UPDATE 1-Cliffs Natural scraps quarterly dividend, cuts debt

Mon Jan 26, 2015 8:27am EST
 
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Jan 26 (Reuters) - Iron ore and coal miner Cliffs Natural Resources Inc said it reduced net debt by $400 million and scrapped its quarterly dividend to cut more debt.

The company, whose shares were up 1 percent in premarket trading, had total debt of $3.25 billion as of Sept. 30.

Cliffs' debt has ballooned as coal and iron ore prices slumped due to excess supplies and sluggish steel demand from China.

Cliffs wrote down the value of its coal and iron ore assets by about $6 billion in October due to weak prices, and warned a month later that it might have to close its Bloom Lake iron ore mine in Quebec.

The company has said it was mulling creditor protection in Canada to insulate itself from closure costs and liabilities at its Canadian operations.

"We see accelerated debt reduction as a more effective means of protecting our shareholders than continuing to pay a common share dividend," Chief Executive Lourenco Goncalves said on Monday.

The company said it would generate about $92 million annually by scrapping quarterly dividend of 15 cents from the first quarter.

Cliffs said cash from operations during the fourth quarter and proceeds from the sale of its Logan County coal assets in West Virginia helped it cut debt.

Cliffs shares, which have slumped 63 percent in the past 12 months, closed at $7.49 on the New York Stock Exchange on Friday. (Reporting by Sneha Banerjee and Tanvi Mehta in Bengaluru; Editing by Don Sebastian)