JUST PR sp in
Glencore has announced that it plans to unbundle its 23.9% stake in platinum miner Lonmin. That’s not really a surprise but it does raise a few issues, chiefly that Glencore is seemingly unable to sell the stake. Selling on market would not be possible as it is simply too large so it would need a large buyer to buy the block, and nobody wanted it. Glencore shareholders will also now be stuck with Lonmin shares − small uneconomic stakes, in many cases. This is passing the buck, but it is also potentially going to hurt Lonmin shareholders as many of those receiving their Lonmin shares will sell them, which will create massive selling pressure and hence price weakness. Now, sure, Glencore directors have been quoted saying that they will be holding onto their Lonmin stakes, but in truth that’s PR spin.