Cliffs Natural removes quarterly dividend to repay debt
Shares on Cliffs Natural Resources (NYSE:CLF), the U.S. biggest iron ore miner, were up 4.4% to $7.82 in pre-market trading Monday after the miner announced it has cancelled its dividend to focus on repaying debt.
Cliffs, which is trying to reshape itself amid tumbling iron prices, said that cutting the dividend of 15 cents a share will save the company about $92 million a year.
“We see accelerated debt reduction as a more effective means of protecting our shareholders than continuing to pay a common share dividend,” said chief executive Lourenco Goncalves in a press release.
The miner also said it reduced its net debt balance by more than $400 million in the past four months.
Since activist hedge fund Casablanca Capital won a battle to topple the previous board of the company in July last year, the new executives have vowed to sold several of the miner's international operations.
Earlier this month Cliffs closed completely its Canadian Bloom Lake iron ore mine and conclude the sale of part of its struggling coal division for $174 million, in cash, to Coronado Coal II LLC.
The Cleveland-based miner's move aims to fully exit higher-cost operations to focus only on its iron ore business in the U.S. As most of its peers, Cliffs has been struggling as a consequence of tumbling prices for iron ore and metallurgical coal, triggered by a slowdown in the Chinese steel industry.