Glencore Gives New Details on Debt-Reduction Plan – by Alex MacDonald (Wall Street Journal – September 15, 2015)

http://www.wsj.com/

Commodities firm will issue new shares representing just under 10% of existing share capital

LONDON— Glencore PLC on Tuesday said it would issue new shares representing up to 9.99% of its existing share capital to institutional investors to further reduce its debt.

The Switzerland-based miner and trader said it would issue 1.31 billion new shares, which at Tuesday’s closing price of £1.28, would add up to about $2.57 billion in new capital. The company is likely to offer the shares at a discount, said analysts, and had said it would raise only up to $2.5 billion.

Its announcement came just after the close of trading on the London Stock Exchange and a wild trading day for Glencore. The company’s stock plunged 8% in early trading to a new low of £1.18, before rallying late in the day. Glencore has been the worst performer in the U.K.’s blue chip FTSE 100 index this year and has been under pressure to cut debt and improve profits as prices collapse for a range of commodities it produces and sells.

The stock issuance was part of a series of moves Glencore last week proposed to shed up to $10 billion in debt. The company also scrapped its dividend, pledged to cut spending, sell assets and temporarily shut down two unprofitable mines in Africa.

On Tuesday, Glencore said 78% of the new placements would be underwritten by Citigroup Inc. and Morgan Stanley while the remaining 22% of the shares will be acquired by the company’s senior management including Chief Executive Ivan Glasenberg, Chief Financial Officer Steven Kalmin and several board members.

The company will disclose the price of the new stock once Citi and Morgan Stanley complete the allocation. Barclays PLC also is involved in the process. The new shares will be allowed to trade on Sept. 21.

Shares would be offered to new and existing institutional investors. Were Glencore to issue stock representing 10% or more of its shares, it would be required to offer the new stock to existing shareholders on an equal basis.

For the rest of this article, click here: http://www.wsj.com/articles/glencore-shares-hit-new-low-after-announcing-debt-rescue-plan-1442320240

Comments are closed.