Glencore Plc has announced its measures to reduce its debt by about $10.2 billion, and to optimize its portfolio to meet the current landscape of commodity prices, according to a press release issued by Glencore.
The company will fully commit to a proposed equity capital raising of up to $2.5 billion to achieve the target.
Glencore said in the press release that the company plans to implement several measures with a value of $7.7 billion between now and 2016 to reduce its debt.
This is in addition to the $2.5 billion equity issuance, which adds up to a total of $10.2 billion in debt reduction.
The measure will generate about $1.5 billion from the reduction of the company's working capital, according to the press release.
It will also generate approximately $2.4 billion from the suspension of the company's final dividend payment in 2015 and its 2016 interim dividend payments.
Glencore mentioned in the press release that they also expect to generate about $2 billion from the sale of the company's assets, and about $500 million to $800 million in long-term loan reductions.
The company also expects to generate $500 million to $1 billion in savings from the additional reduction in industrial capital expenditures.
The Irish Examiner reported that Glencore has been under pressure to reduce its debt, which was at $29.6 billion net at the end of June.
The company has suffered from the sinking prices of its key products, such as copper and coal.
Glencore also said in the press release that they plan to focus on optimizing their portfolio to meet the current landscape of commodity prices.
The company is reviewing its operations at Katanga and Mopan, and is in the process of suspending several productions in Africa.
"The measures we have announced today do not affect our core business activities and overall franchise value and have been designed to sensibly accelerate the deleveraging of our balance sheet, maximize future cash flow generation in the current weak commodity price environment and substantially improve our financial and credit metrics, stability and strength, in the event of a prolonged weaker pricing environment," Ivan Glasenberg, CEO of Glencore, and Steven Kalmin, CFO of Glencore said in the press release.
The Irish Examiner stated that Standard & Poor, a rating agency, has said last week that it may cut Glencore's BBB/A-2 credit ratings.
They will do this if the company's operational funding to debt ratio fails to recover to more than 23 percent from its current 20 percent.
