Cliffs Natural Resources, almost as old as Cleveland itself, is fighting a takeover by a New York hedge fund that wants to take the company apart.
CLEVELAND, Ohio -- Cliffs Natural Resources, which is fighting a take-over of its board by a hedge fund, has set its annual shareholder meeting for July 29.
Gary Halverson, CEO, announced the company's decision -- but declined to take any questions about the company's struggle with the hedge fund -- at the start of a teleconference today with financial analysts to discuss the company's first quarter losses.
Casablanca Capital LP, a New York-based hedge fund, has become a major distraction for the 167-year-old Cliffs during the last several months, pressuring the company to spin off its international operations and reorganize its domestic business.
Cliffs is the nation's largest iron ore producer and a global producer of metallurgical coal for steel making. Its operations include iron ore mines in Michigan, Minnesota, Canada and Australia. Its coal mines are in West Virginia and Alabama.
While closing or cutting back production at some of its mines and slimming down its management in response to a downturn in business, partly driven by the worst winter in 30 years, Cliffs has refused to accede to Casablanca's major demands.
The hedge fund earlier this week set the stage for a showdown. It threatened to field a slate of candidates to replace the board of directors unless the company called a shareholder meeting before June. 4.
"As you may know, one of our shareholders, Casablanca Capital, has nominated director candidates for election to our Board of Directors," Gary Halverson, CEO, told analysts.
"We welcome open communications with all of our shareholders and strive to maintain a constructive dialog with them. We also remain committed to acting in the best interest of our shareholders," he said.
"We do not intend to make any further comments or statements during this call regarding Casablanca," he said, "and I thank you for your cooperation."
Cliffs reported an $83 million net loss, or 54 cents per share, for the quarter compared with a net profit of $97 million, or 66 cents per share, during the first quarter of 2013.
Sales for the quarter were $940 million, a decrease of $201 million, or 18 percent, compared to the first quarter of 2013.
The company has blamed its losses on a decline in demand for iron ore and metallurgical coal -- especially in China. The drop in demand led to competitive price-cutting. And the severe winter added to problems, especially in the Great Lakes where heavy ice ended shipping. In response, the company restructured its operations, cutting expenses and payrolls.
"While only a small portion of these cost-cutting efforts are reflected in our first quarter results, I'm confident that there's more to come. This first quarter progress has come in spite of difficult weather condition that impacted our North American operations," Halverson said.
As stockpiles of ore and coal have declined among Cliffs' customers, business has picked up, Halverson said, prompting the company to predict it will make up for lost sales during the rest of the year.
"In the U.S., the demand from our customers is stronger than ever. This is driven by the weather's impact on movement of iron ore across the Great Lakes. We experienced more than 70 days of minus 30 degree Fahrenheit temperatures over this winter season," he said.
Ice is still an issue, he added, and freighters must travel in convoys with Coast Guard icebreakers leading the way. But the water is deeper and that means ships can be loaded to carry more ore.