Wed, Sep. 30, 12:48 PM
- Glencore (OTCPK:GLCNF, OTCPK:GLNCY) gained another 14% in London trading today, recouping most of the losses from Monday’s 29% plunge as shares rebounded for a second day on higher metal prices and speculation the stock is cheap.
- J.P. Morgan analysts say the recent selloff was excessive and Glencore is undervalued at current commodity prices, while also warning that more capital may be needed to eliminate credit risks.
- Fears about the company's exposure to weak commodity prices from its huge trading operation also were overblown, since Glencore hedges much of its risk through counterparty transactions on all trades, says Charl Malan, senior metals and mining analyst at Van Eck Global.
- Glencore also republished a statement first issued Tuesday in which it said its business "remains operationally and financially robust," now adding that it is delivering measures to reduce its debt levels by up to $10.2B.
- The stock is still this year’s worst performer on the U.K.’s FTSE 100 Index, down 69%.
Wed, Sep. 30, 11:48 AM
- Copper prices surge as mine disruptions in Latin America and optimism for demand from China bring buyers into the market.
- In Chile, output at the world’s biggest copper mine, Collahuasi, was cut by 30K metric tons/year due to low prices; the mine, owned by Anglo American (OTCPK:AAUKF, OTCPK:AAUKY) and Glencore (OTCPK:GLCNF, OTCPK:GLNCY), accounted for 6% of global production in 2014.
- Meanwhile, Peru declared a state of emergency in the area around the Las Bambas mine after clashes between police and protesters left three people dead.
- But while copper prices tend to rally “any time you hear about disruptions to supply out of a country like Chile, the threat has been very short lived," says a commodities broker with RJO Futures, adding that concerns about the health of the global economy continue to keep a lid on the copper market.
- Relevant tickers: FCX, JJC, CPER, CUPM
Wed, Sep. 30, 5:19 AM
- Glencore's (OTCPK:GLCNF) shares have continued their recovery from Monday's 29% plunge, climbing 13.4% in London today following a surge of 17% yesterday after the commodities trader put out a statement reassuring investors that it is financially robust and has no solvency problems. It's also helping that metals are broadly higher today.
- However, Bloomberg calculates that Glencore will have to refinance a quarter of its $13.8B in bonds and credit lines by next May. While the company may be able to extend some of the deadlines, any bond refinancing is likely to be expensive given that some of the firm's debt is trading as junk.
- The rout on Monday was caused by fears about Glencore's ability to manage its debt burden amid the slump in commodities prices.
- Bloomberg also reports that Glencore was due to hold meetings and conference calls with bond investors today in London.
Tue, Sep. 29, 9:41 AM
- Glencore (OTCPK:GLCNF, OTCPK:GLNCY) follows yesterday's nearly 30% plunge with a 20% rebound in London trading today, as the company says its business remains "operationally and financially robust" and it is confident of the medium and long-term fundamentals of its commodities.
- "We have positive cash flow, good liquidity and absolutely no solvency issues,” the company says. “Glencore has no debt covenants and continues to retain strong lines of credit and secure access to funding."
- Shares already were higher as analysts said yesterday's rout probably did not reflect the company’s true value and Citigroup said management should consider taking the company private.
- But others are beginning to warn of the dire financial impact across the mining and metals space if Glencore is unable to control its debt; "Glencore is like Lehman Brothers... they're not just a company processing ore from the ground. If it was to unravel, that could have a global impact," says U.S. Global Investors CEO Frank Holmes.
Tue, Sep. 29, 3:41 AM
- Glencore (OTCPK:GLCNF) shares jump 8.1% in London after collapsing 29% yesterday to a record low amid fears that the company's debt burden won't allow it to survive the rout in commodity prices.
- Despite this morning's rally, the stock is down around 75% this year.
- "Glencore is now under pressure to strengthen its balance sheet via asset sales or a capital injection, and time is of the essence," says analyst Jefferies Chris LaFemina. "There is value in Glencore shares if the company can pull the appropriate levers now, but risks are clearly very high."
Mon, Sep. 28, 2:48 PM
- It isn't just Glencore (OTCPK:GLCNF, OTCPK:GLNCY) who is tanking, as at least one measure of raw materials producers plunges to seven-year lows following the company's woes and data that showed weakening Chinese industrial profits.
- Shares of Glencore plunged 29% to close at just 69 pence, an all-time low, exaggerated by a damning report that said future earnings are so uncertain that the company may need to direct all of its efforts to repay debt.
- Freeport McMoRan (FCX -10.2%) is hit hard after breaking below support at $10/share, and global mining peers Rio Tinto (RIO -4.1%), BHP Billiton (BHP -4.5%) and Vale (VALE -9.4%) also are smacked down.
- A number of other firms also are in situations not that much different from Glencore, says DTN analyst Darin Newsom, noting that Caterpillar (CAT -2.2%) and Deere (DE -1.6%) have been struggling and adding that pressure on Glencore may “create a vacuum those other struggling companies could get sucked into."
- Along with oil and gas producers and precious metals miners, even financial stocks are affected, with Morgan Stanley (MS -3.6%) and Goldman Sachs (GS -3.4%) underperforming their banking peers, perhaps as investors grow nervous about the potential for any of Glencore's problems possibly blowing back on other commodity trading operations.
Mon, Sep. 28, 4:44 AM
- Glencore (OTCPK:GLCNF, OTCPK:GLNCY) is down by 14.6% in London action to a new all-time low amid more weak economic data out of China and a report from Investec suggesting the company's high debt levels means equity valued could be wiped out if commodity prices stay where they are.
- In line with its just-announced plan to sell assets and pay down debt, the company agrees to unload its Araguaia nickel project in Brazil for $8M to Horizonte Minerals.
- Horizonte is already developing a nickel project in that area of the country, and this purchase will allow it to combine Glencore's operations with its own.
- Previously: Glencore leads European gains on plans to cut debt (Sept. 7)
Fri, Sep. 25, 12:12 PM
- Glencore (OTCPK:GLCNF, OTCPK:GLNCY) has hired Citigroup and Credit Suisse to sell a minority stake in its agricultural business, a deal that could value the whole division at as much as $12B, Bloomberg reports.
- Glencore likely would sell the stake to a group of sovereign wealth funds and Asian trading houses, rather than to a single party, according to the report.
- The sale is part of a program announced earlier this month that included asset sales, spending cuts, stock sales and a dividend suspension aimed at lowering the company’s debt to $20B from $30B.
Wed, Sep. 23, 11:58 AM
- Glencore (OTCPK:GLCNF, OTCPK:GLNCY) shares have fallen so low that valuations are divorced from underlying commodity markets, according to Bernstein analyst Paul Gait, who recommends buying the stock as the 79% YTD plunge has been excessive relative to the decline in commodity prices.
- The valuation is now reflecting the risk of bankruptcy, but those fears are overdone, Gait says.
- "Glencore’s assets are of significantly higher quality than those of many other producers,” the analyst says, and “while Glencore’s trading business remains somewhat of a ‘black box,’ the fact still stands that it continues to generate a significant stream of earnings.”
Wed, Sep. 23, 7:57 AM
- Glencore's (OTCPK:GLCNF, OTCPK:GLNCY) Zambian unit Mopani Copper Mines plans to lay off more than 3,800 workers due to lower metal prices and high production costs, Reuters reports, citing government sources.
- At the same time, Glencore is said to have raised the amount of money it plans to invest in Mopani to nearly $1B from $500M over the next 18 months to improve efficiency.
- An electricity shortage in the country and weaker copper prices have put pressure on its mining industry, threatening output, jobs and economic growth in Africa's second-biggest copper producer.
Tue, Sep. 22, 9:07 AM
- Mining shares are leading a big slide in European equities as metals prices tumble on fears that an economic slowdown in China, the world’s biggest consumer of raw materials, is deepening.
- Glencore (OTCPK:GLCNF, OTCPK:GLNCY) fell to a new intraday low of 107 pence/share, down more than 9% for the worst performance on the U.K.’s FTSE 100 index; Anglo American (OTCPK:AAUKF, OTCPK:AAUKY), ArcelorMittal (NYSE:MT) and Antofagasta (OTC:ANFGF) each fall more than 6%, while BHP Billiton (NYSE:BHP) and Rio Tinto (NYSE:RIO) rank among the 10 biggest decliners, down ~4.3% each.
- Credit Suisse cuts its earnings estimates across the mining sector, saying “Until China demand and emerging market currencies find a floor, it will remain challenging to put an absolute floor on commodity prices."
- The firm cuts its stock price targets for diversified miners including BHP, which also says it is planning to sell hybrid securities to help refinance near-term liabilities.
- Moody's says miners likely will be the hardest hit of any sector in Europe, the Middle East and Africa as a result of China’s economic slowdown.
- Also: FCX -4.5%, VALE -4.1%, X -2.8%, AA -1.7% premarket.
Wed, Sep. 16, 5:45 PM
- Glencore (OTCPK:GLCNF, OTCPK:GLNCY) is in talks with Franco-Nevada (NYSE:FNV), Silver Wheaton (NYSE:SLW), Royal Gold (NASDAQ:RGLD) and two other companies to sell portions of the future production of three South American copper mines, according to a Reuters report.
- The streaming deals are said to involve Glencore's Antamina and Antapaccay copper mines in Peru and its Collahausi mine in Chile, and the talks could expand to include other mines; the copper mines also produce precious metals such as silver and some gold as by-products.
Wed, Sep. 16, 4:51 AM
- Glencore (OTCPK:GLNCY) has raised about £1.6B ($2.45B) in a share placing, fulfilling its recently announced plan to cut its massive debt load and safeguard its investment grade credit rating.
- The 1.31B shares issued represent 9.99% of the company's existing share base and were priced at 125 pence a piece, a 2.4% discount to Tuesday’s closing price.
- Glencore senior management bought a large portion (22%) of the new stock, while the remaining 78% were acquired by institutional investors.
Tue, Sep. 15, 5:57 PM
- Copper bulls hurt by slowing Chinese demand have reason for hope as Citigroup predicts mine disruptions will send the oversupplied market back into deficit next year.
- More than 1.5M metric tons of planned output this year has been lost for reasons ranging from rains and riots in Chile to lack of precipitation in Zambia and Papua New Guinea, Citigroup analysts say.
- Copper mine output this year will total 18.9M tons, with production exceeding demand by 61K tons, in 2015 and a deficit of 284K tons next year, with refined output estimated to rise 1.3%, or less than half the rate in 2015.
- Goldman Sachs, however, projects surpluses through 2019, including a 506K-ton surplus this year and 673K in 2016 amid supply growth and weak Chinese demand.
- Relevant tickers: FCX, OTCPK:GLCNF, OTCPK:GLNCY, JJC, CPER, CUPM
Tue, Sep. 15, 2:16 PM
- Glencore (OTCPK:GLCNF, OTCPK:GLNCY) says it will issue new shares representing up to 9.99% of its existing share capital with both new and existing institutional investors, in an effort to pay down debt.
- Glencore plans to issue 1.31B shares, of which 78% will be underwritten by Citigroup and Morgan Stanley while the remaining 22% will be acquired by the company’s senior management including CEO Ivan Glasenberg.
- Glencore last week announced $10B worth of measures aimed at cutting its net debt by a third to ~$20B by the end of 2016, including an equity issue of up to $2.5B; at today's closing price - its shares sank nearly 8% this morning before rallying to close flat - the company’s issue of 1.3B shares raises just over the $2.5B it had pledged.
Tue, Sep. 15, 9:10 AM
- Glencore (OTCPK:GLCNF, OTCPK:GLNCY) tumbles as much as 7.7% to a record low in London trading, erasing gains following last week's announcement of a $10B debt reduction plan designed to reassure investors amid mounting concern about the company's borrowing load.
- Last week's news initially helped lift shares, but with the stock resuming its fall, some analysts say the company may need to issue more shares to raise funds.
- "The more the share price drops, the more dilutive [issuing new stock] becomes," one analyst says. Glencore "will have to issue more shares to achieve the same level of funding."
- Glencore has plummeted nearly 60% YTD and by more than 75% since its London share listing in 2011.
GLCNF vs. ETF Alternatives
Glencore Xstrata is one of the worlds largest global diversified natural resource companies and is one of the ten biggest companies within the FTSE 100 Index. The Groups industrial and marketing activities are supported by a global network of more than 90 offices located in over 50 countries.
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