Log in
E-mail
Password
Remember
Forgot password ?
Become a member for free
Sign up
Sign up
Settings
Settings
Dynamic quotes 
OFFON

4-Traders Homepage  >  Equities  >  London Stock Exchange  >  Glencore    GLEN   JE00B4T3BW64

GLENCORE (GLEN)
Mes dernières consult.
Most popular
SummaryQuotesChartsNewsAnalysisCalendarCompanyFinancialsConsensusRevisions 
News SummaryMost relevantAll newsSector newsTweets

Glencore sale of Rosneft stake earns rivals' respect, bankers' relief

share with twitter share with LinkedIn share with facebook
share via e-mail
0
09/12/2017 | 08:05am CEST
FILE PHOTO - Shadow of worker is seen next to logo of Russia's Rosneft oil company at central processing facility of Rosneft-owned Priobskoye oil field outside Nefteyugansk

Glencore's move last week to sell most of its stake in Russian oil major Rosneft to Chinese conglomerate CEFC is eliciting admiration from the Swiss oil trader's rivals -- and relief from its bankers.

To rivals, it appears to be a clever deal by Glencore's boss Ivan Glasenberg, who had initially invested 300 million euros (272 million pounds) of Glencore's money in a deal worth 10.2 billion.

On paper, after nine months he shows a small loss: Glencore retains a 0.5 percent equity stake in Rosneft, now worth around 250 million euros. But crucially, traders expect Glencore to hold on to the most valuable benefit of the deal: an agreement to let his firm sell hundreds of millions of barrels of Russian oil to global markets over five years.

"It is a very sweet deal. I wouldn't hesitate to pay three times what Glencore paid to get those volumes," said a trader with a rival.

For Glencore's bankers, the relief comes from unwinding the original deal, Russia's biggest privatisation since the 1990s, under which Glencore and Qatari sovereign wealth fund QIA bought nearly a fifth of Rosneft through a structure of offshore holding companies funded mostly by debt.

When that deal was reached in December, participants did not fully disclose the beneficiaries of their off-shore investment vehicle to the public, or explain which Russian banks were among those providing loans.

Most big state Russian banks are subject to U.S. and EU sanctions imposed on Russia over its annexation of Crimea and interference in east Ukraine in 2014.

"This structure is now being unwound. Everyone will now own Rosneft shares directly -- Glencore, Qatar and China. The debt to banks is also being paid out," said a senior source close to last week's deal who asked not to be identified due to the sensitivity of the issue.

Rosneft is run by Igor Sechin, a close ally of President Vladimir Putin. Putin awarded state medals to Glasenberg for executing last year's deal, and to the head of the Russian office of Italian bank Intesa SanPaolo for helping fund it with a 5.2 billion euro loan. The Qataris put in 2.5 billion euros and 2.2 billion came from undisclosed Russian banks.

Unwinding the deal gets it off the books of Intesa, which could not syndicate the loan to share risks with other banks, as most lenders declined to get involved, especially as the United States was imposing new sanctions last month.

"For Western banks it was a dead end. They wanted to know the beneficiaries of the structure and who funded the deal. Plus new sanctions made them even more uneasy," said a source with a Western bank which was asked by Intesa to participate.

Friday's deal saw Glencore and QIA sell 14.16 percent in Rosneft to CEFC for $9.1 billion. Intesa said its debt will be reimbursed.

"It is the end of the mystery. The Western banks will never find out those details (of how the original deal was set up)," said the banking source who asked not to be identified as he is not allowed to speak to the press.

BIG TRADE

The senior source close to last week's deal said the initial transaction stipulated that names of the banks could not be disclosed but added that the deal was fully compliant with all sanctions.

Sources at the consortium have insisted that even though the structure was opaque, its beneficiaries never included firms other than Glencore and QIA.

After the deal with CEFC, Glencore and QIA will retain stakes of 0.5 percent and 4.7 percent in Rosneft respectively.

"Glencore being Glencore, there will be deal behind it. The original agreement included a 5-year supply deal with Rosneft for 220,000 barrels per day or 400 million barrels in total," said investment bank Investec.

By comparison, Glencore and its rival Vitol had to loan Rosneft $10 billion back in 2013 to secure supplies of 490 million barrels of crude, also over five years.

With the old, 2013 deal expiring next year, it was important for Glencore to keep marketing large volumes of Russian crude as it faces stiff competition from the likes of Vitol and Swiss trader Trafigura, two traders at major oil firms said.

"Glencore and QIA did a good deal for the Russian state when it needed money," said the senior source close to the deal, adding that the oil export contract would stay in force even though the structure of the deal changes with the arrival of CEFC.

On Friday, Rosneft's Sechin said QIA and Glencore cut the stakes partially because of a decline in the U.S. dollar against the euro, which made debt servicing more expensive.

The senior source close to the deal said Glencore's and QIA's exposure to the shares was hedged since the beginning and hence the sale didn't bring material gain or loss.

"The consortium never had an optionality to sell the shares back to Rosneft. What happened is that the consortium was contacted by three buyers and chose CEFC as they offered the best price," the source said without naming other contenders.

CEFC China Energy has grown in recent years from a niche oil trader into a sprawling energy conglomerate. Rosneft's market capitalisation stands at $58 billion and the deal makes it one of the largest investments ever made by China into Russia.

(Additional reporting by Barbara Lewis; writing by Dmitry Zhdannikov; editing by Peter Graff)

By Dmitry Zhdannikov

Stocks treated in this article : Intesa Sanpaolo, NK Rosneft' PAO, Glencore
share with twitter share with LinkedIn share with facebook
share via e-mail
0
Latest news on GLENCORE
09/22 Exclusive - Volkswagen moves to secure cobalt supplies in shift to electric c..
09/21 Hedge funds bet on bright future for metals
09/21 GLENCORE : strikes a multi-year purchase deal with Angola LNG
09/20 GLENCORE : Angola LNG and Glencore sign LNG sales agreement
09/15 Surging sterling sends FTSE to fresh four-month low
09/14 FTSE hits bump on sterling jump after Bank of England rate hike signal
09/14 Oil, retailers help European shares touch five-week high
09/14 CALLINEX MINES : Intersects 18.7 Meters of 5.8% Zn Eq. at the Nash Creek Zinc Pr..
09/13 Sterling's slip from one-year high curbs FTSE losses
09/12 Bunge to buy 70 percent stake in IOI Corp unit for $946 million
More news
News from SeekingAlpha
09/22 Iron ore plunges as China's environmental curbs cause "serious impact"
09/20 Iron ore prices slide amid Chinese demand doubts, peak steel warning
09/18 Glencore's Most Excellent Journey
09/14 South Africa places controversial new mining charter on hold
09/14 Base metals miners lose ground amid signs of slowing China economy
Financials ($)
Sales 2017 199 B
EBIT 2017 7 518 M
Net income 2017 4 918 M
Debt 2017 20 533 M
Yield 2017 2,42%
P/E ratio 2017 14,15
P/E ratio 2018 14,75
EV / Sales 2017 0,44x
EV / Sales 2018 0,42x
Capitalization 67 851 M
Chart GLENCORE
Duration : Period :
Glencore Technical Analysis Chart | GLEN | JE00B4T3BW64 | 4-Traders
Technical analysis trends GLENCORE
Short TermMid-TermLong Term
TrendsNeutralBullishBullish
Income Statement Evolution
Consensus
Sell
Buy
Mean consensus OUTPERFORM
Number of Analysts 25
Average target price 4,89 $
Spread / Average Target 4,5%
EPS Revisions
Managers
NameTitle
Ivan Glasenberg Chief Executive Officer & Executive Director
Anthony Bryan Hayward Independent Non-Executive Chairman
Steven F. Kalmin Chief Financial Officer
Peter Roland Coates Non-Executive Director
Leonhard Heinrich Fischer Independent Non-Executive Director
Sector and Competitors
1st jan.Capitalization (M$)
GLENCORE25.17%67 851
CHINA SHENHUA ENERGY COMPANY LIMITED26.82%59 828
COAL INDIA LTD-14.53%24 317
SHAANXI COAL INDUSTRY CO LTD84.12%13 051
CHINA COAL ENERGY COMPANY LIMITED10.15%10 769
YANZHOU COAL MINING CO LTD22.38%7 721