CCI facing obstacles

CLEVELAND - Cleveland Cliffs Inc. still has a few hurdles to clear before it can purchase coal producer Alpha Natural Resources - including getting approval from stockholders and fending off a potentially crippling stock purchase by a hedge fund that doesn't want the deal to move forward.

Harbinger Capital Partners, which currently owns 18.36 percent of CCI stock, said in an Aug. 14 filing with the Securities and Exchange Commission that it would seek CCI shareholder permission to increase its holdings.

CCI, which owns and operates the Empire and Tilden mines in Marquette County, recommended shareholders vote against Harbinger's plan to buy as much as a third of CCI's stock, according to an Aug. 22 SEC filing. The company will ask shareholders to vote on the proposal Oct. 3 at a meeting in South Euclid, Ohio.

"Accordingly, the Cleveland Cliffs board of directors unanimously recommends that Cleveland Cliffs shareholders vote against authorization of the control share acquisition," CCI said in its filing.

Calls to CCI's Cleveland offices were not returned and local offices are not allowed to comment on company stock situations. A Harbinger representative had no comment. Harbinger opposes CCI's plan to buy Alpha, indicating in a separate SEC filing that it believes the purchase isn't in the best interest of Cleveland Cliffs shareholders. According to CCI's filing, allowing Harbinger to boost its stake would give the hedge fund "disproportional influence and control over corporate policy and Cleveland Cliff's strategic plan."

A shareholder vote for the proposed purchase of Alpha, which was announced as a deal valued at $10 billion on July 16, has not been set yet. Alpha shareholders would receive .95 of a share of CCI and $22.23 in cash for each share they own of Alpha if the purchase is approved.

Alpha is the nation's largest supplier and exporter of metallurgical coal, a key ingredient in steel manufacturing. Alpha operates mining complexes in four states, consisting of 57 mines supplying 11 coal preparation and blending plants.

According to The Associated Press, federal regulators have approved the deal. The Federal Trade Commission allowed an early end to the waiting period under the Hart-Scott-Rodino Act, which is used to determine if a takeover violates antitrust laws. The deal is still subject to shareholder approval.