Reuters reported that Trader Glencore has trimmed its ambitions to control Kazakh zinc producer Kazzinc announcing a revised cash and shares agreement worth up to USD 1.4 billion less than half the original deal to raise its stake to just fewer than 70%.

The revised move at a time when Glencore is in the final throes to take over miner Xstrata values Kazzinc at a lower price and will involve less cash. That could reassure credit ratings agencies which had pointed to the purchase as one where the acquisitive trader with a rating of two notches above junk, could cut back on cash strain.

Glencore, the world's largest diversified commodities trader said at the time of its listing in May last year that it would raise its 50.7% stake in Kazzinc one of Glencore's most substantial subsidiaries to 93% spending USD 3.2 billion including USD 2.2 billion in cash.

The plan then had been to boost control of the producer but also to eventually list the gold assets which together amount to the largest gold producer in Kazakhstan, separately. A listing however is unlikely to be imminent in the current market environment easing pressure on Glencore to raise its stake above 90%.

Glencore said that the total price tag including additional cash or shares will not exceed USD 1.4 billion. The new deal will include at least 176 million shares to be issued to the seller, Verny Capital.

Analysts at Liberum said that the deal looks to be a cash light way of creeping up its ownership in Kazzinc using only USD 400 million in cash depending on stock value. The revised offer valued Kazzinc at USD 5.4 billion compared to an original valuation of USD 6.57 billion.

Source - Reuters

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