TORONTO May 29 An activist investor campaigning against miner Cliffs Natural Resources Inc said Thursday it may take the company to court over a "proxy put" that could trigger a liquidity crisis if the hedge fund wins control of Cliffs' board.
Cliffs warned shareholders in a regulatory filing Friday that if all six of New York hedge fund Casablanca Capital's nominees were elected, the company may be forced to repurchase its outstanding senior notes because of a change of control provision on the notes.
Casablanca said Cliffs could defuse the problem by approving its nominees "not as an endorsement, but merely for the narrow purpose of not triggering the proxy put."
"Instead of implementing this now-common corporate governance measure, the board has implied a willingness to put the company's very existence at risk, employing brinksmanship with the company's liquidity in an attempt to preserve its current seats," Casablanca said in a statement.
Cliffs didn't immediately comment on the release. (Reporting by Allison Martell; Editing by Bernadette Baum)