Cliffs Natural Resources (NYSE: CLF), which has been trying to dry up its red ink with the recent sale of some coal mines in West Virginia, said Jan. 27 that Bloom Lake General Partner Ltd. and certain of its affiliates, including Cliffs Quebec Iron Mining ULC, commenced restructuring proceedings in Montreal, Quebec, under the Companies’ Creditors Arrangement Act.
The Bloom Lake Group, which produced iron ore, had recently suspended operations and for several months has been exploring options to sell certain of its Canadian assets, among other initiatives. The decision to seek protection under the Canadian equivalent of bankruptcy was based on a thorough legal and financial analysis of the options available to the Bloom Lake Group.
“The Bloom Lake Group is no longer generating any revenues and is not able to meet its obligations as they come due,” Cliffs explained. “The Initial CCAA Order will address the Bloom Lake Group’s immediate liquidity issues and permit the Bloom Lake Group to preserve and protect its assets for the benefit of all stakeholders while restructuring and sale options are explored.”
As part of the CCAA process, the court has appointed FTI Consulting Canada Inc. as the Monitor. The Monitor will oversee activities of the Bloom Lake Group and provide assistance to the Bloom Lake Group and its stakeholders in respect of the CCAA process.
Lourenco Goncalves, Chairman of the Board, President and CEO of Cliffs, said: “For several months, we have been seeking equity investors and exploring sale options for Bloom Lake including working collaboratively with Investissement Québec. We support the decision by the directors of the Bloom Lake Group to conduct a restructuring process under the supervision of the Court.”
Cleveland-based Cliffs is a mining and natural resources company. It is a major supplier of iron ore pellets to the U.S. steel industry from its mines and pellet plants located in Michigan and Minnesota. Cliffs also produces low-volatile metallurgical coal in the U.S. from its mines located in West Virginia (Pinnacle) and Alabama (Oak Grove). Additionally, Cliffs operates an iron ore mining complex in Western Australia and owns two non-operating iron ore mines in Eastern Canada.