Glencore chief set to become $10B man

(FT.COM) -- Ivan Glasenberg will become one of Europe's richest men after Glencore's initial public offering, as the value of his stake in the world's largest commodities trader will surge to almost $10 billion.

The IPO prospectus -- at more than 1,600 pages -- has for the first time revealed the ownership structure of Glencore, which for nearly 40 years has been privately owned. Besides chief executive Mr Glasenberg, four other senior executives will become overnight billionaires and scores will be millionaires.

The massive paper gains for the employees come as Glencore embarks on a radical transformation, abandoning partnership and privacy for a flotation that will expose it to public scrutiny but also give it the financial firepower to participate in the consolidation of the natural resources industry.

Glencore priced its IPO on Wednesday at a level to give it a valuation of $48 billion-$58 billion, shy of the average forecast of $62 billion provided by the banks underwriting it.

Following the issue of $7.9 billion of new shares, the enlarged company will have a market value of $61 billion at the midpoint of the IPO range.

Mr Glasenberg will have a stake of 15.8% of the enlarged company, worth $9.6 billion at the IPO midpoint.

The publicity-shy South African, who joined the firm in 1984 as a trainee in Johannesburg and rose through the ranks, embodies the shrewd qualities that have made Glencore's traders famous.

"For Ivan, trading is a way of life rather than a job," said one executive at a rival firm.

Other top shareholders include Daniel Maté and Telis Mistakidis, co-heads of the copper business, whose stakes will be worth $3.7 billion apiece.

After the IPO Mr Maté will rank as the fourth-richest Spaniard, while Mr Mistakidis will become the second-richest Greek.

American Tor Peterson, head of coal, will own $3.2 billion, while the stake of Briton Alex Beard, head of oil, will be worth $2.8 billion.

Steven Kalmin, chief financial officer, will top the list of millionaires with a $610 million stake.

Glencore did not disclose the identities of the rest of the 500 or so employees who own shares as their stakes are below the 3% limit.

The massive value creation for the company's employees is drawing parallels with Goldman Sachs' flotation in 1999. Both companies share a reputation for secrecy and having a distinctive culture that delivers success. But the Wall Street bank's IPO valued then-chief executive Hank Paulson stake at just $219 million.

The windfall for Glencore's employees has prompted some investors to question whether the IPO marked the staff's cashing in at the top of the commodities cycle. But Mr Glasenberg vehemently denied that was the case in an interview with the Financial Times last month, saying that top employees will be locked in for up to five years. However, Glencore warned potential investors on its prospectus that the flotation could make retaining its top staff more difficult.

"This cultural change could result in certain key employees ... leaving," it said, adding that "compensation payments may not be as effective as the opportunity to receive ownership interest" that existed before the IPO.

Bankers and investors anticipate strong interest in the IPO, the largest to date in London and the third largest in Europe. Glencore has embarked the support of a roster of blue-chip cornerstone investors, including Aabar, one of Abu Dhabi's most sophisticated sovereign wealth funds, and the unusual backing of hedge fund such as York Capital, Brookside Capital and Och-Ziff. The cornerstone investors have taken 31% of the offer, investing $3.1 billion.

Mr Glasenberg on Wednesday said pricing at the low end of the expectations reflected the culture of Glencore, which had built its business over decades on long-term mutually "beneficial relationship" with customers and capital providers.

"We believe that the price range of our offer continues that approach and we look forward to welcoming new shareholders as long-term partners in our growth."

Glencore said it expected to announce the final IPO pricing on May 19 and that the shares would be admitted for unconditional dealings in London on or about May 24 and in Hong Kong on or about May 25.

The IPO is set to bring huge fees to the underwriting banks, lead by global coordinators Citigroup, Credit Suisse and Morgan Stanley. BNP Paribas, Société Générale, Bank of America Merrill Lynch, Barclays Capital, UBS and Liberum Capital will also participate in the shares sale, Glencore said.

The group also announced new additions to its banking syndicate, naming Crédit Agricole, HSBC, ING, ABN Amro, DBS, Natixis, Santander, Bank of China, Commerzbank, Mizuho, Rabobank, Sberbank of Russia and Standard Chartered.

© The Financial Times Limited 2011

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Posted in: Business,Market

GM posts biggest profit since 2000

NEW YORK (CNNMoney) -- General Motors posted its best operating results in 11 years in the first quarter, lifted by a jump in sales and strong pricing.

With rivals Ford Motor (F, Fortune 500) and Chrysler Group alsoposting profits in the first quarter, this the first time since 2004 that all of Detroit's Big 3 automakers have been in the black at the same tim

GM earned $3.2 billion in the quarter, up from $865 million a year ago. But roughly half of this quarter's profit came from a one-time gain from sales of the company's interests in Delphi Automotive and Ally Financial's preferred stock.

Excluding those special items, the company still made $1.7 billion, or 95 cents a share, topping the forecast of 91 cents a share from analysts surveyed by Thomson Reuters. It was also GM's biggest profit since earning $1.8 billion in the second quarter of 2000.

GM sold 2.2 million vehicles globally, helping to lift revenue 15% to $36.2 billion, about $600 million more than analysts were expecting.

And the automaker gave a strong outlook for the rest of the year, saying that better pricing and lower costs should outweigh the effects of rising oil prices and changing consumer preferences.

GM executives said that even if gas prices remain high and consumers continue to shop for fuel economy, the company is prepared.

"GM is much better positioned today to meet the demands of consumers seeking more fuel efficient vehicles," said CEO Dan Akerson, pointing to sales of more than 50,000 Cruzes, its new compact car. And he said the Cruze is selling for about $4,000 more than the small car it replaced.

But some of the good news for GM could translate to bad news for consumers. The company is forecasting better pricing, partly because automakers have been cutting back on cash-back offers.

Investors less impressed

Despite the strong results and guidance, shares of GM were down more then 2% in morning trading. The stock had run-up sharply in recent days on hopes that GM would top forecasts by an even greater amount.

Adam Jonas, analyst with Morgan Stanley, described the results out of North America as "disappointing," given the stronger than expected sales and pricing of vehicles in GM's home market.

Shares of GM are once again below the $33 price of the company's initial public offering last November. That's significant for taxpayers as the Treasury Department weighs selling its remaining shares in the company to recoup the money used to bail out GM.

Treasury still owns about one-third of GM shares, and the price would have to rise by more than 60% from current levels for taxpayers to get back all of the money spent on the bailout.

Excluding the special items, GM posted only a modest improvement in income from North America and trimmed losses in Europe. It said it expects its European operations to finally break even this year.

But profits fell in its South American unit as well as its International Operations unit, which includes operations elsewhere around the globe.

Still, the company reported sales gains in every region, as it picked up market share everywhere except South America during the period. Its biggest gain came in China, where sales outpaced GM's U.S. sales for the fifth-straight quarter.

"We believe we are well positioned to take advantage of global industry growth," said Akerson. 

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Posted in: Business,Market

Euro falls as Trichet signals no rate rise

(FT) -- The euro retreated from a 17-month peak against the dollar and a 13-month high against the pound as Jean-Claude Trichet, president of the European Central Bank, signaled that eurozone interest rates would remain on hold next month.

Analysts said the single currency had received support in recent weeks since the ECB, in contrast to the Federal Reserve and the Bank of England, was seen as being ready to tighten monetary policy further in the coming months in a bid to stem inflationary pressures in the eurozone.

While the ECB, as expected, left rates unchanged at its policy meeting on Thursday, following April's 25-point rise, investors focused on comments from Mr Trichet for clues as to future monetary tightening.

Ahead of his remarks, forecasts were split as to whether the ECB chief would signal a move in June or July.

In the past, Mr Trichet has used codewords to signal the ECB's intentions. The phrase "strong vigilance" over price pressures has implied a rate increase at the ECB's next meeting, while the phrase "monitoring closely" has signaled the no change in policy the following month.

In the event, Mr Trichet said the ECB was "monitoring price developments very closely", which sent the euro lower as markets moved to price out the chance of a June rate rise.

"Trichet's comments seem less hawkish than the market had anticipated and the euro is coming off sharply," said Marc Chandler, global head of currency strategy at Brown Brothers Harriman.

"He is using none of the word cues that point to a June hike."

The euro, which on Wednesday hit a 17-month peak of $1.4939 against the dollar, fell 0.8 per cent to $1.4718.

The euro also retreated from a 13-month peak of £0.9042 against the pound, falling 0.6 per cent to £0.8936 and dropping 1.7 per cent to Y117.42 against the yen.

Meanwhile, the pound eased 0.2 per cent to $1.6460 against the dollar as the Bank of England, as universally expected, kept UK interest rates on hold at a record low of 0.5 per cent after its monetary policy committee meeting.

The pound suffered after a survey suggested activity in the UK services sector slowed markedly in April dented expectations that the Bank would move to abandon its ultra-loose monetary policy stance in the near future.

The UK services sector purchasing managers' index dropped 54.3 in April, below expectations for a reading of 56.0.

Kathleen Brooks at Forex.com said the figures were a worrying sign of a slowdown in the UK economy just as public sector spending cuts started to take hold.

"This data is pivotal for the Bank of England. This reduces the chances of a rate hike, even if headline inflation remains elevated," she said. "This will keep pressure on the pound."

Meanwhile, weakness in equities and commodity prices weighed on investors' risk appetite, buoying haven demand for the yen and the Swiss franc.

The dollar fell 1 per cent to Y79.80 against the yen, its weakest level since global central banks intervened to cap yen strength in March, and eased 0.3 per cent to SFr0.8587 against the Swiss franc.

The dollar did advance against commodity-linked currencies, however, as raw material prices came under pressure.

The greenback climbed 0.5 per cent to $1.0671 against the Australian dollar, rose 0.7 per cent to C$0.9658 against the Canadian dollar and gained 0.3 per cent to $0.7865 against the New Zealand dollar.

© The Financial Times Limited 2011

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Posted in: Business

Mel Gibson to Oksana -- 'Don't Call Me ...'

Oksana Grigorieva has been trying to talk to Mel Gibson for months, TMZ has learned, and now that a judge has allowed her to contact Mel, she's hoping for lots of future chit chat ... but she shouldn't hold her breath.

TMZ broke the story ... Oksana's lawyer shockingly went to court yesterday and told Judge Scott Gordonshe would drop all of her claims in custody court that Mel committed domestic violence against her.

Oksana's attorney, Dan Horowitz, also got Judge Scott Gordon to lift the protective order prohibiting contact between Mel and Oksana.

Witnesses who have been present when Mel and Oksana have been together post break-up tell TMZ ... she has "repeatedly" tried to engage him in conversation, notably at doctor's appointments for Lucia.  We're told Mel has always rebuffed any of her overtures.

We're told Mel is adamant -- he wants nothing to do with Oksana and uses his people to shield her from him.  

Love ... ain't it a beautiful thing.

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