What happened

Shares of iron ore producer and steelmaker Cleveland-Cliffs (CLF -0.69%) fell a little more than 10% as trading got underway on Feb. 9. An hour into the trading day, the stock was still off by around 9%. There were three pieces of relevant news here.

So what

First, Cleveland-Cliffs announced after the market close on Feb. 8 that it was selling 20 million shares of stock. The cash raised from the sale is slated for debt-reduction efforts. However, the move will dilute current shareholders, a situation that is usually not welcomed by investors. Second, it also announced that ArcelorMittal (MT -1.37%) would be selling 40 million shares it owns following the sale of North American steelmaking assets to Cleveland-Cliffs. Cleveland-Cliffs won't see any of that cash. It's not shocking that a sale of this scale would put downward pressure on the stock.    

A steel worker in a foundry with molten steel pouring from a vessel.

Image source: Getty Images.

And then, today, the company announced a $1 billion debt sale. The proceeds are to be used to pay down debt maturing between 2021 and 2025, effectively pushing these maturities out to between 2029 to 2031. That's probably a net positive, but not enough to offset the hit from the sale of shares.   

Now what

Balance sheets matter, and Cleveland-Cliffs has made a couple of aggressive acquisitions to build a steel business. Now it is trying to deal with the cost of those moves, which have left the steel- and iron ore maker with a debt-to-equity ratio of more than five times. It is good that the company is addressing its debt issues, but investors clearly weren't too pleased with the company's efforts here today.