Deals Help Shrink Glencore’s Mountain of Debt – by Jesse Riseborough (Bloomberg News – April 6, 2016)

Glencore Plc’s $2.5 billion agriculture deal is another milestone to solving Chief Executive Officer Ivan Glasenberg’s biggest problem last year — reducing a mountain of debt.

Canada’s biggest pension fund will buy a 40 percent stake in the agriculture business and Glencore said it may sell an additional 20 percent, which could be worth $1.25 billion based on Wednesday’s deal. Other transactions are in the works, including the sale of two small copper mines and Australian coal and rail assets.

The latest deal “shows continued asset disposals as promised, but perhaps a lower price than hoped,” Marc Elliott, a mining analyst at Investec Plc in London. His September research note on Glencore’s debt helped send the shares plunging 29 percent in one day.

“They made bold plans which could be challenging to deliver, certainly in a bearish environment,” he said.

The agriculture deal yesterday valued the division at $6.25 billion, underwhelming some who had expected a higher amount. That could pressure Glencore to deliver more to meet its target of reducing net debt to as low as $17 billion, from $25.9 billion at the end of last year.

The company is confident of getting more than A$1 billion ($757 million) through the sale of its Australian coal train assets, which include nine locomotives, wagon and supporting equipment, a spokesman said last month. Earlier this week, its Kazakhstan mining unit sold a gold deposit for $100 million.

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