Cliffs Increases Series A Conversion Ratio

Jan. 05, 2016 10:50 AM ETCLF
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On the wires about Cliffs Natural and the Series A preferred (wrote about it here) (emphasis mine):

Cliffs Natural Resources Inc. today announced that, under the terms of its 7.00% Series A Mandatory Convertible Preferred Stock, Class A, the final quarterly dividend will not be paid in cash.

Instead, pursuant to the terms of the Series A preferred stock, the conversion rate will be increased such that holders of the Series A preferred stock will receive additional Cliffs common shares in lieu of the accrued dividend at the time of mandatory conversion of the Series A preferred stock on February 1, 2016.

In accordance with applicable law, Cliffs' board of directors determined not to declare a dividend payable in cash. The number of Cliffs common shares in the aggregate to be issued in lieu of the dividend is estimated to be approximately 1.26 million. This results in an effective conversion rate of .9052 common shares, rather than .8621 common shares, per depositary share, each representing one-fortieth of a share of Series A preferred stock.

Based on toady's price on Cliffs (CLF), this results in a CLV price of $1.44. Price is currently $1.40.

Smart to conserve cash although I was hoping for a cash divvie.

Disclosure: I am/we are long CLV.

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