Scotiabank sues Cliffs Natural for breach of loan terms

Thu Mar 19, 2015 12:06pm EDT
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By Anannya Pramanick and Shubhankar Chakravorty

(Reuters) - Canada's Bank of Nova Scotia (BNS.TO: Quote) sued Cliffs Natural Resources Inc (CLF.N: Quote), saying the U.S. iron ore miner had breached terms of a loan agreement when it filed for creditor protection for its Canadian operations.

Cliffs in January stopped production at its Bloom Lake mine in Quebec, where costs exceeded expectations, and started restructuring the Canadian operations after years of weak iron ore prices.

Cliffs' shares fell as much as 7.2 percent in morning trading on the New York Stock Exchange on Thursday.

The move to file for creditor protection in Canada accelerated Cliffs' payment obligations, Scotiabank said in a lawsuit filed in a U.S. District Court in Ohio on March 16.

Scotiabank is claiming damages of about $52.6 million.

In response to the bank's notices, Cliffs denied that it was obligated to repay the debt immediately, Scotiabank said in the lawsuit.

Andrew Chornenky, a spokesman for the bank told Reuters he would not comment on matters "that are before the courts."

Cliffs was not immediately available for comment.   Continued...

Snow covers the Scotiabank logo at the Bank of Nova Scotia headquarters in Toronto December 16, 2013.  REUTERS/Chris Helgren