Glencore to Sell as Much as $2.5 Billion Shares

 

  • Company will seek to cut debt by as much as $10.2 billion
  • Commodities producer and trader to suspend dividend payments

Glencore Plc, the commodity producer and trader, plans to sell assets and shares to cut its $30 billion net debt by about a third following the rout in global markets.

Baar, Switzerland-based Glencore, which last week posted its biggest weekly decline in London since going public in 2011, plans to sell about $2.5 billion in new shares and assets worth as much as $2 billion. It also will suspend dividend payments until further notice as it aims to reduce its net debt by about $10.2 billion, the company said Monday in a statement.

Glencore has lost more than half its market value this year, and along with BHP Billiton Ltd. and Rio Tinto Group has seen profits slump as commodity prices plunged to touch a 16-year low last month. Standard & Poor’s cut Glencore’s outlook to negative from stable last week, saying weaker growth in China will weigh on copper and aluminum prices.

The proposals are “designed to sensibly accelerate the deleveraging of our balance sheet, maximize future cash flow generation in the current weak commodity price environment and substantially improve our financial and credit metrics,” Chief Executive Officer Ivan Glasenberg and Chief Financial Officer Steve Kalmin said in the statement.

Morgan Stanley and Citigroup Inc. will underwrite 78 percent of the proposed share sale. Glasenberg and Kalmin and several board members will take up the remaining 22 percent. The company said it will save $1.6 billion from suspending its 2015 final dividend and a further $800 million from suspending its 2016 interim dividend.

Glencore’s net debt was $29.6 billion as of June 30, according to an Aug. 19 filing. It’s rated at BBB, the second-lowest investment grade, by S&P.

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