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SOURCE Pomerantz LLP
NEW YORK, June 20, 2014 /PRNewswire/ -- Pomerantz LLP has filed a class action lawsuit against Cliffs Natural Resources, Inc. ("Cliffs" or the "Company") (NYSE: CLF) and certain of its officers. The class action, filed in United States District Court, Northern District of Ohio, Eastern Division, and docketed under 1:14-cv-01106, is on behalf of a class consisting of all persons or entities who purchased or otherwise acquired Cliffs securities between March 14, 2012 and March 26, 2013, both dates inclusive (the "Class Period"). This class action seeks to recover damages against Defendants for alleged violations of the federal securities laws pursuant to Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 and Rule 10b-5 promulgated thereunder.
If you are a shareholder who purchased Cliffs securities during the Class Period, you have until July 11, 2014 to ask the Court to appoint you as Lead Plaintiff for the class. A copy of the Complaint can be obtained at www.pomerantzlaw.com. To discuss this action, contact Robert S. Willoughby at firstname.lastname@example.org or 888.476.6529 (or 888.4-POMLAW), toll free, x237. Those who inquire by e-mail are encouraged to include their mailing address, telephone number, and number of shares purchased.
Cliffs is an international mining and natural resources company that derives substantially all of its revenue from the production and sale of iron ore and coal.
The Complaint alleges that throughout the Class Period, Defendants were aware of, but failed to disclose, systemic problems with its Bloom Lake's facilities that caused massive cost overruns and serious production issues. These problems made it impossible for Cliffs to produce ore from Bloom Lake at low costs or to maintain the Company's dividend. The true facts, which Defendants knew but misrepresented or concealed from investors, were that: (i) Bloom Lake's facilities had serious problems, including inadequate equipment and shipping facilities that were incapable of efficiently transporting iron ore products; (ii) the mining operation of Bloom Lake would be more expensive than disclosed, including that the production cost of iron ore per ton had increased and could not be decreased, as a result of the Company's reliance on contract labor and a failure to efficiently manage the operation; (iii) production volumes at Bloom Lake had decreased rather than increased; (iv) the Phase 2 and Phase 3 projects designed to increase production at Bloom Lake were not economically viable; (v) as a result of the systemic and persistent problems at Bloom Lake, the Company's dividend was not sustainable; and (vi) the Company was incapable of adequately testing the dividend.
On November 19, 2012, the Company announced significant adjustments to its 2013 operating plan, effectively admitting that the Bloom Lake project was encountering serious problems. These adjustments included a suspension of key components of the Phase 2 expansion at Bloom Lake, and a delay of Cliffs' Phase 3 study. The Company, however, continued to conceal from investors the full extent of the issues at the mine as well as the fact that Defendants knew that Cliffs' dividend was not sustainable. The next day, Goldman Sachs cut its rating on Cliffs' stock, citing Bloom Lake's expansion delay, high production costs, as well as concerns regarding the Company's ability to continue paying its dividend. On this news, the price of Cliffs' stock dropped from $35.33 per share to $30.48 per share, or almost 14%, on November 19, 2012.
On February 12, 2013, after the financial markets had closed, Cliffs announced that it would slash its dividend by 76% to $0.15 per share. Significantly, this announcement came less than one year after Cliffs more-than-doubled its dividend and after repeated assurances that the dividend had been tested and was sustainable. The next day, Cliffs stated during its fourth quarter 2012 earnings conference call that Bloom Lake's costs remained elevated at $86 per ton. On this news, the price of Cliffs' stock dropped approximately 20%, or $7.32 per share, from $36.61 per share on February 12, 2013 to $29.29 per share on February 13, 2013.
On March 27, 2013, Morgan Stanley and Credit Suisse severely cut their price targets on Cliffs' stock, citing a weak balance sheet, the potential need to sell core assets, structural changes in its business and increased costs. On this news, the price of Cliffs' stock declined from $21.43 per share on March 26, 2013, to $18.46 per share on March 27, 2013 or almost 14%, on March 27, 2013.
The Pomerantz Firm, with offices in New York, Chicago, Florida, and San Diego, is acknowledged as one of the premier firms in the areas of corporate, securities, and antitrust class litigation. Founded by the late Abraham L. Pomerantz, known as the dean of the class action bar, the Pomerantz Firm pioneered the field of securities class actions. Today, more than 70 years later, the Pomerantz Firm continues in the tradition he established, fighting for the rights of the victims of securities fraud, breaches of fiduciary duty, and corporate misconduct. The Firm has recovered numerous multimillion-dollar damages awards on behalf of class members. See www.pomerantzlaw.com.
Robert S. Willoughby
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