Glencore shares rebound after firm denies delisting
The Local · 29 Sep 2015, 16:18
Published: 29 Sep 2015 16:18 GMT+02:00
- Glencore raises $2.5 billion in share sales (16 Sep 15)
- Swiss mining firm faces multi-billion-dollar debt (07 Sep 15)
- Glencore posts heavy losses in first six months (19 Aug 15)
"Our business remains operationally and financially robust — we have positive cash flow, good liquidity and absolutely no solvency issues," the company, headquartered in the canton of Zug, said in a statement.
In London afternoon trading, Glencore shares climbed 20.08 percent to 82.47 pence, after the stock had plunged by nearly 30 percent on Monday.
By the end of the day Monday, Glencore had lost more than three quarters of its value since listing with much fanfare in London and Hong Kong in May 2011, sparking speculation it might be delisted.
Glencore was hammered by weak commodity prices as Chinese demand stumbled, taking a particularly heavy hit because of its towering $30-billion debt-load.
Dealers were further spooked on Monday when brokerage Investec said in a research note to clients: "The challenging environment for mining companies leads us to the question of how much value will be left for equity holders if commodity prices do not improve.
"If major commodity prices remain at current levels, our analysis implies that, in the absence of substantial restructuring, nearly all the equity value of both Glencore and Anglo American could evaporate."
But on Tuesday, Glencore stressed that it had already taken a number of "proactive steps to position our company to withstand current commodity market conditions."
The Swiss mining goliath said it was making progress on a range of drastic moves announced at the beginning of the month aimed to cut its $30-billion debt by a third.
Among other measures, the company has raised $2.5 billion in share sales, has suspended dividend payments until further notice and has suspended production at its Katanga copper and cobalt mine in the Democratic Republic of Congo.
"Glencore has no debt covenants and continues to retain strong lines of credit and secure access to funding thanks to long term relationships we have with the banks," it said in Tuesday's statement.
"We remain focused on running efficient, low cost and safe operations and are confident the medium and long-term fundamentals of the commodities we produce and market remain strong into the future," it added.