It looks like Glencore is moving ahead with plans to sell a minority stake in its global agriculture portfolio.
Bloomberg News reported earlier today that Glencore PLC has hired banking companies Citigroup and Credit Suisse to assist in selling a minority stake in Glencore’s global agriculture business, which includes Canadian grain handling company Viterra.
Citing an unnamed source familiar with the sale, the Bloomberg report says Glencore is involved in talks with close to a dozen sovereign wealth funds and Asian trading houses.
Switzerland-based Glencore is the parent company of Viterra, the Canadian grain handling company that owns grain export terminals in Vancouver, Prince Rupert, Thunder Bay and Montreal as well as 70 primary elevators across Western Canada.
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Viterra is Canada’s largest grain handler, with primary elevator storage capacity of 1.8 million tonnes.
It also owns a network of grain collection and export facilities in Australia.
Earlier this month, Glencore chief executive officer Ivan Glasenberg confirmed that the company is considering selling a minority share in its agriculture division in an effort to reduce company debt.
In a Sept. 7 conference call with investors, Glasenberg said the company would also consider selling agricultural assets in Canada.
Together, the sale of assets in the Glencore’s agriculture and precious metals portfolios is expected to generate roughly $2 billion.
In 2012, Glencore acquired Viterra’s assets, primarily grain handling facilities in Canada and Australia, in a deal valued at $6.1 billion.
The Swiss company is now attempting to reduce its overall debt to the low $20 billion range.
To accomplish that, a series of measures will be taken, including the suspension of shareholder dividends, a reduction in working capital levels, a proposed equity issuance worth as much as $2.5 billion and asset sales in Glencore’s precious metals and agriculture portfolios.
Glencore officials have not said which Canadian assets are most likely to be involved in a sale, but Glencore’s chief financial officer, Steven Kalmin, said Viterra has multiple ports, storage facilities and rail infrastructure assets that have generated considerable interest among pension funds and other investors.
“We have hundreds of facilities and opportunities there with good solid flows in very low risk jurisdictions,” he said.
“In terms of interest in either infrastructure, components thereof, or minority interest in that business, it is incredibly strong and the feedback … continues to support that.”
Viterra officials in Regina have so far declined to comment on Glencore’s plans.
brian.cross@producer.com
