Clf Pile
Image: Cliffs Natural Resources.

Disruptions in the global commodity markets have contributed to big long-term declines in shares of Cliffs Natural Resources (NYSE:CLF), as demand from the iron-ore market has collapsed in light of substantial drops in steel production. Yet even as Cliffs Natural shares have fallen precipitously, the company has taken some positive steps to try to make the most of a tough situation, and bullish investors have responded with some new enthusiasm concerning the iron-ore specialist and its future stock prospects. Let's take a closer look at three things that Cliffs Natural has done well recently to see if the rewards are paying off for shareholders.

1. Cliffs is taking advantage of the bond market.
One of the things that has held Cliffs Natural back is its debt, with the company reporting nearly $2.9 billion in long-term debt on its balance sheet as of June 30. In response to Cliffs' recent woes, bondholders have reacted negatively, and bonds trade at a considerable discount to par value.

Many companies would simply retrench and conserve cash in such an environment, but Cliffs Natural has taken the opportunity to make what could become a vital move to produce savings and reduce debt. With a tender offer in August, Cliffs Natural was able to reduce its overall debt by $125 million, but it ended up paying less than $70 million to bondholders because of the dramatic discounts in the bond market. As CEO Lourenco Goncalves observed, the net result was $56 million in what he called "equity value creation through discount capture," and Cliffs will also save $18 million in interest expense by having bought back the bonds. If further cash becomes available, similar opportunities could accelerate debt reduction well beyond what many have expected.

2. Cliffs is selling off non-core assets.
Companies under stress typically aim to focus on their best prospects, and Cliffs Natural is doubling down on its U.S. iron ore business. As a result, it's looking to raise cash and eliminate unnecessary expenses by selling off other assets that aren't critical to its primary strategy.

In its latest move, Cliffs said that it would sell its common shares of First Point Minerals, in which it owns about a 14% stake. Part of the transaction will involve First Point purchasing Cliffs' 60% interest in the Decar nickel project in British Columbia, with a price of about $4.75 million for the property. Cliffs also expects to get just over a Canadian nickel per share for its 14.35 million shares of First Point, which would produce another $550,000 or so in proceeds at current exchange rates.

Obviously, these small amounts aren't all that substantial in financial terms. Yet the real value of divestiture is giving Cliffs Natural fewer distractions in seeking to pursue its long-term strategies. The more Cliffs can focus, the more likely it is to succeed in the long run.

3. Cliffs is living up to its financial obligations.
Cliffs has done its absolute best to quell any sense of panic among investors by avoiding potentially inflammatory moves. Last week, for instance, the company declared its ordinary dividend on its mandatory-convertible preferred Cliffs Natural Resources Class A (NYSE:CLV) shares. With a $0.4375 per share quarterly dividend, the preferred stock currently yields a whopping 56%.

Yet the high yield reflects the fact that the stock faces its mandatory conversion event in February 2016. After the November payment that it just declared, Cliffs will have to pay out just one more quarterly dividend. At that point, the preferred stock will automatically convert into common stock, with each 100 shares of preferred giving shareholders just over 86 shares of common stock.

With Cliffs having suspended its common-stock dividend, the company could have chosen to stop paying preferred shareholders as well. Yet the consequences would have been dire enough to make that a bad strategic move, and Cliffs' awareness of the situation points to its ability to keep thinking long term rather than looking for short-term cash at all costs.

Cliffs unquestionably has several hurdles in front of it before it can declare long-term victory in its long struggle. Nevertheless, with actions like these three moves, Cliffs is demonstrating its desire to remain a viable company and pursue its strategic vision as vigorously as possible.

Dan Caplinger has no position in any stocks mentioned. The Motley Fool owns shares of Cliffs Natural Resources. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.