Cliffs Natural (CLF) to Sell 9M Common, 20M Depositary Shares

February 12, 2013 4:34 PM EST Send to a Friend
Cliffs Natural Resources Inc. (NYSE: CLF) announced that it is offering to sell, subject to market and other conditions, 9,000,000 of its common shares, par value $0.125 per share ("Common Shares") (or up to 10,350,000 Common Shares if the underwriters of such offering exercise their option to purchase additional Common Shares) (the "Common Shares Offering"), and 20,000,000 of its depositary shares ("Depositary Shares"), each representing a 1/40th interest in a share of its new mandatory convertible preferred stock, Class A ("Mandatory Convertible Preferred Shares"), $1,000 liquidation preference per Mandatory Convertible Preferred Share (equivalent to $25 per Depositary Share) (or up to 23,000,000 Depositary Shares if the underwriters of such offering exercise their over-allotment option in full) (the "Mandatory Convertible Preferred Shares Offering") in separate registered public offerings.

The Depositary Shares entitle the holders, through the bank depositary, to a proportional fractional interest in the rights and preferences of the Mandatory Convertible Preferred Shares underlying the Depositary Shares, including conversion, dividend, liquidation and voting rights, subject to certain limited exceptions. Unless converted earlier at the option of the holders, each Mandatory Convertible Preferred Share (and, correspondingly, each Depositary Share) will automatically convert into a variable number of Common Shares on or around Feb. 15, 2016. The conversion rates, dividend rate and other terms of the Mandatory Convertible Preferred Shares will be determined by negotiations between the Company and the underwriters of the Mandatory Convertible Preferred Shares Offering.

The Company intends to use the net proceeds from the Common Shares Offering and the Mandatory Convertible Preferred Shares Offering to repay borrowings outstanding under its term loan facility. Any remaining net proceeds will be used for general corporate purposes.

The Common Shares Offering is not contingent upon the successful completion of the Mandatory Convertible Preferred Shares Offering and the Mandatory Convertible Preferred Shares Offering is not contingent upon the successful completion of the Common Shares Offering.

Currently, no public market exists for the Depositary Shares. The Company intends to apply to list the Depositary Shares on the New York Stock Exchange under the symbol "CLV." If the application is approved, the Company expects trading of the Depositary Shares on the New York Stock Exchange to commence within the 30-day period after the initial delivery of the Depositary Shares.

J.P. Morgan and BofA Merrill Lynch are serving as joint book-running managers for the Common Shares Offering and the Mandatory Convertible Preferred Shares Offering.


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