Cleveland-Cliffs adopts rights plan after stockholders reject Harbinger's bid for more shares

By Lisa Kerner

Charlotte, N.C., Oct. 14 - The board of directors of Cleveland-Cliffs Inc. adopted a shareholder rights plan to protect the company and its shareholders from "potentially coercive takeover practices or takeover bids."

According to Cleveland-Cliffs, the rights will initially trade together with the company's common shares and will not be exercisable.

The rights generally will become exercisable if a person or group acquires beneficial ownership of 10% or more of Cleveland-Cliffs' outstanding common shares, a company news release said.

An exchange option is also included in the rights plan. After the rights become exercisable, Cleveland-Cliffs' directors may exchange part or all of the rights for the company's common shares on a one-for-one basis.

The company's directors may, at their option, redeem all rights for $0.001 per right at any time prior to the time the rights become exercisable, said Cleveland-Cliffs.

Cleveland-Cliffs will be renamed Cliffs Natural Resources on Wednesday.

It was previously reported that a majority of Cleveland-Cliffs shareholders rejected Harbinger Capital Partners' control share acquisition proposal at a special meeting held Oct. 3.

Harbinger wanted to acquire more than one-fifth but less than one-third of Cleveland-Cliffs' shares outstanding. The Harbinger investors beneficially own 15.57% of the company's total issued and outstanding shares, according to a prior news release.

Cleveland-Cliffs said it will hold a shareholder meeting in mid-November to vote on the company's proposed $10 billion cash and stock buyout of Alpha Natural Resources Inc.

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

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.

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