NEW YORK (AP) — One of Cliffs Natural Resources shareholders is recommending that the mining company take several steps to boost shareholder value, including spinning off its international assets, cutting costs and doubling its annual dividend.
Cliff's Natural shares jumped more than 7 percent in premarket trading Tuesday.
Casablanca Capital LP, which owns about 5.2 percent of Cliffs' stock, said in a regulatory filing that Cliffs should also convert its U.S. assets to a master limited partnership. A master limited partnership can be an attractive option for a company because it provides the tax benefits of a limited partnership and the liquidity of a publicly traded company.
The investment management company said that it feels that if Cliffs acts on the recommendations its shares should be valued at $53 per share. Cliffs' stock closed at $19.40 on Monday.
Cliffs said in a statement that it has held preliminary talks with Casablanca and looks forward to continuing discussions "to better understand their assumptions, projections and overall views."
Casablanca said in a letter sent to Cliffs Chairman James Kirsch that it wants Cliffs to spin off its Asia Pacific assets and its Bloom Lake project to create "Cliffs International." Cliffs has been working on expanding Bloom Lake, an open-pit iron ore mine located in Fermont, Quebec, but the project has gone slower than expected.
Casablanca also suggested that Cliffs sell its nickel, chromite and other development projects, as well as its railroads, power plant and port assets. Casablanca called the non-core assets "a distraction and burden to (Cliffs) balance sheet."
Cliffs said it has taken steps to improve its financial and operating performance across its businesses and will continue to evaluate its assets. The company said it's open to constructive talks with all shareholders and will continue to review and consider ideas that may create additional value.
Cliffs Natural Resources Inc.'s stock gained $1.38, or 7.1 percent, to $20.78 in Tuesday premarket trading.