RE:RE:RE:RE:RE:1Q19 Resultsbigguy56 wrote: can someone C&P it. I agree wih the observation about the unreliability of FT. I remember it last summer with their misinterpretation of the deal that was announced in the spring.
Glencore is working on a deal to address the heavy debt load of Katanga Mining, the beleaguered
Canadian-listed company that controls one of its most important assets.
Glencore owns 86 per cent of Katanga Mining, which in turn controls the Kamoto Copper
Company (KCC), one of Africa’s biggest copper producers and a key global supplier of cobalt.
Katanga has been a near constant source of headaches for Glencore, which is run by billionaire
trader Ivan Glasberg.
After Katanga was fined last year by Canadian regulators for issuing false and misleading
statements, Glencore decided to take a more active role in managing the company.
Two of its top executives are now running the business and have set about shaking up its
operations and imposing Glencore’s standards and procedures.
As well as trying to improve the company’s profitability and performance on the ground, Glencore
is also trying to tackle Katanga’s debt and unsustainable capital structure.
In its first-quarter results statement, Katanga said it had received a proposal from Glencore aimed
at tackling its indebtedness, which would be reviewed by a special committee of independent
directors.
In addition, Katanga said Glencore had agreed to roll up more than $450m of interest owed on
related-party loans that mature in 2021, and had guaranteed a new $500m credit facility.
Katanga did not provide details of Glencore’s debt proposal but restructuring $6.3bn of loans and
$563m of interest payments will not be easy.
However, the two sides have until 2021 to reach a deal that analysts reckon will have involve a
debt-for-equity swap.
In the three months to March, Katanga posted a net loss of $218.4m, against a loss $153m in the
same period a year earlier.
Katanga, which has a market value of just $700m, hit the headlines last year after it was fined by
Canadian regulators for issuing false and misleading financial statements.
That led to its chief executive Johnny Blizzard being banned from serving as a company director
and a fine for Glencore’s former copper boss Telis Mistakidis, who served as a Katanga director and
effectively ran the business.
Mr Mistakidis left Glencore last year, while Mr Blizzard has been replaced by Jeff Gerard, the chief
development officer of Glencore’s coal business. Paul Smith, Glencore’s head of strategy, is
Katanga’s finance director.
The company recently lowered its production guidance after its new management team launched a
comprehensive business review, which is targeting significant cost reductions and operational
improvements.
“The company intends to update the market with revised guidance once the review has been
completed, which is expected to be during the third quarter of 2019,” Katanga said in the results
statement.
Katanga was forced to halt sales of cobalt late last year after discovering traces of uranium in its
supplies.
While it has been able to ship some cobalt this year, Katanga will not be able to export all of its
production until a new processing plant has been built.