Cliffs Sees $6 Billion Decrease in Assets

Cliffs Natural Resources, traded as CLF, recently announced plans to take a big step by devaluing its seaborne iron ore and coal assets by $6 billion in the coming quarter. This adjustment, while substantial, will not affect the cash flow of the company in the short or long term.

This decision is a result of Cliffs’ updated perspective on the future pricing of these resources and the tough market circumstances for seaborne iron ore and metallurgical coal. It contrasts with the more stable conditions seen in the company’s U.S. iron ore sector.

To accommodate this devaluation, Cliffs is in the process of discussing alterations to its financial agreements with its banking partners. This will involve removing the 45 percent debt-to-capitalization covenant currently in place within its revolving credit, as the write-down will push this ratio above that threshold. The company’s executives mentioned that they are optimistic about finalizing this amendment by the time their third-quarter earnings report is released on October 27.

As of the end of September, Cliffs had not withdrawn funds from its $1.25 billion revolving credit and anticipates ending the quarter with roughly $250 million in cash reserves. Those interested can get further insights on the financial performance of the company by tuning into an investor conference call set for October 28 at 9 a.m. Eastern Time. An archive of the call will be accessible through the company’s website at http://www.cliffsnaturalresources.com.