“Ivan Glasenberg has until May 2017 to restructure the business”, Sanford C. Bernstein Ltd. analysts including Paul Gait wrote in a report on Monday, referring to Glencore’s chief executive officer.
Shares in mining giant Glencore soared in afternoon trade Monday in Hong Kong following reports of talks on selling its agriculture business, but the firm said it was unaware why its stock had risen so sharply.
“Having made such enquiry with respect to the company as is reasonable in the circumstances, the board confirms that it is not aware of any reasons for these price and volume movements or of any information which must be announced to avoid a false market…”
The company is actively involved in the reduction of its $30 billion debt, through the sale of assets, reduction in its dividends, and the issuance of further equity. “The agricultural sector is extremely well looked-at at the moment”.
In addition, weak U.S. jobs data last Friday might keep interest rates lower for longer, she said.
Early last week its shares slumped to 71p ($1.53), while the cost of insuring its debt has blown out to near default levels. Debt is not an existential issue for Glencore, the analysts wrote.
COFCO is expanding its agricultural activities and has already invested $2.8 billion in 2014 through two important joint ventures, Dutch grain trader and Noble’s group agribusiness; buying Glencore’s agriculture unit will open up huge opportunities for the business.
In addition, the company raised $US2.5 billion from a capital-raising drive and cut 400,000 tonnes of copper production from a few of its African mines.
The Daily Telegraph newspaper reported on Monday, without identifying its sources, that Glencore would listen to offers for the whole company, although management doesn’t believe there are buyers willing to pay a fair value in the current market. Glencore’s market capitalisation has halved since the start of the year.