(SKY News) Glencore In Peace Talks Over $2.5bn Cash Call - full artoicle

Glencore, the crisis-hit miner and commodities trader, has held secret peace talks with the City's most influential investor trade body amid fury over the company's recent $2.5bn (£1.6bn) cash call.
Sky News has learnt that a meeting took place on Tuesday morning between the Investment Association - whose members manage £5.5trillion of client assets - and John Burton, Glencore's company secretary.
The talks were also attended by a senior banker from Citi, one of Glencore's financial advisers.
A source familiar with the summit said it had been convened in response to concerns raised by institutional investors about the resources group's decision to raise equity through a placing, thereby bypassing a pledge to give existing shareholders the right of refusal to participate.
The move, part of a $10bn (£6.6bn) debt reduction plan announced by Ivan Glasenberg, Glencore's chief executive, was designed to reassure investors about the state of the company's balance sheet during a period of depressed commodity prices.
However, the placing sparked fury in the City, prompting investors to issue a strongly worded statement.
"The Investment Association and the National Association of Pension Funds note that 22% of the issue was allocated to employee shareholders of Glencore, while their members, who represent the savings of millions of individuals, enjoyed no such choice.
"Whilst shareholders generally recognise that the company needed to strengthen its balance sheet, the use of the authority in this manner is a serious and unnecessary breach of the principles [of pre-emption].
"Most importantly, there is no evidence of any suitable consultation with existing shareholders," it said.
"This sets a very damaging precedent for market practices."
Glencore and the Investment Association both declined to comment on Tuesday's meeting, and it was unclear whether a firm commitment had been given by Mr Burton that the company would not raise capital in this way again.
The fact that Glencore - whose chief executive is notoriously truculent - decided to attend the meeting indicates, however, that it acknowledges the strength of shareholders' feelings at a time when it could be forced to seek a further capital cushion.
Mr Glasenberg is understood to have pulled out of attending a dinner organised by the Singaporean bank DBS on Monday following a precipitous fall in Glencore shares which saw its value fall by almost one-third during the day's trading in London.
Investors were spooked by a research note published by the investment bank Investec which concluded that Glencore's equity could be worthless if low commodity prices persist.
Glencore shares rebounded on Tuesday, trading up by about 5% during the morning as analysts suggested that the company could be taken private.
The company is examining the sale of a number of assets, including its agricultural commodities unit, although observers questioned whether a mooted $12bn (£7.9bn) valuation for the division was realistic.
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>>> Cevian says ABB needs to 'hurry up' push to simplify - paper - RTRS

Cevian says ABB needs to 'hurry up' push to simplify - paper - RTRS


29-SEP-2015 12:42:05

ZURICH, Sept 29 (Reuters) - ABB ABBN.VX Chief Executive Ulrich Spiesshofer needs to speed up his streamlining efforts at the Swiss engineering group, a director of ABB's second-largest investor told a Swiss business newspaper.

"When it comes to boosting efficiency and agility as well as the simplification of the business units, ABB management needs to hurry up," Lars Foerberg, managing partner of Cevian Capital, told Finanz und Wirtschaft, according to an interview published on the paper's website on Tuesday.

ABB revealed in June that Cevian had taken a stake of more than 3 percent. The activist investor has since increased it to about 5.2 percent. (Full Story)

Foerberg said Cevian agrees with ABB's decision to combine its Power Systems and Power Products into a new division, Power Grids, which will be subjected to a strategic review over the coming year before ABB decides what to do with it.

ABB CEO Spiesshofer has said all options are on the table, including a sale of Power Grids. UBS analysts estimated the business may be worth $10 billion. (Full Story)

"To start with, there needs to be an impartial, fact-based analysis of the division," Foerberg told the paper. "As far as I can tell, that's what ABB is doing."

He said the possible sale suggested the division had few synergies with the rest of ABB's business.

Cevian, which has also bought stakes in German steelmaker ThyssenKrupp AG TKAG.DE and Swedish truckmaker Volvo VOLVb.ST, generally invests in companies in which it sees the potential to double the value of its investment within three to seven years.

(HSBC) GLobal Cement : Cement industry in EM turmoil

We remain cautious on trading prospects in emerging markets (EM) and believe that it is too early to invest for a rebound in share prices. We re-iterate our Reduce rating on industry leader LafargeHolcim (TP CHF42 from CHF66), our India coverage (ACC, Ambuja and Ultratech), Indocement and Holcim in Indonesia (two of three Indonesian stocks under coverage). We prefer developed markets at present, particularly US-exposed global majors, with a small Buy list headed by Cemex (TP USD10.15) and HeidelbergCement (TP EUR81 from EUR91).

(Citi) Glencore : Bottomless? - we don’t think so

* Credit or Credibility? — GLEN shares are down >40% since the $2.5bn placing at
125p a few weeks ago. We believe this has been driven by concerns around
balance sheet and liquidity, reflected by both the rising CDS spreads and bond
yields. We believe the markets response is overdone and that the ratings agencies
are likely to take a more through-the-cycle view and therefore a downgrade to subinvestment
grade is not likely. We think that GLEN will promptly execute a
streaming deal and/or a stake sale in agriculture business as outlined at original
announcement which would be both credit and equity positive. Buy, PT £1.70/share.

* Potential Upside Surprise — We believe there is potential upside to the $2bn
target outlined from asset sales, including streaming and minority stake sale to
strategic investor(s) in the agricultural business. The level of interest is likely to be
high in both situations. We also think the group is not limited to just selling a
minority stake and if the need be, the entire agricultural marketing business could
be sold, which we value at ~$10.5bn.

* Stress Testing — Running $4,000/t copper price and all else at spot gives us a
sustainable adjusted EBITDA of ~$7.5bn and a net debt level of <$21bn, whereas
the sustainable EBITDA implies a net debt ceiling of $22.5bn at group’s target of <3
ND/EBITDA. Sustainable EBIT from marketing business at these prices still remains
healthy at ~$1.9-2.0bn, which we believe is an underlying achievable number just
from the logistics handling. We therefore don’t see a stressed balance sheet. The
group has >$12bn in liquidity, including $6.5bn of cash after the recent equity
placing, implying that the group can stay away from debt markets till 2017 and
potentially beyond if it could divest more than the $2bn target.

* Go Private and Re-structure? — We believe that in the event the equity market
continues to express its unwillingness to value the business fairly, the company
management should take the company private, whereby restructuring measures
can be taken easily and quickly, with a potential float of just the industrial business
occuring further down the track.

>>> What to look at today - 29th of September 2015

Dow-1.92% S&P-2.57% Nasdaq-3.04% Russell-2.87% VIX @ 27.63 +16.98%
US Market closed lower. Glencore was on heavily pressure in Europe after an investec report and a 8.8% year-over-year decline in China's industrial profits, a disappointing 1.4% monthly decline in pending U.S. home sales for August, and a declaration from International Monetary Fund (IMF) head Christine Lagarde that the IMF's forecasts for global growth of 3.3% this year and 3.8% next year are no longer realistic due principally to the weakness in emerging markets. allegation from famed investor Carl Icahn that there could be another financial catastrophe looming with the persistence of the Federal Reserve's policy rate near the zero bound, cast a pall on investor sentiment that hung over the capital markets all day. oil (-2.7% to $44.47 per barrel) and other commodity prices got knocked back noticeably, high-yield bond prices continued to weaken, cyclical sectors like the energy (-3.6%), materials (-3.2%), and consumer discretionary (-2.9%) sectors were among the hardest hit areas, and Treasuries rallied in a flight-to-safety bid. VIX surge 17% to 27.63. All tech names were down even Apple after announcing record sell on iPhone 6s. Valeant (VRX) -16.5% on congressional probe into drug prices. Cheniere Energy: Carl Icahn raises active stake to 11.43% from 9.59% AMD Said to Have Held Stalled Investment Talks With Silver Lake, US After Hours LNG +1.2%, AGN +2.0%, CMTL -14.2%, SNX -2.7% following earnings/guidance, YHOO +4.0% (provided update on Alibaba (BABA) stake spin off; co continues to expect completion in Q4; spin-off no longer conditioned upon receipt of a favorable ruling from the IRS)...Asian Equity markets are trackig US & Europe performance ( Glencore & Clinton price reform in biotech weighting)...Evans remarked the Fed should do some three 25bp moves by the end of next year, and moderate voter Williams reiterated liftoff would still be appropriate this year. Williams did acknowledge that inflation is still below preferred levels, though unemployment would fall below 5% later this year and remain there through 2016.

Nikkei -3.87% Hang Seng -3.25% Shanghai -1.96%

Eur$1.1268 CNY 6.3643 JPY 119.45 GBP 1.5175 EURCHF 1.0947 BRL 4.1096 RUB$ 66.1451 WTI $$44.45

S&P -0.33% EuroStoxx -1.09% Dax -0.76% SMI -1.12%


Macro :
- Qatar Fund Loses $5.9 Billion on Holdings in VW, Glencore
- With Glencore, Commodity Rout Beginning to Look Like a Crisis
- Wilbur Ross Ready to Invest More in Greek Banks: Handelsblatt

Keep an eye on:
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- NESN VX : Nestle, Hershey, Mars Sued in Human Rights Abuse Cases
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- VOW3 GY : VW Committee of Holders, Labor Reps to Meet Wed. on Crisis: DJ
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