Cliffs Natural Resources Inc. (NYSE: CLF) announced that it, Bloom Lake General Partner Ltd., as well as some affiliates had commenced restructuring proceedings in Canada under the Companies’ Creditors Arrangement Act (CCAA). The Bloom Lake group had previously suspended operations and was looking to sell some of its Canadian assets.
According to the press release:
The initial CCAA Order will address the Bloom Lake Group’s immediate liquidity issues and permit the Bloom Lake Group to preserve and protect its assets for the benefit of all stakeholders while restructuring and sale options are explored.
Lourenco Goncalves, chairman, president and CEO of Cliffs, stated that the company had been looking for equity investors as well as sale options for the past few months but to no avail.
This was all originally brought on by a failed arbitration for Bloom Lake in the fourth quarter.
ALSO READ: Why GE Is Likely to Keep Raising Its Dividend
Cliffs struggled through the fourth quarter, pursuing an exit strategy from Bloom Lake. At the time Cliffs and its subsidiary, Cliffs Quebec Iron Mining, along with Bloom Lake General Partner and Bloom Lake Iron Ore Mine, lost an arbitration claim that they filed against a previous Bloom Lake customer. The arbitration pertained to the August 2011 termination of an iron ore sales agreement.
As a result, at the end of the fourth quarter, Credit Suisse lowered its price target to $1 from $10, which is a huge shift in confidence as Cliffs has been at the mercy of analysts for a while. Also in the fourth quarter, Deutsche Bank downgraded Cliffs to Hold from Buy and Citigroup downgraded Cliffs to Sell from Neutral with a price target of $5.
Even more recently, Cliffs had a quarterly dividend of $0.15 per share on the common shares, which had an annual yield of 8%. However, the board decided to eliminate the dividend for the first quarter of 2015 and all subsequent quarters in an effort to pay down the company’s debt in the hard times it is having now.
Shares of Cliffs were up as high as 3% at $7.43 following the release and down as much as 3% at $7.04 in the second half of Tuesday’s trading session. It would appear that investors are confused about how to react to the news. The stock has a consensus analyst price target of $6.75 and a 52-week trading range of $5.63 to $23.53.
Stay tuned.
ALSO READ: 5 Stocks Under $5 With Gigantic Potential Upside
Credit Card Companies Are Doing Something Nuts
Credit card companies are at war. The biggest issuers are handing out free rewards and benefits to win the best customers.
It’s possible to find cards paying unlimited 1.5%, 2%, and even more today. That’s free money for qualified borrowers, and the type of thing that would be crazy to pass up. Those rewards can add up to thousands of dollars every year in free money, and include other benefits as well.
We’ve assembled some of the best credit cards for users today. Don’t miss these offers because they won’t be this good forever.
Flywheel Publishing has partnered with CardRatings for our coverage of credit card products. Flywheel Publishing and CardRatings may receive a commission from card issuers.
Thank you for reading! Have some feedback for us?
Contact the 24/7 Wall St. editorial team.