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London - Glencore [JSE:GLN] finalised a $7.7bn loan from almost 60 banks as the commodity trader shores up its balance sheet following a raw-materials downturn.
Lenders offered more than $10bn, according to a person familiar with the matter who asked not to be identified because they’re not authorised to speak publicly. The loan has an all-in cost of 95 basis points above the three-month London interbank offered rate, they said.
“This is a signal that the market is open,” said Paul Gait, a London-based senior analyst at Sanford C. Bernstein & Co. a research arm of AllianceBernstein Holding, which oversees $479bn of assets. “People were concerned that they wouldn’t be able to refinance their debt.”
Chief Executive Officer Ivan Glasenberg has scrapped dividends, raised $2.5bn in a stock offering and sold assets to allay concerns about Glencore’s borrowings amid lower commodity prices. He intends to cut net debt to as low as $17bn this year, from $25.9bn at the end of 2015.
The new loan replaces an $8.45bn revolving credit facility. The smaller size reflects the current and projected needs of the business, the company said in an e-mailed statement.
Shares rebound
The debt plan and a commodity pickup have fuelled a 42% surge in Glencore stock this year. That’s after a 70 percent rout in 2015. The shares rose 1 percent to 130 pence in London on Tuesday, or about a quarter of the 2011 initial public offering price.
The Baar, Switzerland-based company is selling two copper mines and is studying options for a Kazakh gold project. It may also sell another 9.9% of an agriculture unit, following a 40% stake sale agreed to earlier this year.
Peter Grauer, the chairman of Bloomberg , the parent of Bloomberg News, is a senior independent non-executive director at Glencore.
