2020 Distribution and Revolving Credit Facilities

RNS Number : 2585I

Glencore PLC

31 March 2020

 

Glencore plc

Baar, Switzerland

31 March 2020

2020 Distribution and Revolving Credit Facilities

The COVID-19 pandemic has generated exceptional social and financial impacts around the world. Glencore's first priority remains the health and wellbeing of our people, their families and our communities. We understand the uncertainty caused by the current environment and will endeavour to support our workforce and local communities, as appropriate.

Simultaneously, we are taking prudent action to protect and strengthen our capital structure amid the current period of heightened uncertainty in order to enable us to more safely navigate this challenging environment.

The Company reaffirms its commitment to maintain strong Baa/BBB investment grade credit ratings, supported by a near-term Net debt target range of c. $14-15 billion (from $17 billion at 31 December 2019, excluding marketing related lease liabilities) and a Net debt/Adjusted EBITDA target ratio closer to 1x.

To support this commitment, the Board believes it prudent to defer its decision as to whether to proceed with the proposed cash distribution of $0.20 per share (c. $2.6 billion) in 2020, amid the current period of exceptional economic uncertainty. We have also reinforced our liquidity position ($10.1 billion of committed available liquidity as at 31 December 2019) through the refinancing and extension (see below) of our revolving credit facilities (the "Facilities") on the same commercial terms as our 2019 Facilities.

Glencore continues to generate material levels of positive free cash at current production levels and spot prices, due to its globally diversified marketing / distribution business and industrial asset portfolio, including many large-scale, low-cost assets. The significant weakening of our key producer currencies against the USD (AUD, ZAR, CAD, KZT etc.), capital expenditure deferrals being implemented and lower oil prices and interest rates have provided substantial cash offsets to the fall in USD commodity prices and some level of COVID-19, mainly government imposed, production disruptions.

We intend to provide updated guidance in respect of 2020 production, key industrial division unit costs and capital expenditure, alongside our Q1 production report, scheduled for release on 30 April.

2020 Distribution

The Board considers it prudent to defer its decision as to whether to proceed with the proposed cash distribution of $0.20 per share (c. $2.6 billion) in 2020, in order to strengthen the Group's overall financial position and reflecting that, although none to date, there exists the risk of material production disruption due to COVID-19.

When the Board is in a better position to consider COVID-19's updated impacts, the economic outlook, and the Company's prospects, expected alongside release of the Group's interim results in Q3 2020, it will then decide what level of distribution would be appropriate to make this year.

Refinancing and extension of Revolving Credit Facilities

Our Facilities have been refinanced and extended, effective 22 May 2020, on the same commercial terms as our 2019 Facilities.

The shorter-term Facilities were initially launched at $8 billion and closed substantially oversubscribed, raising $10.75 billion. Reflecting strong support from Glencore's broad group of relationship banks:

• Glencore scaled back subscription levels and ultimately increased the size of the Facilities to $9.975 billion, up from the $9.775 billion signed in 2019

• A total of 48 banks committed to the Facilities, including 31 Mandated Lead Arrangers and Bookrunners.

The longer-term $4.65 billion revolving credit facility was extended to 2025.

The new and extended facilities are for general corporate purposes, comprising:

• a $9.975 billion 12-month revolving credit facility, with a 12-month term-out option at Glencore's discretion, and a 12-month extension option

• a $4.65 billion 5-year revolving credit facility with a 12-month extension option

As in previous years, these committed unsecured facilities contain no financial covenants, no rating triggers, no material adverse change clauses and no external factor clauses.

Glencore's Chairman, Tony Hayward, commented: "As well as prioritising the health and wellbeing of our people, their families and our communities, we are taking a cautious approach to protect our capital structure amid the current period of extreme uncertainty. Therefore, notwithstanding that Glencore continues to generate material levels of positive free cash in the current environment, the board considers it prudent to defer the distribution decision. We will review the opportunity for a distribution at our August results, when we will have an improved understanding of COVID-19's impact on our business and its prospects."

 

For further information please contact:

Investors
Martin Fewings	t: [phone]	m: [phone]	[e-mail]
Maartje Collignon	t: [phone]	m: [phone]	[e-mail]
Media
Charles Watenphul	t: [phone]	m: [phone]	[e-mail]

www.glencore.com

Glencore LEI: 2138002658CPO9NBH955

This announcement contains inside information

Notes for Editors

Glencore is one of the world's largest global diversified natural resource companies and a major producer and marketer of more than 60 commodities. The Group's operations comprise around 150 mining and metallurgical sites and oil production assets.

With a strong footprint in over 35 countries in both established and emerging regions for natural resources, Glencore's industrial activities are supported by its global marketing network.

Glencore's customers are industrial consumers, such as those in the automotive, steel, power generation, battery manufacturing and oil sectors. We also provide financing, logistics and other services to producers and consumers of commodities. Glencore's companies employ around 160,000 people, including contractors.

Glencore is proud to be a member of the Voluntary Principles on Security and Human Rights and the International Council on Mining and Metals. We are an active participant in the Extractive Industries Transparency Initiative.

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Disclaimer

The companies in which Glencore plc directly and indirectly has an interest are separate and distinct legal entities. In this document, "Glencore", "Glencore group" and "Group" are used for convenience only where references are made to Glencore plc and its subsidiaries in general. These collective expressions are used for ease of reference only and do not imply any other relationship between the companies.  Likewise, the words "we", "us" and "our" are also used to refer collectively to members of the Group or to those who work for them. These expressions are also used where no useful purpose is served by identifying the particular company or companies.

 

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