Mining company Cliffs Natural Resources Inc (NYSE:CLF) disclosed that it has struck an agreement in principle on a pending class action lawsuit against it. That should enable it to settle the putative Federal securities class action as well as the combined shareholder derivative actions pending in different district courts in Ohio. A total of $84 million was settled on in the agreements. The company was slapped with several different lawsuits in 2014 and is now trying to resolve them out of court.
A number of former directors and officers of Cliffs were charged before the change of control occurred in the company. Those changes occurred during the shareholder meeting in July 2014. The allegations against the former directors and previous management concerned the dissemination of misleading information in respect of the Bloom Lake mine in Canada. As a result, the impact on operations and the financial outlook for the company, which included the sustainability of its dividend, has also hurt shareholders’ interests.
The class action suit also alleged failure of the management to keep internal controls apart from overseeing and managing the Bloom Lake mining operation development appropriately.
No Admission of Wrongdoing
Cliffs clarified that its settlement agreements do not mean that it was admitting any liability or committing any wrongdoing. That included a complete release of defendants in respect of the charges made in the lawsuits. The company indicated that its settlements were subject to court approval, shareholder notice, and definitive documentation.
The miner also indicated that the lawsuit settlement would not have any impact on its financial conditions or operations. The company said that the settlement payment would be paid by its third party insurance carriers. The insurance carriers would also pay the plaintiff’s lawyer fees and costs of $775,000 subject to court approval. Aside from the payment, the company also agreed to make several changes to its corporate practices, protocols, and governance policies.