US private equity giant First Reserve confirmed yesterday that it had sold its $800m (£600m) convertible bonds – issued in December 2009 – and instead acquired 141m ordinary shares in Glencore.
The firm, which specialises in natural resources, said will use the proceeds of the bond, sold at 135 cents on the dollar, which amounts to $1.08bn before fees, to buy Glencore shares at a price of 680 cents (425p).
This means First Reserve will end up with around 158m shares from the deal, more than than the 140m it would have had if it had waited for the bond to convert in 2014.
Credit Suisse and Morgan Stanley have been acting as joint bookrunners on the offering.
Glencore shares surged 7.58 per cent to close at 436.5p, their highest since 4 August, a welcome relief for the commodities trader that has seen its shares drop 24 per cent since its initial $10bn initial public offering in May.
Liberum Capital said it considered the move to be “a bullish signal” for Glencore’s shares.
“First Reserve is a specialist natural resources private equity firm and its chairman and CEO William Macaulay is a Glencore non-executive director and we expect it will remain a long term Glencore shareholder,” Liberum said in a note.
Other investors in the original $2.3bn bond include Government of Singapore Investment Corporation (GIC), BlackRock, and China’s Zijin Mining Group.