Glencore announces $125m bond issue

Glencore, through its subsidiary Glencore Funding, announced the successful placing of a tap issue of non-dilutive zero coupon cash settled guaranteed convertible bonds due 27 March 2025 on Thursday, with a nominal amount of $125m.

The FTSE 100 company said the new bonds were to be issued on the same terms, save for the issue price, as the $500m zero coupon non-dilutive cash settled guaranteed convertible bonds due 27 March 2025 issued by Glencore Funding on 27 March this year.

It said that, as of the date falling 41 days after the issue date, the new bonds would be fully fungible and consolidated with the original bonds.

Concurrently with the placing of the new bonds, Glencore Funding had purchased cash-settled call options on shares of Glencore to hedge the increase in its economic exposure to a potential exercise of the conversion rights embedded in the bonds.

As conversion rights of the bonds would be cash-settled only, the issue and conversion of the bonds would not result in the issuance of any new shares, or the delivery of existing shares, of Glencore or any other group company.

Glencore said the net proceeds of the offering of the new bonds would be used for general corporate purposes and for the purchase of the call options.

The initial issue price of the new bonds would be 89% of their nominal value, with the final issue price to be determined following a reference period of two consecutive trading days after pricing, in order to reflect the share price performance and the evolution of the GBP-USD exchange rate.

Glencore said the final issue price of the new bonds would be announced on 21 September.

The settlement and delivery of the new bonds was expected to take place on 26 September.

“In the context of the offering, Glencore and the issuer have agreed to a lock-up undertaking in relation to its shares and equity-linked securities for a period ending 90 calendar days after the date hereof, subject to certain exceptions and waiver by the sole global coordinator,” Glencore said in its statement.

BNP PARIBAS was acting as sole global coordinator for the offering, and together with Citigroup Global Markets as joint bookrunners.