Glencore and Teck take fight to Barcelona with investor pitches
Bloomberg News
,The chief executive officers of Glencore Plc and Teck Resources Ltd. took their battle for the future of the Canadian miner to Barcelona, offering competing pitches to investors.
Glencore boss Gary Nagle and his Teck counterpart Jonathan Price were both speaking at Bank of America Corp.’s mining conference in the Spanish city on Tuesday. Nagle highlighted the dependence of Teck’s copper business on its coal mines for financing, while Price countered that his company is looking at ways of raising fresh capital as part of new plan it’s working on.
The companies have spent the past five weeks in a bruising fight to win over Teck investors, after its board and controlling shareholder publicly rejected Glencore’s proposal. The Swiss commodities giant offered to buy Teck for US$23 billion and then create two new companies combining their respective metals and coal businesses.
Teck cancelled a vote on its plan to spin off its coal business just hours before a shareholder meeting, admitting that it didn’t have the support it needed. The company said it would work on a new plan to split out coal, and once again dismissed Glencore’s proposal.
Teck has one of the best copper growth pipelines among all the big miners, but has been depending on the profits from its coal business to fund it. After shareholders rejected its plan to split coal, but keep most of the profits, the company is now trying to find a new way forward.
It’s a dilemma that Nagle seized upon, saying Teck would have to ask shareholders for more money to fund the development of its copper projects, according to a summary for his presentation by Bank of America. Nagle also said there would be “blood on the streets,” should Teck shareholders be forced to exit a standalone coal business at a steep discount. Glencore has offered to buy out Teck holders from the coal company it has proposed creating.
Price, speaking later, said Teck had heard nothing more from Glencore on a new proposal. The company believes it has strong support from its shareholders to press ahead with a simpler split of its coal business, he said.
Price said the company is “working around the clock” on a new plan since shareholders rejected its earlier proposal. The CEO said it has been re-engaging with counter parties on the coal business and also looking again at its options for capital markets.
Glencore has said it’s willing to increase its offer and go directly to shareholders should Teck refuse to engage, but has so far not done so.
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