Mounting pressure from investors has forced debt-laden commodities giant Glencore into a $US2.5 billion ($3.6 billion) equity raising to protect its investment grade credit rating, which is needed to underpin its trading business, from being downgraded to junk status.
Less than three weeks after Glencore’s chief executive Ivan Glasenberg boasted about the miner’s ability to cover its dividend with free cash flow, unlike some of its rivals, the trading giant has suspended its dividend until further notice, beginning with the final payment for the 2014-15 year and its interim dividend for 2016.
That measure will save the group a further $US2.4 billion, as part of its new remedy plan to grab $US10.2 billion in “savings”, to cut its $US29.6 billion net debt by about a third.
Will you offer us a hand? Every gift, regardless of size, fuels our future.
Your critical contribution enables us to maintain our independence from shareholders or wealthy owners, allowing us to keep up reporting without bias. It means we can continue to make Jewish Business News available to everyone.
You can support us for as little as $1 via PayPal at [email protected].
Thank you.
It could be a fatal blow for Glencore’s designs on rival Rio Tinto, which it wanted to take out through an all-scrip “merger of equals”.
Advertisement
Glencore’s share price has been savaged since it posted an interim net loss in August, and it failed to allay investor and analyst concerns that it was not doing enough to deal with its huge debt.
Read the full story at SMH, by Amanda Saunders
