JOHANNESBURG (miningweekly.com) – LSE- and JSE-listed diversified natural resource multinational Glencore will issue $500-million cash-settled, guaranteed convertible bonds, which will not dilute its shareholding, the company said in a statement on Thursday.
The company will, concurrently with the bonds (due in 2025), buy from one or more hedge counterparties cash-settled call options on shares of Glencore to hedge its economic exposure to a potential exercise of the conversion rights embedded in the bonds.
“As conversion rights in respect of the bonds will be cash-settled only, the issue and conversion of the bonds will not result in the issuance of any new shares, or the delivery of existing shares,” the company said in the statement.
The net proceeds of the offering of the bonds will be used for general corporate purposes and for the purchase of the call options. The nominal value of each bond will be $200 000.
“The bonds will not bear interest and will be issued at a price of 93.25% to 98.25% of their nominal value, corresponding to an annual gross yield to maturity of 0.25% to 1%, on March 27, 2018, the expected settlement date of the bonds.”
The bonds will be redeemed at par on March 27, 2025, unless previously redeemed or converted.
The initial conversion price will be 25% above the share reference price, which will be determined as the arithmetic average of the daily volume-weighted average prices of the shares in pounds on the LSE on each of the ten consecutive trading days commencing on and including March 21, 2018.
The initial conversion ratio of the bonds will correspond to the nominal value per bond converted into pounds and divided by the initial conversion price.
Glencore expects to announce the final terms of the bonds later on Thursday, except for the share reference price, initial conversion price, initial conversion ratio and dividend threshold that will be announced through a press release at the end of the share reference price period, which is expected to occur on April 5, 2018.