Commodities giant Glencore has halted Hong Kong trading in a bid to reduce some of its $30bn debt. In a press release published on the same day, the company also declared its commitment to a proposed equity issuance that aims to raise up to $2.5bn. Morgan Stanley and Citi will underwrite 78 percent of the equity issuance, with Glencore’s senior management taking up the remaining 22 percent.
Glencore will also suspend production in Zambia and the Democratic Republic of Congo for 18 months
Additional measures will be implemented so as to raise a further $7.7bn, which include the suspension of dividends and reductions in working capital. According to the press release, Glencore will also suspend production in Zambia and the Democratic Republic of Congo for 18 months in order to remove 400,000 tonnes of copper cathode from the market, which is expected to boost prices.
The Barr-based firm is also considering the sale of assets, including a stake in its agriculture unit that could reduce its debt by around a third.
2015 has been a turbulent year for Swiss firm; falling prices in oil and metal have caused heavy losses that amounted to $676m in the first half of the year and caused Glencore’s market value to plummet by more than 50 percent.
The start of September saw the situation deteriorate with Glencore’s largest weekly decline in London since it began trading publically in 2011. While on September 03, Standard & Poor downgraded Glencore’s credit rating from stable to negative, which has placed further pressure on this year’s worst performer in the FTSE 100 index.
Following the debt reduction measures that were announced on September 8, Glencore shares jumped by 10.8 percent to 136.30p.
