Glencore to distribute cash as debt reduction on track
With proceeds of $6.3 billion this year from its asset sales program, Glencore Plc plans to return $1 billion to its shareholders, explaining on Thursday that it is close to cut debt to the target range of between $16.5 billion and $17.5 billion. The mining giant said the cash distribution will be executed next year, in two tranches. Originally, it planned to divest units worth between $1 billion and $2 billion.
Glencore said today it completed sales of its GRail business and stakes of 49.99% in Glencore Agriculture to Canada Pension Plan Investment Board and British Columbia Investment Management Corporation. Together with last month's transaction concerning a share in the Ernest Henry copper and gold business, the company received $4.7 billion.
Management projected free cash flow for 2017 at $6.5 billion compared to earnings before interest, tax, depreciation and amortization (EBITDA) of $14 billion. Apart from the fixed $1 billion for shareholders, a minimum payout was set at 25% of free cash flow in the industrial segment. "We have delivered on our commitments and done so in a way that has preserved the long-term earnings capability of the group. Glencore can look forward to the future with confidence, based on our scalable and low-cost industrial operations and robust marketing business,” said chief executive Ivan Glasenberg.