Cliffs to Cut Quarterly Dividend to Save Cash

Cliffs Natural Resources Inc. (NYSE:CLF) announced that during Q4 2014 and the start of January 2015, it lowered its debt by more than $400 million.

The company also said it plans to eliminate the $0.15 quarterly dividend on its common shares.

As quoted in the press release:

This accelerated debt reduction was achieved through the repayment of short-term debt as well as the repurchase of more than $200 million aggregate principal amount of senior notes in the open market at an average discount of 34 percent to par, capturing a total discount of approximately $70 million. The sources of funds to execute the accelerated debt reduction program were cash from operations generated during the fourth quarter of 2014 and net proceeds from the sale of Cliffs Logan County Coal.

Lourenco Goncalves, president, CEO and chairman of the board at Cliffs, commented:

Our strong performance in the fourth quarter of 2014 and the sale of Cliffs Logan County Coal which closed on December 31st allowed us to take advantage of the discounts offered in the debt markets and significantly reduce our debt. We see accelerated debt reduction as a more effective means of protecting our shareholders than continuing to pay a common share dividend. The elimination of this dividend provides us with additional free cash of $92 million annually, which we intend to use for further debt reduction.

Click here to read the full Cliffs Natural Resources Inc. (NYSE:CLF) press release.