Glencore berated by investor groups

GLENCORE shares fell nearly 5pc yesterday as City investor groups continued to warn that its £1.6bn equity placing breached rules.

The Institute of Directors followed the Investment Association and the National Association of Pension Funds in slamming the commodities trading giant’s equity raising, accusing it of flouting the rights of shareholders.

Glencore completed the £1.6bn share placing this week to pay down some of its £19bn debt pile amid fears its credit rating could be cut. It also outlined plans for more asset sales and cost cutting.

The share placing, which saw its nine key directors take 22pc of the stock to ensure they retained their stakes in the firm, diluted other shareholders.

Oliver Parry, senior corporate governance adviser at the IoD, said: ‘Glencore’s conduct falls short of what we would expect of a major global company.

‘Their decision appears to be in direct contravention of the rights of shareholders and goes against a pledge they made at their AGM in May. It flies in the face of the shareholder pre-emption rights which are designed to protect investors in these exact circumstances and should worry anybody with an interest in upholding the highest standards of corporate governance at Britain’s biggest companies.’

Glencore’s shares fell 6.15p to 126p. Its share weakness yesterday was mirrored with other mining stocks. Randgold Resources rose 134p to 3863p and Fresnillo climbed 20p to 610p.

The US Federal Reserve’s decision to keep interest rates unchanged renewed doubts about the global outlook, which would impact the demand for commodities such as iron ore, copper and coal. But the ensuing fall in the US dollar lifted gold prices.