Melania Trump Club

Friday, June 8, 2012

Glencore


Glencore International plc (LSE: GLEN, SEHK: 0805) is a multinational commodities trading and mining company headquartered in Baar, Switzerland and with its registered office in Saint Helier, Jersey. Glencore is the world's largest commodities trading company, with a 2010 global market share of 60 percent in the internationally tradeable zinc market, 50 percent in the internationally tradeable copper market, 9 percent in the internationally tradeable grain market and 3 percent in the internationally tradeable oil market.

Glencore has production facilities around the world and supplies metals, minerals, crude oil, oil products, coal, natural gas and agricultural products to international customers in the automotive, power generation, steel production and food processing industries. The company was formed in 1974 by a management buyout of Marc Rich & Co AG.

Glencore listed on the London Stock Exchange in May 2011 and is a constituent of the FTSE 100 Index. It has a secondary listing on the Hong Kong Stock Exchange.

2000 to present

In 2005, proceeds from an oil sale to Glencore were seized as fraudulent, in an investigation into corruption in the Republic of Congo.

In a 2011 survey of Glencore, Reuters reviewed an example of its opportunistic, contrarian, well-funded investment approach—focusing on equity participation, controlling interest, and working upstream from trading relationships:

    The acquisition was the culmination of 18 months of deal-making in Congo... [including fighting off a counterbid by] former England cricketer Phil Edmonds.... Starting in June 2007, Glencore and partner Dan Gertler, an Israeli mining magnate, paid GB£300 million for a quarter-stake in mining company Nikanor, which was seeking to revive derelict copper mines next to Katanga Mining's properties. That deal gave Glencore exclusive rights to sell all Nikanor's output -- an "offtake" agreement.... [Then, o]n Christmas Eve 2008, ... [having] lost 97 percent of its market value over the previous six months ... in the depths of the global financial crisis and ... running out of cash, Katanga accepted a lifeline it could not refuse. [Glencore] wanted control. For about US$500 million in a convertible loan and rights issue, Katanga agreed to issue more than a billion new shares and hand what would become a stake of 74 percent to Glencore. ... [By early 2011], with copper prices regularly setting records above US$10,000 a ton, Katanga's stock market value [had reached] nearly US$3.2 billion.... [Since the Glencore acquisition], Katanga ... is reaping the benefit of the surging markets and its wealthy, powerful owner. After losing US$108 million in 2009, it posted an annual profit of US$265 million in 2010.

In the course of the Congo events, Nikanor was merged into Katanga in late 2007 in a transaction valued at US$3.3 billion.

In May 2009, Glencore announced it would manage Brazilian bankrupted agricultural products company Agrenco.

In early 2011, the Reuters report included speculation that, after an Initial Public Offering (IPO), Glencore could develop an interest in London/Kazakh Eurasian Natural Resources Corporation. In May 2011 the company launched an IPO valuing the business at US$61 billion and creating five new billionaires. Trading was limited to institutional investors for the first week and private investors were only allowed to buy the shares from 24 May 2011.

In February 2012, Glencore International Plc, agreed to buy Xstrata Plc for GB£39.1 billion (US$62 billion) in shares. Glencore offered 2.8 new shares for each Xstrata share in agreed all-share "merger of equal". It is the biggest mining takeover and after approval for the plan would create an entity with 2012 sales of US$209 billion.

History

According to an Australian Public Radio report, "Glencore's history reads like a spy novel". The company was founded as Marc Rich & Co. AG in 1974 by now-billionaire commodity trader Marc Rich, who was charged with tax evasion and illegal business dealings with Iran in the U.S., but pardoned by President Bill Clinton in 2001. He was never brought before U.S. justice before his pardoning, therefore there was never a verdict on these charges.

In 1993 commodity trading and marketing company Trafigura was "split off from" Marc Rich's group of companies. As physical commodities traders, along with Trafigura, Glencore's main rivals in 2011 were identified as Vitol and Cargill, amongst a number of others.

In 1993 and 1994, after failing to control the zinc market, losing $172 million and nearly bankrupting the company, Rich was forced to sell his majority share in Marc Rich & Co. AG back to the company. The enterprise, renamed Glencore, is now owned and run by Marc Rich's secretive inner-circle of "lieutenants", including founding Glencore CEO Willy Strothotte and present CEO Ivan Glasenberg.

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