Swiss company Glencore in billon-dollar deal

Swiss commodities giant Glencore announced on Wednesday it was selling nearly half of its vast agriculture business to a Canadian pension fund for $2.5 billion (2.2 billion euros), in cash.

Swiss company Glencore in billon-dollar deal
Photo: Fabrice Coffrini/AFP

Glencore said it would sell 40 percent of its Agricultural Products business to a wholly-owned subsidiary of the Canada Pension Plan Investment Board (CPPIB).
“The proceeds from the transaction will be used by Glencore to reduce net indebtedness,” said the company, which is undergoing a dramatic restructuring to trim its towering debt.
The deal announced on Wednesday, which is subject to regulatory approvals and is expected to close during the second half of the year, values Glencore's entire Agricultural Products business at $6.25 billion.
It also recognises $600 million in debt and $3.0 billion in working capital, which Glencore said it “intends to finance with short term debt on closing.”
“We are pleased to be partnering with CPPIB as we embark on the next stage of the development of Glencore Agri,” Glencore chief Ivan Glasenberg said in the statement.
The deal is only the latest in a long line of shifts Glencore has announced in recent months to cut back its debt-load, which at the end of 2015 stood at nearly $26 billion, including scrapping its dividend, suspending production at a number of mines, and selling off assets.
Mark Jenkins, the senior managing director at CPPIB also hailed the deal.
“As an asset class, agriculture is an excellent fit for a long-term investor like CPPIB, and we are excited about the opportunity to acquire a significant stake in Glencore Agri,” he said.
At arm's length from the Canadian government, the CPPIB invests the funds not needed by the Canada Pension Plan (CPP) to pay current benefits to 19 million pension contributors, placing the funds in equities, real estate, infrastructure, and fixed income instruments.
At the end of 2015, the CPP Fund totalled nearly $283 billion.
Glencore Agri meanwhile trades major agricultural commodities like grains, oilseeds products, rice, sugar and cotton, and counts more than 200 storage facilities, 31 processing facilities, and 23 ports worldwide.
When the deal closes, Glencore Agri will continue to be run by current chief Chris Mahoney and will be governed by its own board of directors, including two appointed by CPPIB and two appointed by Glencore.
In addition, the two sides have agreed to an initial four-year lock-up period during which Glencore can sell CPPIB up to a further 20 percent stake in the agri-business, and to a provision allowing either side to call for the business to go public after eight years.

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Reader question: Is Barclays closing bank accounts of Swiss-based Brits?

UK nationals living across Europe have begun to receive letters from their bank telling them that their accounts will be closed, in an apparent post-Brexit change. Will the same apply in Switzerland?

Reader question: Is Barclays closing bank accounts of Swiss-based Brits?

Customers of Barclays Bank who are living in Europe have been receiving letters telling them that their UK accounts will be closed by the end of the year. There appears not to be an option to register for a different account.

Numerous readers of The Local have contacted us to report receiving either letters or messages in their online banking telling them that their accounts would be closed because of their residency.

However, the widespread closures look set to avoid Swiss-based Brits at this stage, as Switzerland is not a member of the European Economic Area (EEA). 

The changes have been targeted at Brits living in EEA countries. This includes all European Union countries and every EFTA country other than Switzerland. 

A spokesperson for Barclays told The Local on Friday, July 29th, that the bank was “currently only writing to customers within the EEA”. 

Here’s what you need to know. 

What is Barclay’s doing?

The closures have been announced for Brits based in the EEA in recent weeks. 

Customers are being given six months to make alternative arrangements. The changes affect all personal current accounts or savings accounts, but do not affect ISAs, loans or mortgages.

A Barclays spokesperson told The Local:As a ring fenced bank, our Barclays UK products are designed for customers within the UK.”

“We will no longer be offering services to personal current account or savings customers (excluding ISAs) within the European Economic Area. We are contacting impacted customers to give them advance notice of this decision and outline the next steps they need to take.”  

Many UK nationals who live abroad maintain at least one UK bank account, sometimes just for savings but others use their accounts regularly to receive income such as pensions or income from rental property or – for remote workers – to receive income for work done in the UK.

Not having a UK bank account can make financial transactions in the UK more complicated or incur extra banking fees.

Since Brexit, the UK banking sector no longer has access to the ‘passporting’ system which allows banks to operate in multiple EU countries without having to apply for a separate banking licence for each country.

And it seems that many UK high street banks are deciding that the extra paperwork is not worth the hassle and are withdrawing completely from certain EU markets. 

What is the situation in Switzerland?

As it stands, Brits based in Switzerland with Barclays accounts will be OK for the meantime, as the closures only impact those in EEA countries. 

However, a Barclays spokesperson told The Local that their accounts were designed for people living in the UK. 

“As a UK ring fenced bank, our Barclays UK products are designed for customers within the UK and we continue to review the services we offer to retail customers outside of the UK.”

“If Barclays UK makes a decision to close accounts in any further countries, we will contact customers to give them advance notice of this decision and outline the next steps they need to take.”

Stay tuned to The Local for more updates on banking and living in Switzerland.