Glencore said to complete US$7.7 billion loan amid turnaround push

The logo of Glencore at the Swiss commodity trading giant's headquarters in Baar, central Switzerland, on Oct 10, 2015.
The logo of Glencore at the Swiss commodity trading giant's headquarters in Baar, central Switzerland, on Oct 10, 2015.PHOTO: AFP

LONDON (BLOOMBERG) - Glencore Plc finalized a US$7.7 billion (S$10.6 billion) loan from almost 60 banks as the commodity trader shores up its balance sheet following a raw-materials downturn.

Lenders offered more than US$10 billion, according to a person familiar with the matter who asked not to be identified because they're not authorized to speak publicly. The loan replaces an US$8.45 billion revolving credit facility, according to an earlier statement.

"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 LP, which oversees US$479 billion of assets. "People were concerned that they wouldn't be able to refinance their debt."

Chief Executive Officer Ivan Glasenberg has scrapped dividends, raised US$2.5 billion in a stock offering and sold off assets to allay concerns about Glencore's borrowings amid lower commodity prices. He intends to cut net debt to as low as US$17 billion this year, from US$25.9 billion at the end of 2015.  The debt plan and a commodity pickup have fueled a 42 per cent surge in Glencore stock this year. That's after a 70 per cent rout in 2015. The shares were little changed at 128 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 per cent of an agriculture unit, following on a 40 percent stake sale agreed to earlier this year.

Peter Grauer, the chairman of Bloomberg LP, the parent of Bloomberg News, is a senior independent non-executive director at Glencore.