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LONDON — Reuters – Glencore shares tumbled more than 30 per cent to an all-time low on Monday on fears that the mining and trading company was not doing enough to rein in its debt to withstand a prolonged fall in global metals prices.
About 3.5 billion pounds ($5.33-billion) in market value was wiped off the firm, which is in the middle of a drive to sell assets and raise cash to help cut its $30-billion debt pile and protect its credit rating after a crunch in prices of its main products, copper and coal.
Swiss-based and London-listed Glencore earlier this month raised $2.5-billion through a share placement, part of a wider plan to cut its net debt by a third by the end of 2016.
Glencore’s top individual shareholders, according to Thomson Reuters Eikon data, include CEO Ivan Glasenberg, with an 8.4 per cent stake, and Qatar Holding, with 8.2 per cent. Qatar is also a top shareholder of German auto maker Volkswagen , another beaten-up blue-chip.
Monday’s fall spread to the broader UK mining sector, which has also felt the pain from an emerging-markets slowdown and a crash in commodities prices. The FTSE 350 mining index sank to its lowest level since Dec. 2008.
Traders cited a Investec note that raised doubts over Glencore’s valuation unless spot metal prices improve. The note pointed to high debt levels and a need for deeper restructuring.
“If major commodity prices remain at current levels, our analysis implies that, in the absence of substantial restructuring, nearly all the equity value of both Glencore and Anglo American could evaporate,” analysts at Investec wrote.
Both Glencore and Anglo American declined to comment.
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