Exhibit 2
6.12.2014
Casablanca and Cliffs, So Far, Prove a Bridge Too Far
By: David Benoit
A set of filings this week show Casablanca Capital and iron-ore
miner Cliffs Natural Resources CLF +2.76% came oh-so-close to a settlement of their ongoing proxy fight before talks broke down
in April.
The activist hedge fund of Donald Drapkin will now push forward
with its campaign to take over a majority of Cliffs’s 11-person board. Since late January, Casablanca has been agitating
to shake up Cliffs, the worst-performing stock in the S&P 500 over the previous 12-months when it was booted from the index
in April. The stock is down 47% this year and down 78% since the start of 2012. It remains heavily shorted.
Casablanca, which owns 5.2% of Cliffs, spells out in detail
in its proxy filing the distance the two sides went to reach a settlement that would have given the hedge fund three seats on a
reduced nine-person board.
Casablanca’s desire for its nominee, Lourenco Goncalves,
to be executive chairman with Cliffs’s CEO reporting directly to him proved to be the hang-up in the end, according to both.
But each gives a slightly different take on the nearly two months of talks.
Both filings agree that talks began in earnest in early March,
with Cliffs offering to put Casablanca’s Mr. Drapkin on the board, an offer Mr. Drapkin rejected. A day later, Cliffs offered
two board seats and the opportunity to appoint a third mutually agreed upon independent nominee. Casablanca again rejected that
offer, and a day later said it would nominate six candidates.
On March 14, Cliffs Chairman James Kirsch met with Mr. Drapkin
and, according to Casablanca’s filing, the two sides reached an outline of an agreement, which Mr. Kirsch signaled would
be acceptable with some conditions. That pact centered on Casablanca getting three board seats and Mr. Goncalves becoming executive
chairman, Casablanca says.
Mr. Kirsch said at the meeting, according to Casablanca’s
filing, that “he thought the proposed terms would be acceptable and that, subject to Mr. Goncalves meeting the majority of
the board members, he was prepared to recommend the proposed settlement to the entire Board.”
Cliffs’s filing includes no such mention of Mr. Kirsch
agreeing to anything.
Casablanca’s filing then lays out the cross-country
adventures of Mr. Goncalves as he met Cliffs board members: First to Cliffs’s headquarters in Cleveland, then to Milwaukee
where one board member met him and another canceled a meeting, then to Houston, then to Washington, then to Fort Lauderdale, Fla.
The first meeting was March 19; the last was April 10.
Cliffs’s filing states simply that Mr. Goncalves met
the board members in March and April and the board then determined it wasn’t in best interests of shareholders to name Mr.
Goncalves executive chairman.
On April 21, Cliffs rejected the settlement offer. Both filings
state that the company signaled it would consider a settlement that didn’t include naming Mr. Goncalves as executive chairman.
Casablanca hasn’t proposed such a settlement, arguing it needs more board seats or the executive chairmanship to “effect
the necessary change.”
The sides are now back on track for a shareholder vote to
determine the board makeup, though even that will have some unusual steps.
Cliffs has taken the unusual step of nominating only nine members
for the board, essentially conceding two nominees to Casablanca. Cliffs’s filing says based on its conversations with shareholders
it believes the stockholders would support Casablanca having a minority representation on the board.
6.12.2014
Cliffs Natural Resources: What Else Could Go Wrong?
By: Ben Levisohn
In a letter to shareholders, Casablanca Capital explained
why they think much of Cliffs Natural Resources’ board has to go.
Since we began our campaign to create
value for all of Cliffs’ shareholders late last year, we have consistently emphasized that the Company is substantially undervalued
as a result of strategic missteps, blatant mismanagement and a misalignment of incentives between Cliffs’ shareholders and
its Board of Directors and management…
A majority of the current Board and nine-member
slate of Directors up for reelection approved both the $4.9 billion Consolidated Thompson transaction to acquire the Bloom Lake
project and the subsequent $1.5 billion in capital expenditures. These ill-conceived investments were part of a broader diversification
strategy that included the Coal, Chromite, Wabush and Amapá projects for a total outlay of $9 billion. None of these projects
currently contributes one cent to earnings…
6.11.2014
Cliffs' Shareholders Likely To Begin Ousting Its Board Next Month
By: Zvi Bar
Cliffs Natural Resources (CLF) (CLV) is troubled and the clearest
course to a solution is restructuring. Such restructuring must occur not only among the company's growth strategy, but also its
leadership. Many shareholders will likely jump-start this needed transformation by voting alongside Casablanca Capital in its endeavor
to elect new members to Cliffs' board of directors at the annual meeting on July 29.
Near the start of 2014, Casablanca Capital, an investment fund that
had amassed a 5.2% stake in Cliffs, proposed a split of the company, where the North American assets would be converted to a master
limited partnership and its international assets would become a standalone corporation.
Beyond these abovementioned measures, Casablanca has argued that
Cliffs made multiple "knee jerk reactions and entrenchment tactics." Even before Casablanca arrived, Cliffs' board engaged
in entrenchment tactics, including proposals to remove shareholders' rights to approve bylaw
amendments and eliminate cumulative voting, both of which failed
to gain shareholder approval in 2013.
Examples Casablanca presents in response to its engagement include
that roughly two weeks after filing its 13-D, Casablanca proposed Lourenco Goncalves as Cliffs' next CEO. Its basis was that Goncalves
has experience as a CEO of a metals company where he created value for shareholders, while Gary Halverson, who whom Cliffs brought
in as president and COO, had never led a company. Cliffs appeared to acknowledge Halverson's need for on the job training in his
hiring as they did not place him in the CEO role immediately, despite needing one. In any event, the day after Casablanca proposed
Goncalves, Cliffs officially appointed Halverson as CEO. The timing, from the perspective of Casablanca, was undoubtedly an insult.
Cliffs' dubious to outright hostile treatment of Casablanca's proposals
did not end there. The following month, in the days after Casablanca rejected a Cliffs proposal that it receive two board seats
and no more, Casablanca nominated six alternative directors. The following day, Cliffs indefinitely delayed the company's annual
meeting. The following month, Cliffs set an annual meeting date after Casablanca forced the issue. Below is a timetable that Casablanca
prepared, highlighting these events. (click to enlarge)
Casablanca appears most disappointed with James Kirsch, who was
appointed the Chairman of the Board last year and who has been on the board since 2010. Kirsch and five other current board members
(Richard K. Riederer, Susan M. Cunningham, Barry J. Eldridge, Susan M. Green
and Janice K. Henry) approved the Bloom Lake acquisition that squandered
billions, and Kirsch was the most senior executive and apparent puppet master behind Cliffs' reactions to Casablanca.
Casablanca has argued that because the Asian assets will likely
be nearly depleted by the end of the decade, it is not a core asset and a sensible one to sell or spin off.
5.13.2014
Is Cliffs Natural Resources Inc on Its Last Legs?
By: Rupert Hargreaves
There is also the issue of Casablanca Capital, an activist
investment fund, which is pressing for the breakup of Cliffs' and the replacement of the company's management.
Casablanca has some great ideas for Cliffs, which I have
covered here. However, Casablanca's most attractive proposal is the replacement of Cliffs' management. Casablanca claims that Cliffs'
current management team has been in place while the company has destroyed nearly $9 billion of shareholder value.
The fund also notes that Lourenco Goncalves, a board member Casablanca
is putting up for election, has purchased 50,000 shares in Cliffs. This fact in itself does not seem important, but according to
Casablanca, Cliffs' management team (including the CEO, Executive Chairman, and other board members) have purchased only 3,460
shares in Cliffs for cash. This shows almost no faith in the company.
4.30.2014
Cliffs Natural Resources: $120 Iron Ore Is Really, Really Important
By: Ben Levisohn
It’s not hard to see why this year has been difficult for
Cliffs Natural Resources. Earnings were disappointing; its Bloom Lake project is a disaster; and it’s engaged in a battle
with Casablanca Capital over the future of the company.
4.24.2014
Miner Cliffs slides to first-quarter loss
Reporting by: Nicole Mordant
Editing by: Matthew Lewis
Cliffs Natural Resources Inc, which is facing off against an activist
investor who wants to break up the company, reported a first-quarter loss on Thursday on the back of lower market prices for iron
ore and metallurgical coal.
