London - Glencore's [JSE:GLN]share price eased again on Thursday despite the company's assurances to investors that its debt-cutting plans remain on track and a decision by board member and legendary banker John Mack to buy $600 000 worth of stock.
Battered by a collapse in global commodity prices over the past year, the share price has lost about 70% this year, nearly half of that on Monday alone. On Thursday it resumed its descent after an initial rally and was down 0.7% off its day lows.
Traders blamed the return of hedge funds and short-sellers for the renewed losses.
Address concerns
Earlier the commodities trading and mining giant said Mack, a former chief executive of Wall Street bank Morgan Stanley, had bought stock, following a similar move this week by former BP head and Glencore board member Tony Hayward.
The share price had initially gained as much as 6% on Thursday after credit analysts from Barclays said a meeting they had organised with members of Glencore's management on Wednesday, including the co-head of corporate finance Carlos Perezagua and the head of strategy Paul Smith, managed to address many concerns of investors and bondholders.
"It was an encouraging meeting (on Wednesday) as we believe it helped to clear up many misconceptions and confusion we believe is currently in the market around commodity trading," credit analysts from Barclays said in a note on Thursday.
A source close to Glencore confirmed that the meeting had mainly focused on the balance sheet and debt reduction plan.
The market jitters over Glencore reflect concerns over the Swiss-based trader and miner's ability to service its heavy debts, accumulated after an asset buying spree, amid the slump in commodity prices.
Share sale
"The market is telling us that Glencore is in financial distress. Our credit colleagues believe this is premature and do not have those concerns - they do not think Glencore is at risk of imminent default," the Barclays note said, adding it believed the company could retain its investment grade credit rating.
Glencore has already pledged to cut its net debt to $20bn from $30bn, by selling assets, reducing capital expenditure, suspending dividend payments and raising $2.5bn of new equity capital with the share sale completed earlier this month.
Glencore said on Wednesday that it was on track to sell a stake in its agricultural business by early next year, according to Barclays.
It also hopes to complete a so-called streaming deal by the end of this year. This entails selling by-products such as silver or gold from copper production at a fixed price before it is mined. The deals could generate around $2bn, according to market estimates.