Commodities giant Glencore has turned to Magic Circle firms Linklaters and Clifford Chance to implement a raft of plans in order to cut $10.2bn from the business’ $30bn debt pile.
In the mining and metals giant’s biggest mandate since its $66bn acquisition of Xstrata in 2013, the company shelved its dividends and announced a $2.5bn equity-raise in a bid to slash up to $10bn worth of debt by the end of 2016.
The legal team chosen by Glencore was the same team from Linklaters and Clifford Chance that executed the drawn-out Xstrata deal.
Linklaters’ corporate heavyweight Charlie Jacobs, who handles the firm’s relationship with Glencore, and City corporate partner David Avery-Gee were selected to handle the corporate end of the mandate.
Citi and Morgan Stanley also returned to run the $2.5bn share placement, four years after acting as Glencore’s joint global coordinators on the company’s floatation in 2011. Morgan Stanley and Citi will underwrite 78% of the proposed equity issuance, with Glencore senior management, including chief executive Ivan Glasenberg, agreeing to inject the remaining 22%.
Clifford Chance, which advised those investment banks on the initial public offering, fielded the same team of Iain Hunter and Adrian Cartwright to handle the finance element of Glencore’s debt plan. Hunter, a capital markets partner, and Cartwright, Clifford Chance’s global head of capital markets, were also involved in Glencore’s merger with Xstrata.
Nearly $1.6bn worth of dividends expected to be paid out at the end this year have also been scrapped, with plans in place to suspend the $800m interim dividend in 2016.
Glasenberg said: ‘Notwithstanding our strong liquidity, positive operational free cashflow generation, lack of debt covenants, modest near-term maturities and the recent affirmation of our credit ratings, recent stakeholder engagement in response to market speculation around the sustainability of our leverage, highlights the desire to strengthen and protect our balance sheet amid the current market uncertainty.’
tom.moore@legalease.co.uk