Mining and commodities major Glencore to suspend dividends, sell assets

Mining and commodities trading firm Glencore said today that it would suspend dividends, sell assets and raise $2.5 billion in a new share issue as it aimed to cut its net debt to $20 billion by the end of next year.

The London-listed company had been under pressure to slash its debt, which stood at $29.6 billion at the end of June, as prices for its key products, copper and coal, sunk lower than six-year lows.

According to Glencore, 78 per cent of the proposed equity issuance was underwritten by Citi and Morgan Stanley, while its senior management would take up the remaining 22 per cent.

It added, it would not be paying a final dividend for 2015, which would save about $1.6 billion, while a saving of $800 million would result from suspension of the 2016 interim dividend.

The commodities giant had come under increasing pressure from investors to raise $2.5 billion ($3.6 billion) equity to protect its investment grade credit rating, which was needed to underpin its trading business from being downgraded to junk status.