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UPDATE 2-Cliffs Natural to take $6 bln charge on coal, iron ore assets

Oct 17 (Reuters) - Cliffs Natural Resources Inc said it would record a non-cash charge of $6 billion in the third quarter to write down the value of some coal and iron ore assets due to weak prices.

Oct 17 (Reuters) - Cliffs Natural Resources Inc said it would record a non-cash charge of $6 billion in the third quarter to write down the value of some coal and iron ore assets due to weak prices.

The company's shares fell 2 percent to $9.30 in light premarket trading on Friday.

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Cliffs Natural replaced it chief executive in July and said it would sell underperforming assets after New York-based fund Casablanca Capital triumphed in a proxy battle.

Coal prices have halved over the past three years as a result of sluggish demand and rising output from Australia, Indonesia, South Africa, Colombia and the United States.

Iron ore prices sank to a five-year low last month as output from Australia and Brazil continues to rise even as top Consumer China imports less.

Cliffs Natural said the charge was related to iron ore for export and coal used in steel-making.

The company said in May it expects seaborne iron ore and metallurgical coal prices to remain weak in the near term, which would reduce revenue in most of its businesses.

The company said on Friday the charge would increase its debt-to-capitalization ratio over the 45 percent threshold set by its revolving credit facility, and it was working with its banking group to amend the covenant.

Cliffs has a debt-to-capital ratio of 25.1 percent, according to Thomson Reuters StarMine. Debt-laden coal miners Arch Coal Inc and Walter Energy Inc have ratios of over 50 percent.

Cliffs Natural, due to report quarterly results on Oct. 27, is expected to post a quarterly loss of 1 cent per share on revenue of $1.29 billion, according to Thomson Reuters I/B/E/S.

The company said the charge would not impact its cash flows from operations or any future operations.

The company said it had no drawings on its $1.25 billion revolving credit facility as of Sept. 30 and expects to have closed the third quarter with about $250 million of cash on hand.

The company's shares have fallen more than 60 percent this year to close at $9.50 on Thursday. (Reporting by Anannya Pramanick in Bangalore; Editing by Don Sebastian)

Reuters
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Reuters
Published on:
October 17, 2014
Source url:
http://feeds.reuters.com/~r/reuters/USenergyNews/~3/WEOMD8lLRyw/story01.htm
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