I was reading an article earlier today that suggests Drapkin might be front running a CLF PROXY. It talks a lot about how Casablanca functions and why Drapkin is doing this. He is nothing more than a front for a large bank who wants CLF to pay its loans back now. The bank is scared that with iron ore pricing dropping CLF will fail to payoff its loans in a timely fashion. This is actually a sensible article. How did Drapkins tiny fund come up with $200 million to invest? And why did he invest almost everything in one stock? This is a logical idea. I am proposing a bank whom CLF owns billions to is supplying Drapkin with funds to run his fixcliffs campaign. Drapkin is not pulling these strings the bank is. That is why Drapkin is pushing so hard for the six votes and that is why CLF management is handing over two votes for no reason.
CLF isn't up against one fund in Casablanca it is up against a large bank who is funding Casablanca. All it wants is its money back. CLF knows this and that is why it is being so quiet. The bank has come calling and CLF better listen.
CLf does not owe Billions to any bank... the bonds (publicly trade-able Debt) that they pay interest on are held by Insurance companies and money managers. There is a market every day of bonds being bought and sold. Allianz owns the most at $79 million. If a bank had any actual exposure to CLF they would be far better served publicly dealing with them, the mere fact that last year CLF was able to have their Line of credit covenants relaxed would go directly against such a theory.
Now i would think that would be very illegal and a bank would be risking a lot . But it is Wall Street and look at the players and if any of this is true this government needs to come down hard on them and give long prison terms to all involved .
Listen for the last time. Loans might not come due but CLF will have trouble paying the interest payments on those loans. If it has trouble paying of the interest payments then they will have trouble paying of the entire loan when it is due. What don't you understand about that. Plus the revolving credit loan is based on the last four quarters of EBITDA. If the company breaks covenants the limit of the revolving credit loan will be lowered. It is that easy to understand. CLF is facing a liquidity crunch. Working on operations isn't going to solve this problem. CLF needs to start generating shareholder value not realizing the value of its assets. Plain stupid and does not attack the problem. Management is incompetent and doesn't see the difference between realizing and creating share holder value. Just stupid.
BAC and JPM are doing exactly what the bank wants. They are lining up buyers for CLF's international assets. Nothing will happen until after the proxy. But after look for CLF to start entering into joint ventures on its international assets. A complete sale at this iron ore spot prices would be stupid selling at the bottom always is. But JV are a possibility.