Share Investment, Discussion & Tips

[Andy2]

If you were to close Glencore tomorrow and sell it's assets, you could pay off it's debts and distribute the rest to the shareholders, and they would have a 300% profit.

That is how ridiculous the Glencore valuation is.

...and their assets aren't difficult to evaluate, because they consist of millions and millions of tons of Copper and Zinc.

Shareholders don't get anything. Bond holders have the first right to assets.

[BlasterBates]

Shareholders don't get anything. Bond holders have the first right to assets.

Debt including bond holders is 100 billion
Assets 148 billion

If the assets are sold at 148 billion

148 billion - 100 billion = 48 billion

48 billion is the book value of the company.

http://www.glencore.com/assets/inves...eport-2015.pdf

They have huge inventories of copper, zinc and nickel all priced up in their half yearly report and mining assets to sell.

Of course now the question is do you do that now or wait; that's the conundrum that Glencore faces, uncertainty but they do have a lot levers to pull to get cash when they need it.

Sure if they restructure the business it ends up smaller and not as profitable in the long run, but that's not bankruptcy.

[tomtomagain]

More likely that the original investors will take the opportunity to take the company back into private hands.

Then they can refinance without the hindrance of being a public company, rebrand and then re-float in a few years time when everyone has forgotten.

[AtW]

Debt including bond holders is 100 billion
Assets 148 billion

Debt is most certainly the same as quoted OR higher.

Assets - most certainly LESS than quoted.

There might be a cheap big wheel tractor sale soon. xoggoth might be interested for that funny farm of his...

[yasockie]

Debt is most certainly the same as quoted OR higher.

Assets - most certainly LESS than quoted.

This - if you wanted to liquidate 148b worth of commodity assets such as copper, they wouldn't be worth 148b anymore. Everybody already has a computer, tablet and a smartphone and the best Glencore can hope for is someone upgrades to iPhone 6s and they sell 20 million x 1g of copper

[AtW]

I'll give a fiver for all free float of Glencore.

Offer valid for the next 24 minutes.

[BlasterBates]

More likely that the original investors will take the opportunity to take the company back into private hands.

Then they can refinance without the hindrance of being a public company, rebrand and then re-float in a few years time when everyone has forgotten.

Exactly, in fact their bank has said as much, it is pretty self evident that Citi Group is prepared to go ahead and sort out the financing for the MBO.

This is what will probably happen if things go on like this. Could be heading for the division of the company into separate entities for trading and mining.

[SimonMac]

Debt including bond holders is 100 billion
Assets 148 billion

If the assets are sold at 148 billion

148 billion - 100 billion = 48 billion

48 billion is the book value of the company.

http://www.glencore.com/assets/inves...eport-2015.pdf

They have huge inventories of copper, zinc and nickel all priced up in their half yearly report and mining assets to sell.

Of course now the question is do you do that now or wait; that's the conundrum that Glencore faces, uncertainty but they do have a lot levers to pull to get cash when they need it.

Sure if they restructure the business it ends up smaller and not as profitable in the long run, but that's not bankruptcy.

But the assets are only worth what someone is willing to pay for them, and as the commodity price has dropped so too has their asset value, and in a firesale all bets are off as to what you might get ignoring what its worth

[BlasterBates]

But the assets are only worth what someone is willing to pay for them, and as the commodity price has dropped so too has their asset value, and in a firesale all bets are off as to what you might get ignoring what its worth

But they're not facing imminent bankruptcy as everyone seems to perceive, they have plenty of time to sell stuff off.


http://www.bloomberg.com/news/articl...-shopping-list


There seems to be a perception that Glencore is about to declare bankruptcy. If that were the case Citi Group and Morgan stanley wouldn't have stumped up $1.6 billion for the share issue.


Petrobras was downgraded to junk status in 2010, 5 years ago, ....now Petrobras is in danger of bankruptcy in the next few months.

[DimPrawn]

I suppose the only redeeming fetaure of making a punt on a share like this, is downside is limited to zero, upside is unlimited. Who knows, share price from here could go up 10x current price in the next boom.

However, it might go nowhere for 5 years, which ties up that capital which could be better served elsewhere.