Katanga Mining Ltd Ord KATFF

Glencore writes off $5.6bn to end DRC dispute

[internalaudit]

Debt for equity swap.  Did Glencore just take up a loss?  This article suggest it didn't.

https://www.ft.com/content/eb73096e-6e6c-11e8-92d3-6c13e5c92914


“Glencore is pleased that this matter has now been resolved and looks forward to supporting KCC’s closer partnership with Gcamines as the parties work together to ensure that the joint venture reaches its full potential for the benefit of all stakeholders,” the company said in a statement. The deal is expected to close in two weeks.

Analysts also welcomed the deal, which solves one of the legal problems facing Glencore in the DRC and have caused its shares to underperform this year.

“The settlement appears to solve one of four DRC related risks for Glencore and improves relations with an important stakeholder,” said analysts at JPMorgan.

 

“Glencore’s consolidated net debt does not change as a result of the recapitalisation and in practical terms we believe the key impact will be slower upstreaming of cash from KCC to Glencore,” they added.

 

“We believe that this is more than just a good outcome for Glencore with regards to this specific issue. It is also a positive signal regarding the DRC more generally,” said Bernstein analyst Paul Gait. “Firstly, it shows that Gcamines /the Congo are not just out to expropriate assets. Secondly, it shows that appropriate commercial negotiation can reach positive outcomes in that jurisdiction.”