Glencore in Early Refinancing of $8.45 Billion Loan -- Update
17 Fevereiro 2016 - 7:44AM
Dow Jones News
By Alex MacDonald
LONDON--Commodities titan Glencore PLC agreed Wednesday to
refinance a $8.45 billion loan facility ahead of schedule in a bid
to allay investor concerns about its ability to refinance its hefty
debt burden in a sustained commodities downturn.
The Switzerland-based commodities trader and miner said it would
replace its existing $8.45 billion revolving credit facility, due
to expire in May, with a smaller, oversubscribed $7.7 billion
facility that has no financial covenants and will now expire two
years later.
The early refinancing means the Switzerland-based commodities
trader and miner will now have no refinancing commitments until May
2018, a person close the refinancing said.
Glencore's shares were up 6.4% early Wednesday but are still
down 64% over the past 12 months, making it the second worst
performer on the U.K.'s blue chip FTSE 100 index after Anglo
American.
Glencore, like many other miners, has been aggressively
restructuring its businesses to weather a protracted slump in
commodity prices as demand from China, the world's second-largest
economy continues to slacken, and output continues to rise
following years of overinvestment in the industry.
Last year, Glencore announced plans to reduce its net debt by
more than $10 billion to between $18 billion and $19 billion by the
end of this year. This was aimed at easing investors' concerns that
the company could lose its investment grade credit rating given its
heavy debt load if commodity prices remain low for longer or fall
further.
Credit-ratings firm Moody's Investors Service downgraded U.
K-based Anglo American PLC to junk status this week, citing
concerns that the current commodities downdraft marks a structural
shift toward more prolonged downturns. Moody's is also reviewing
the credit ratings of other miners for potential downgrades
although it has a stable rating on Glencore's credit outlook.
Glencore said the loan refinancing was oversubscribed with just
37 banks offering $8.4 billion in commitments. The firm will now
seek to syndicate the loan through another 30 banks in the second
quarter of this year.
The size of the loan was scaled back to reflect lower financing
needs following the recent commodities price slump and the
company's high liquidity of more than $14 billion, the person close
to the refinancing said.
The overall cost of the new loan is less than 1% of the total
amount, the person said. Glencore managed to refinance the loan at
a time when banks have become wary of lending money to miners that
have been pummeled by falling commodity prices and crimped
earnings. Loan proceeds to the global metals and mining industry
fell 27% to $122 billion in 2015 following a two-year period of
relatively strong lending, according to a report from consultancy
firm Ernst & Young.
Write to Alex MacDonald at alex.macdonald@wsj.com
(END) Dow Jones Newswires
February 17, 2016 04:29 ET (09:29 GMT)
Copyright (c) 2016 Dow Jones & Company, Inc.
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