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« on: September 28, 2015, 11:30:54 am »
Glencore Plc fell to a record low as Goldman Sachs Group Inc. said the company’s recent steps to reduce debt and bolster its balance sheet are inadequate.
"Investors are not yet convinced that Glencore has gone far enough to totally allay fears that the industrial assets can service the new lower debt level," Goldman Sachs analysts including Eugene King, said in a report Thursday. "Recent underperformance suggests that the measures exercised are insufficient and more is needed."
Glencore dropped for the fifth time in six days. The shares fell 9.6 percent to close at 98.61 pence in London, the lowest since the company’s $10 billion initial public offering in 2011.
Dividend Cut
Shares of the miner and commodity trader run by billionaire Ivan Glasenberg have plunged 67 percent this year as sliding commodity prices reduced earnings and forced the company to scrap its dividend and sell new stock. Glencore announced a $10 billion debt-reduction program earlier this month to strengthen its balance sheet as China’s economic slowdown deepens.
Goldman Sachs lowered its share-price target on Glencore to 130 pence from 170 pence. The rating remains "neutral" and the bank expects continued volatility.
Should commodity prices fall another 5 percent, the metrics needed to maintain the company’s credit rating would be out of the required range, Goldman Sachs estimated. Goldman Sachs also lowered its profit estimates for Glencore, citing lower thermal and metallurgical coal forecasts. Earnings will be 9 cents a share in 2016, the bank said, down from an earlier 20-cent forecast.
In a separate report, the bank said the bear market in copper will persist for years. It reiterated a call for prices to fall to $4,800 a metric ton by the end of the year. The metal was little changed at $5,054 on the London Metal Exchange on Thursday