Glencore - what if....?

[Output Flange]

Obviously Glencore shares are doing wonderfully at the moment.

One of the reports suggests that if the current slide continues, it would make sense for there to be a management buyout and for it to go private.

In that scenario, what happens to the existing shareholders?

[trickywoo]

The existing shareholders exchange their shares for cash or shares in the new company assuming its listed. The amount will be agreed in the offer among the necessary proportion of shareholders.

Despite whats happened to the share price over recent months it'd be a massive management buyout in the traditional sense. Can't see the existing management team being able to sell a couple of cars and remortgage to afford it.

[Fittster]

trickywoo said:

The existing shareholders exchange their shares for cash or shares in the new company assuming its listed. The amount will be agreed in the offer among the necessary proportion of shareholders.

Despite whats happened to the share price over recent months it'd be a massive management buyout in the traditional sense. Can't see the existing management team being able to sell a couple of cars and remortgage to afford it.

I think the current management have a lot of skin in the game.

"The reaction of Glencore’s share price Monday is all the more shocking because the company has only just completed a $2.5 billion secondary share offering aimed to a large degree at paying down debt. Glencore managers who are still the group’s biggest shareholders, including CEO Ivan Glasenberg, put up $800 million of that $2.5 billion."

The current management own about a third of the firm, which I guess would be unusual for a large PLC

http://www.bloomberg.com/news/articles/2015-05-18/...

Edited by Fittster on Tuesday 29th September 13:30

[iphonedyou]

Glencore management made a st ton (scientifically speaking) when they floated. It might not be impossible.

[Grey Ghost]

iphonedyou said:

Glencore management made a st ton (scientifically speaking) when they floated. It might not be impossible.

Anything is possible with Ivan to be fair. However, a lot of the folks who received shares the first time around borrowed against them whilst they were vesting. The vesting period has now ended and the values have dropped significantly enough for banks to call in the loans so perhaps there is not as much liquidity in the firm as there used to be.

[iphonedyou]

Grey Ghost said:

Anything is possible with Ivan to be fair. However, a lot of the folks who received shares the first time around borrowed against them whilst they were vesting. The vesting period has now ended and the values have dropped significantly enough for banks to call in the loans so perhaps there is not as much liquidity in the firm as there used to be.

This is very true.

[Ozzie Osmond]

Output Flange said:

it would make sense for there to be a management buyout and for it to go private.

In that scenario, what happens to the existing shareholders?

Any such buyout would need shareholder approval in the first place. The managers can't just decide to do it.

Since commodities are well known to be cyclical I would be surprised if many shareholders want to get out.

[Output Flange]

What's the mechanics of that, though? Does it use the last listed market price of the shares to determine the redemption value for existing shareholders, or if not how is the valuation done?

[Ozzie Osmond]

The managers would need to make an "offer" and the shareholders vote on whether it's high enough to accept.