(Rewrites throughout with details from meeting, analyst view,
By Kim Palmer
CLEVELAND, July 29 Casablanca Capital triumphed
on Tuesday in its proxy battle with miner Cliffs Natural
Resources Inc, preliminary estimates show, putting the
hedge fund in a position to replace Cliffs' chief executive and
sell off underperforming assets.
Shareholders of Cleveland-based Cliffs voted onto the
miner's board all six nominees put forward by Casablanca, the
New York-based fund said, citing estimates from its proxy
solicitor. That means they will make up a majority of the
Cliffs CEO Gary Halverson said at the company's
well-attended annual meeting in Cleveland that because of the
contested nature of the elections, the results would be
announced in the next three business days.
Shares in Cliffs, a producer of iron ore and metallurgical
coal, jumped as much as 10.4 percent to $18.33 on the New York
The vote outcome "is a culmination of years of frustration
on behalf of shareholders," said Garrett Nelson, a mining
research analyst at BB&T Capital Markets.
Casablanca began a proxy fight in March against Cliffs, of
which it owns 5.2 percent, accusing the miner of destroying
shareholder value through an ill-conceived expansion strategy.
Cliffs shares have fallen about 85 percent in
the past three years, at a time when iron ore and coal prices
The vote by Cliffs shareholders has "sent a resounding
message of support for our efforts to drive meaningful change at
Cliffs, bring true accountability to the company's leadership,
and restore shareholder value," Casablanca Chairman Donald
Drapkin said in a statement.
Casablanca has said it wants to replace Cliffs' CEO with its
preferred candidate, Lourenco Goncalves, a former CEO of Metals
Other than naming a new CEO immediately, Casablanca will
likely pursue the sale of three of Cliffs four operating
segments, its Asia-Pacific iron ore business, its Eastern
Canadian iron ore operations and its North American coal unit,
said Nelson, the mining research analyst.
In recent weeks, Cliffs has made a series of concessions to
Casablanca, cutting down its slate of director nominees so that
at least four of Casablanca's candidates were likely to win
seats, and promising to elect a new chairman after the annual
Casablanca called these moves "a desperate attempt to resist
Cliffs has been critical of Casablanca's CEO candidate,
arguing that he does not have enough experience.
To be sure, three proxy advisory firms, Glass Lewis,
Institutional Shareholder Services and Egan-Jones had
recommended that Cliffs retain a majority of the board, Cliffs
said last week.
The six Casablanca nominees put forward for the board were:
Goncalves, Robert Fisher, Joseph Rutkowski, James Sawyer,
Gabriel Stoliar and Douglas Taylor, Casablanca's CEO.
(Reporting by Kim Palmer in Cleveland; Writing and additional
reporting by Nicole Mordant in Vancouver; Editing by Franklin
Paul and Grant McCool)