Boston, MA 01/29/2014 (wallstreetpr) – Cliffs Natural Resources Inc (NYSE:CLF) was advocated to double its dividend by separating foreign assets. Shareholder Casablanca Capital LP urged the chairman of the biggest U.S. iron ore producer in a letter Chairman James Kirsch filed with the regulators today.
Casablanca is the fourth largest stakeholder in the Cleveland based company with around a 5.2% stake in the company. The New York based investment adviser has directed Cliffs Natural to convert its U.S. assets to a master limited partnership. According to them, this would save the iron ore producer costs significantly. Casablanca holds 7.91 million shares in the company which is struggling to surge up profits.
Iron ore’s falling prices: A worry
Like many other mining companies, Cliffs Natural Resources Inc (NYSE:CLF) is having a hard time drawing in profits and go ahead with any expansion plans. This can be accounted for by the falling iron ore prices which have declined as much as 17% over the past year. Cliffs Natural has also delayed its plans for expanding its Quebec mine. They have cut down on dividend also in 2013 after the Chief Executive Officer and president of global operations in the company left.
Not a good idea: Analysts
Analysts have a different take on the suggestion of Casablanca. According to an analyst at BMO Capital Markets in London, Tony Robson, this offer to increase shareholder value is perhaps not the best one. Cliffs Natural Resources Inc (NYSE:CLF)’s U.S. and international parts instead could be streamlined to perform iron ore operations jointly, he said. As far as the other assets are concerned, the company could look at completely shutting down all underperforming operations and focus on working as only specialists in their major business.
A good idea: Cliffs Natural
In its letter, Casablanca wrote that Cliff Natural’s valuation will increase up to $53 per share if they implemented the changes. The management of both the companies has met twice in the last couple of months. Cliffs Natural Resources Inc (NYSE:CLF) is looking upon the discussions as productive and seeks to seriously consider the proposal.
