Glencore has been told exactly how it could spin-off its coal division by an activist investor, arguing that the production of such polluting fuel was becoming a barrier to investment.
Activist investor Bluebell Capital Partners wrote to Glencore’s board last month, the Financial Times reported, saying a separate company should be formed to hold Glencore’s coal assets.
The new coal company would comprise a dual share structure with ‘A’ and ‘B’ shares, as a way for Glencore to maintain control of the firm.
“The real debate should not be about ‘if’ Glencore should spin off coal, but ‘how’ a spin off should be executed, taking into account both financial and environmental considerations that support Glencore’s strategy to responsibly run down coal,” Bluebell said in its letter to Glencore, as cited by the FT.
Bluebell said the use of a dual share structure would allow Glencore to control voting rights through ‘A’ shares, while only retaining a 9.9% economic interest in the firm.
“By decoupling governance and economic rights, Glencore would be able to continue to exercise responsible stewardship, whilst separating coal in the interests of shareholders,” the letter continued.
Glencore had not responded to the reports by Monday morning.
Giuseppe Bivona and Marco Taricco, partners at Bluebell, kicked off the calls for such a demerger last year, though their early calls were declined by Glencore’s new chief executive officer Gary Nagle.
“We do not have any of our major investors asking to spin off coal,” Nagle said at the time, alleging that some investors believed spin-offs were “the wrong scenario”.
Market watchers saw that as a reference to Anglo American’s spinning-out of its South African coal operations to Thungela, which launched a plan to increase coal output soon after separation from its former parent.
At 0918 GMT, shares in Glencore were down 1.71% at 410.70p.
