Cliffs Natural Resources Inc. recently announced that the company has reached its decision to agree on the principle to settle the alleged federal securities class action pending in the United States District Court for the Northern District of Ohio. Cliffs will also resolve the combined shareholder derivative actions pending in the Court of Common Pleas of Cuyahoga County, Ohio.
According to The Wall Street Journal, Cliffs Natural Resources Inc. on already agreed to settle a pending federal securities lawsuit related to the company's former Bloom Lake iron-ore mine in Canada for $84 million. The Cleveland-based miner claimed that its insurance carriers will pay the full amount of the settlement.
PRN Newswire reported that the lawsuits were brought against the Company and some of its former directors and officers in 2014. It happened before the change of control occurred coincident with the July 2014 annual shareholder meeting.
These lawsuits were based on the alleged distribution of misleading information from the previous management and previous board of directors regarding the Company's former Bloom Lake mine in Canada.
It also alleged the impact of those operations on the Company's financial outlook. These include the sustainability of the common stock dividend, and alleged failures to keep up with the internal controls and properly oversee and manage the development of the Bloom Lake mining operation.
Cliffs in 2014 took a $6 billion write-down, which are mostly related to the purchase of Bloom Lake, which it acquired in 2011 to supply the Chinese steel market. The miner eliminated its common-stock dividend in January 2015.
Moreover, under the terms of the settlement of the derivative actions, the Company has agreed to adopt a few changes to its corporate governance policies, protocols and practices. Additionally, the Company's insurance carriers will pay $775,000 for plaintiff's attorneys' fees and costs, subject to court approval, as claimed by Yahoo! Finance.
Meanwhile, the settlement agreements contain no admission of wrongdoing and include a full release of all defendants in connection with the accusations made in the lawsuit. But the settlements are subject to definitive documentation, shareholder notice, and court approval.
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