The activist hedge fund pushing for change at Cliffs Natural Resources plans to back a candidate for chief executive as it steps up its fight at the mining company.
The investor, Casablanca Capital, plans to disclose on Wednesday that it is backing Lourenco Goncalves, the former chief executive of Metals USA, as its choice to lead the company.
And the firm plans to nominate a slate of candidates, including Mr. Goncalves, to replace a majority of Cliffs’s board.
Casablanca has been calling on the mining concern to combine its Bloom Lake property in Canada with its Asian assets, spinning them off into an internationally focused company.
The hedge fund has also demanded that Cliffs put its remaining assets into a master limited partnership to curb its taxes and increase payouts to investors.
Casablanca’s move on Wednesday follows Cliffs’s announcement on Tuesday that it plans to cut up to $425 million in capital spending and lay off 500 employees. But the cost-cutting initiative wasn’t enough to satisfy Casablanca, which plans to say that the proposal was a “knee-jerk reaction†that doesn’t improve the company’s performance enough.
“We believe they are inadequate to address Cliffs’s issues, including the need for dramatic cost savings, and do not demonstrate the strong leadership needed to create substantial value for shareholders,†Donald Drapkin, the founder of Casablanca, said in a statement.
According to the hedge fund, Mr. Goncalves is the right person to lead the mining company as it searches for a new leader. During his time at Metals USA, the company’s stock price grew sevenfold before being taken private.
