Glencore International Considers Share Sale, FT Says (Update1)

June 19 (Bloomberg) -- Glencore International AG, the world’s biggest commodities trader, is reviewing its partnership structure and considering an initial public offering, the Financial Times said, citing a person close to the matter. The company has held initial talks with bankers about a share sale, although an offering isn’t considered imminent, the FT reported. The constraints imposed by its current partnership structure are thought to be inefficient and a barrier to growth, according to people close to the company, the newspaper said. Spokesman Marc Ocskay declined to comment on the report. Glencore, founded in 1974 by Marc Rich who sold to the current owners 20 years later, had its credit rating cut to the lowest investment grade in December by Standard & Poor’s because of plunging metal prices. After more than three decades operating as a closely held partnership, the Swiss company has begun issuing increasingly detailed quarterly reports amid the unprecedented plunge in its markets. Listing on a stock exchange may open up new sources on expansion capital, the Financial Times said. The cost of insuring Glencore against a default on its debt spiked 16-fold in the three months from September 2008, on market speculation over its liquidity, the newspaper said. The employee-owned trading firm, which also controls mines and smelters across six continents, has been hurt by slumping demand for its zinc, aluminum and nickel from automakers and steel producers. Glencore, led by Chief Executive Officer Ivan Glasenberg, rivals some mining companies such as Australia’s BHP Billiton Ltd., the world’s biggest, and Brazil’s Vale SA in terms of earnings and geographical reach. The firm employs traders at its headquarters in Baar, in the Swiss canton of Zug, and offices in London and Singapore. It produces zinc in Peru and Kazakhstan, coal in South Africa and copper in the Philippines. Glencore holds 34 percent of Xstrata Plc, the Swiss nickel and copper producer, as well as minority stakes in companies including Moscow-based aluminum producer United Co. Rusal.