Harbinger seeks support for share acquisition, denies attempt to take control of Cleveland-Cliffs

By Lisa Kerner

Charlotte, N.C., Sept. 12 - Cleveland-Cliffs Inc.'s largest shareholder, Harbinger Capital Partners Funds, once again asked the company's shareholders to authorize Harbinger's purchase of additional shares at the special meeting on Oct. 3.

Harbinger proposes acquiring 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, according to a schedule 13D filed with the Securities and Exchange Commission.

Cleveland-Cliffs' board of directors unanimously recommended that shareholders vote against the measure, it was previously reported.

"By building our stake, we aim to provide a clear and potent voice advocating for maximum value creation for the benefit of all shareholders," Harbinger said in a Sept. 12 letter to shareholders.

The investor denied it was attempting to seek control of the company.

Harbinger is "gravely concerned" by Cleveland-Cliffs' decision to buy Alpha Natural Resources Inc. and said the "$10 billion acquisition of Alpha is too much, too fast."

Because it has already acquired more than 10% of the company's voting shares without board approval, Harbinger is prohibited from engaging in certain transactions with Cleveland-Cliffs, such as mergers, dispositions and asset sales, for a three-year period, the letter stated.

With an increased stake in Cleveland-Cliffs, Harbinger admitted it could block transactions it believes do not maximize shareholder value, including possibly the Alpha acquisition, depending on the record date.

Harbinger Capital Partners Master Fund I, Ltd. directly and indirectly owns 9 million shares, or 8.43%, of Cleveland-Cliffs. Harbinger Capital Partners Special Situations Fund, LP directly and indirectly owns 7,616,472 shares, or 7.14%, of the company's total issued and outstanding shares.

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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