Iron ore and coal producer Cliffs Natural Resources (NYSE: CLF) announced Jan. 26 that during the fourth quarter of 2014 and the beginning of January 2015, the company reduced its net debt balance by more than $400m.
This accelerated debt reduction was achieved through the repayment of short-term debt as well as the repurchase of more than $200m aggregate principal amount of senior notes in the open market at an average discount of 34% to par, capturing a total discount of approximately $70m. The sources of funds to execute the accelerated debt reduction program were cash from operations generated during the fourth quarter of 2014 and net proceeds from the sale of Cliffs Logan County Coal in southern West Virginia.
In addition, Cliffs’ Board of Directors has decided to eliminate the quarterly dividend of $0.15 per share on Cliffs’ common shares. The decision is applicable to the first quarter of 2015 and all subsequent quarters.
Lourenco Goncalves, Cliffs Chairman of the Board, President and CEO, said: “Our strong performance in the fourth quarter of 2014 and the sale of Cliffs Logan County Coal which closed on December 31st allowed us to take advantage of the discounts offered in the debt markets and significantly reduce our debt. We see accelerated debt reduction as a more effective means of protecting our shareholders than continuing to pay a common share dividend. The elimination of this dividend provides us with additional free cash of $92 million annually, which we intend to use for further debt reduction.”
Cliffs Natural Resources Inc. will host the fourth quarter and 2014 full-year earnings conference call on Tuesday, February 3, 2015 at 10 a.m. ET to review its financial results and to inform the status of relevant ongoing strategic initiatives.
Cliffs Natural Resources is a leading mining and natural resources company. The company 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 and Alabama. Additionally, Cliffs operates an iron ore mining complex in Western Australia and owns two non-operating iron ore mines in Eastern Canada.