NEW YORK (The Deal) -- New York activist hedge fund investor Casablanca Capital LP is going full tilt against Cleveland iron ore and coal miner Cliffs Natural Resources (CLF) by nominating six directors to its board, according to a Friday regulatory filing. The investor has blamed the company's failed expansion strategy for precipitating an 80% decline in the company's value.
In a letter to Cliffs' board made public after the market closed Thursday, Casablanca, which has a 5.2% stake, called for a new strategy focused on its core U.S. business, which it said could be spun off into a master limited partnership or sold. The fund also reiterated its support for 30-year metals and mining veteran Lourenco Goncalves to lead Cliffs as CEO.
Donald Drapkin, chairman of Casablanca and former chief associate of financier Ronald Perelman, said its slate of directors, including Goncalves, are "far better equipped" than current board members to implement a new strategic direction for Cliffs and to take the steps that are "urgently required" for the company to get back on track and realize its full potential value.
The fund's nominees include: Goncalves, who was CEO of Metals USA in 2003, took the company private in 2005 with Apollo Global Management LLC and then public again in 2010 before selling it to Reliance Steel & Aluminum Co. last year for $1.2 million, a 5.5 times return for investors; Rip Fisher, the former Goldman Sachs head of mining and Canadian corporate finance and investment banking; Patrice Merrin, a director of Stillwater Mining Co. and former chairman of CML Healthcare Inc. and ex-CEO of Luscar; Joseph Rutkowski, former executive vice president of business development at Nucor Corp.; Gabriel Stoliar, former CFO at Vale SA; and Douglas Taylor, CEO and co-CIO of Casablanca.