Glencore Raises $2.5Bn Through Share Placing to Help Cut Debt Load
Total Page：16
File Type：pdf, Size：1020Kb
Glencore raises $2.5bn through share placing to help cut debt load BY NEIL HUME, JAMES WILSON AND DAVID SHEPPARD FINANCIAL TIMES | SEPTEMBER 26, 2015 Glencore has raised $2.5bn through a share placing, part of the miner-cum-trader’s $10bn package of measures to cut its large debt load and safeguard its investment grade credit rating. The UK-listed group, reeling from the latest commodities slump, issued 1.3bn new shares on Wednesday at a price of 125p, a slight discount to Tuesday’s closing price of 128p. The stock had touched a record low of 118p earlier on Tuesday. Shares in Glencore rose 3.2 per cent to 132p on Wednesday morning. The new shares issued represent 9.99 per cent of the company’s issued ordinary share capital prior to the placing. Senior executives bought a large portion of the new shares, including Ivan Glasenberg, chief executive, who spent $211m. Telis Mistakidis, Glencore’s head of copper, spent $80m while Daniel Mate, head of zinc, spent $81m. The equity issue is the first cash call by one of the world’s large diversified mining groups since the so- called commodities supercycle went into reverse, prompted by China’s economic slowdown. Glencore has been among the hardest hit because of concern for its $30bn of net debt and exposure to commodities such as copper and coal, which are trading close to their lowest levels since the financial crisis. Glencore’s shares have slumped by more than half this year, making them the worst performer in London’s FTSE 100 index. They have lost more than three-quarters of their value since the company’s 2011 initial public offering — the largest ever on the London Stock Exchange. Tuesday’s equity placing, equivalent to just under 10 per cent of Glencore’s existing share capital, comes a week after Mr Glasenberg promised to prepare the group’s balance sheet for “Armageddon”. The debt reduction package also includes a plan to sell up to $2bn of assets and scrap two dividend payments amounting to $2.4bn. Preserving Glencore’s investment grade credit rating is important for its trading business, which needs access to cheap finance in order to move millions of tonnes of copper, coal and other commodities around the world. Analysts believe more miners might be forced to follow Glencore’s decision to raise funds and cut dividends. The decision to issue shares via a so-called accelerated bookbuild means Glencore can proceed quickly, without the need for a shareholder vote or the publication of a prospectus. People close to Glencore said the intention was to give shareholders first refusal on whether to buy shares, in proportion to their existing holdings, but potentially excluding hedge funds that have shorted the stock. “This gets things done quickly so the company can get back to focusing on business,” said one person familiar with the company. “The company has been in talking to shareholders for a week so they have a good idea of who is interesting in buying new shares.” Glencore considered alternatives to a share placing, including a convertible bond, which would have meant less dilution for existing shareholders but could have excluded some equity-only investors. “A mandatory convertible is also quick but it is less friendly to long-only shareholders,” said another person close to the company. The new shares are likely to be placed with investors at a small discount to Tuesday’s closing price. The issue has been underwritten by Barclays, Citi and Morgan Stanley. UniCredit Sets Discount for $14 Billion Rights Offer at 38% BY SONIA SIRLETTI AND CHIARA VASARRI BLOOMBERG | FEBRUARY 1, 2017 UniCredit SpA will sell new shares for more than a third less than their current price in a 13 billion- euro ($14 billion) rights offer aimed at strengthening its capital position. The bank will sell stock at 8.09 euros a share and offer 13 new shares for every five held, the Milan- based lender said in a statement Wednesday. The offer price is 38 percent less than the theoretical value of the shares excluding the rights, known as TERP. “The discount is in line with expectations,” said Fabrizio Bernardi, a Milan-based analyst at Fidentiis Equities. “Such a discount implies a high dilution for investors who plan to not fully subscribe to shares, and this can increase price volatility when the offer starts.” Fondazione Cariverona, one of UniCredit’s biggest investors, will subscribe to up to 73 percent of its current 2.23 percent stake, it said in a statement. Another major shareholder, Cassa di Risparmio di Torino, may invest as much as 320 million euros, roughly equivalent to its 2.5 percent stake, La Stampa reported last month. UniCredit Chief Executive Officer Jean Pierre Mustier is selling stock and assets to cover losses on bad loans and finance his turnaround plans. Mustier is seeking to accelerate the bank’s share offer to repair capital buffers that fell below regulatory requirements at the end of last year as a result of the balance- sheet cleanup. UniCredit fell 2 percent to 26.08 euros as of the Milan close on Thursday, giving the company a market value of 16.2 billion euros. Buy Recommendation Banca Akros SpA said in a note that it’s lowering its target price on UniCredit to 32 euros from 37 euros, but keeping its buy recommendation, after the discount exceeded the 25 percent that it had anticipated in December. A group of underwriting banks led by Morgan Stanley and UBS Group AGhave guaranteed the rights offer, the lender said. UniCredit’s investors can buy stock from Feb. 6 to Feb. 23, and the rights will trade from Feb. 6 to Feb. 17. Since Mustier became CEO in July of a lender burdened by mounting debt and the slimmest capital buffer among Europe’s big banks, the stock has gained about 40 percent as investors bet on his ability to reshape UniCredit’s finances. In December, he outlined a turnaround plan that included the rights offer, asset disposals and cost-cutting to restore finances and boost the balance sheet. “The successful completion of the rights issue will enable the bank’s capital requirements to be maintained following the implementation of the measures included in the strategic plan, as well as to align these requirements with those of the best European” systemically important banks, UniCredit said in the statement. Financial Targets The bank confirmed its 2019 financial targets, including one for a key capital ratio, even as it took 1 billion euros of additional charges in the fourth quarter. That brought the 2016 annual loss to 11.8 billion euros. UniCredit’s share sale, which comes after peer Banca Monte dei Paschi di Siena SpA failed to raise 5 billion euros in December, was previously expected to begin after fourth-quarter earnings are released on Feb. 9. Last year, Banco Popolare SC raised 1 billion euros in a rights offer, pricing new stock at a 29 percent discount on TERP. In 2012, amid the global financial crisis, UniCredit sold shares at a 43 percent discount to raise 7.5 billion euros. Credit Suisse launches $4bn share sale to ease capital fears BY LAURA NOONAN AND RALPH ATKINS FINANCIAL TIMES | APRIL 26, 2017 Credit Suisse has launched a SFr4bn ($4bn) share sale and abandoned plans to list its Swiss division in an attempt to finally quash capital fears that have dogged the bank since chief executive Tidjane Thiam took the helm more than two years ago. Switzerland’s second-largest bank said it would ask shareholders to approve the capital plans at an extraordinary meeting on May 18. It will also close its SFr83bn bad bank a year earlier than planned, in 2018. “Nobody is more eager than me to get to 2018, to then see in 2019 what the bank can deliver,” Mr Thiam said, describing how the extra capital will fuel more growth in divisions that are “constrained”. The sum the bank is asking for is at the higher end of the SFr2bn-SFr4bn capital gap it cited in February, when it said it might axe the Swiss listing, which was a cornerstone of Mr Thiam’s 2015 restructuring plan. Still, shares in Credit Suisse rose 2.5 per cent in early trading to SFr15.7 as investors digested the prospect of buying new shares at a discount of about 29 per cent to Tuesday’s closing price. Analysts said the latest share rise reflected the fact that the rights issue was already priced in, and that investors were happy with the bank’s first-quarter earnings, which were 37 per cent ahead of analysts’ predictions. The cash call comes less than two years after Credit Suisse sold SFr6.05bn of fresh equity to shore up the bank’s balance sheet and fund a restructuring to create a Swiss and Asia-Pacific focused wealth management group and downsize its investment bank. The investment bank restructuring proved more costly than expected and Asian growth forecasts were cut. The bank’s leadership faces a shareholder revolt over executive pay at Friday’s annual meeting, despite top executives’ recent decision to cut their proposed SFr78m bonus package in 2016 by 40 per cent. Asked whether investors could be confident that this was the final cash call, Mr Thiam told reporters that a SFr2bn-SFr4bn capital increase had always been planned for 2017. “The only discussion is about how we do it,” he said. “It’s not something that we have to do because we are under pressure, because the plan is not going well,” he added.