Cleveland-Cliffs shareholders reject Harbinger's bid for more shares

By Lisa Kerner

Charlotte, N.C., Oct. 3 - Cleveland-Cliffs Inc. said a majority of its shareholders voted against Harbinger Capital Partners Funds' proposed control share acquisition at a special meeting on Friday.

The count includes shares voted by holders other than Harbinger, its equity-swap counterparties and other "interested" shareholders, according to a Cleveland-Cliffs news release.

Final results will be tabulated by the independent inspector of elections, IVS Associates, Inc.

As previously reported, Harbinger wanted to acquire enough Cleveland-Cliffs shares to bring its total voting power to at least one-fifth but less than one-third of the company's voting power.

"We are pleased Cliffs' shareholders voted to retain their right to provide meaningful input on the future strategic decisions of the company," Cleveland-Cliffs chairman, president and chief executive officer Joseph A. Carrabba said in the release.

"Moreover, we are pleased that all shareholders will have the opportunity to evaluate the merits of the proposed acquisition of Alpha Natural Resources [Inc.]"

Harbinger said it was "obviously disappointed" by the vote and reiterated that it was never its intention to control the company.

Cleveland-Cliffs' largest shareholder admitted that with an increased stake, it could block transactions it believes do not maximize shareholder value, it was previously reported.

"We continue to believe that the proposed acquisition would have placed Harbinger in a position to advocate the shared interests of all shareholders in maximizing the value of their investment," Harbinger said in a statement.

"In the process of soliciting proxies for today's vote, we have found widespread agreement among the company's shareholders that the proposed acquisition of Alpha Natural Resources represents a profound strategic mistake which places the future of the company at substantial risk," Harbinger added.

In July, Cleveland-Cliffs agreed to acquire Alpha Natural Resources in a cash and stock transaction valued at approximately $10 billion.

Harbinger Capital Partners Master Fund I, Ltd. and Harbinger Capital Partners Special Situations Fund, LP directly and indirectly own a combined 15.57% of the company's total issued and outstanding shares, a prior news release said.

Cleveland-Cliffs, a mining company, produces iron ore pellets in North America and supplies metallurgical coal to the steelmaking industry. The company is based in Cleveland.

Alpha Natural Resources, located in Abingdon, Va., supplies Appalachian coal to the steel industry, electric utilities and other industries.

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