging and evasion throughout the process. This has now culminated
in the Board's refusal to consummate the agreement or offer any meaningful
insight into what settlement terms might bridge our respective concerns. We
are frustrated by the Board's apparent stall tactics, and believe that it has
failed to show any genuine intention to conclude a mutually-acceptable
settlement agreement in the best interests of shareholders.
We remain troubled that the Board has delayed the Company's annual election of
directors, today confirming to us that it has no intention of holding its
annual meeting imminently. We find this management entrenchment tactic
unacceptable. Despite the Company's suggestion to the contrary, at no time did
Casablanca request a delay of the shareholder meeting.^1
Casablanca believes the Cliffs' Board continues to lack any sense of urgency,
and that its stall tactics exemplify the flawed decision-making that has
brought Cliffs to where it is today. We believe this demonstrates a lack of
leadership and vision for Cliffs, and that shareholders deserve better.
Very truly yours,
/s/ /s/ /s/
Donald G. Drapkin Douglas Taylor Gregory S. Donat
Chairman Chief Executive Partner & Portfolio
Officer Manager
Other announcements, filings, and background materials related to Casablanca's
investment in Cliffs can be found at www.fixcliffs.com.
^1 We believe the Board has confused shareholders in its press releases dated
March 7, 2014 and related public statements by conflating two very different
topics: the record date for the shareholder meeting (which Cliffs and
Casablanca discussed), and the actual annual meeting date (which was never
discussed). A record date merely establishes the date on which a shareholder
must own shares if they are to be eligible to vote in the annual meeting.
Cliffs' record date was originally set for March 7, 2014—a deadline that was
only four days away when the Company contacted Casablanca on March 3, 2014,
and indicated its desire to discuss a settlement. In this highly-preliminary
discussion, Casablanca suggested that delaying the impending record date might
be a productive way to lay the groundwork for meaningful settlement
discussions. Cliffs responded by indefinitely suspending its annual meeting
date—stating it was doing so “in order to accommodate this request.”
Casablanca only suggested that the record date be pushed back, but did not at
any time request that the annual meeting itself be delayed.
About Casablanca Capital LP
Casablanca Capital is an Event Driven and Activist investment manager based in
New York, founded in 2010 by Donald G. Drapkin and Douglas Taylor. Casablanca
invests in high quality but underperforming public companies that have
multiple levers to unlock shareholder value. The firm seeks to engage with the
management, boards, and shareholders of those companies in a constructive
dialogue in order to enhance shareholder value through improved operational
efficiencies, strategic divestitures, capital structure optimization and
increased corporate focus. In 2011, Casablanca successfully initiated a
campaign at Mentor Graphics Corporation to improve profitability and enhance
value at the company, working with shareholders to elect three nominees to
Mentor's Board.
Cautionary Statement Regarding Opinions and Forward-Looking Statements
Certain information contained herein constitutes “forward-looking statements”
with respect to Cliffs Natural Resources Inc. ("Cliffs"), which can be
identified by the use of forward-looking terminology such as “may,” “will,”
“seek,” “should,” "could," “expect,” “anticipate,” “project,” “estimate,”
“intend,” “continue” or “believe” or the negatives thereof or other variations
thereon or comparable terminology. Such statements are not guarantees of
future performance or activities. Due to various risks, uncertainties and
assumptions, actual events or results or actual performance may differ
materially from those reflected or contemplated in such forward-looking
statements. The opinions of Casablanca Capital LP ("Casablanca") are for
general informational purposes only and do not have regard to the specific
investment objective, financial situation, suitability or particular need of
any specific person, and should not be taken as advice on the merits of any
investment decision. This material does not recommend the purchase or sale of
any security. Casablanca reserves the right to change any of its opinions
expressed herein at any time as it deems appropriate. Casablanca disclaims any
obligation to update the information contained herein. Casablanca and/or one
or more of the investment funds it manages may purchase additional Cliffs
shares or sell all or a portion of their shares or trade in securities
relating to such shares.
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