Commodity trader Glencore (LON:GLEN) has hit back at claims that it could lose nearly all its equity amid commodity price turmoil, saying it was financially robust.
Glencore said it had strong lines of credit and access to funding, according to a statement from the company sent to media outlets in Australia and picked up by international newswires.
"Glencore has taken proactive steps to position our company to withstand current commodity market conditions," it said. "Our business remains operationally and financially robust – we have positive cash flow, good liquidity and absolutely no solvency issues.
"We are getting on and delivering a suite of measures to reduce our debt levels by up to US$10.2bn," the statement continued.
"Glencore has no debt covenants and continues to retain strong lines of credit and secure access to funding thanks to long term relationships we have with the banks.
"We remain focused on running efficient, low cost and safe operations and are confident the medium and long-term fundamentals of the commodities we produce and market remain strong into the future. "
Share in Glencore plunged 30% on Monday as broker Investec suggested current commodity prices would mean all the trader's equity could be lost against its hefty debt pile, while Anglo American (LON:AAL) could also suffer.
Investec said in a note: "We note that the heavily indebted companies (GLEN LN, AAL LN) could see almost all equity value eliminated under spot conditions, leaving nothing for shareholders."
But on Tuesday, a couple of brokers spoke out in favour of holding the shares, which staged a partial recovery. In mid-afternoon trading in London, they were up 11.15p at 79.77p.
Analyst Myles Allsop at UBS said the Swiss investment bank believed the stock had been heavily oversold.
Allsop said: "While the volatility in the share and concerns about management credibility is likely to put off investors near-term, we expect the share to re-rate over six to 12 months as management delivers on promises to cut net debt and as the copper price picks up.
"It is encouraging bonded warehouse inventory continues to fall in September and copper premia are up. In our opinion, the risk of a further capital increase is low."
Another Swiss bank, Credit Suisse, also issued an upbeat note on the commodity trader.
Augustin Eden at Accendo Markets said opportune buyers were snapping up cheap-looking Glencore shares among others "after yesterday's sell-off, spurred by a bearish Investec note, was called into question by Credit Suisse this morning."
Earlier this month, Glencore raised £1.6bn to slash debt and shore up its balance sheet in the face of falling prices.
Glencore said it had placed just over 1.3bn new shares with existing and new institutional shareholders, directors and staff of Glencore at 125p per share.
The new shares make up about 9.99% of the company's issued ordinary share capital before the placing.
Glencore shares have been the worst performer on the FTSE 100 this year so far as prices of many of the commodities it mines and trades tumbled.
The mining group has shed more than three-quarters of its value since it listed in 2011 and are down by two-thirds since it made an early stage merger approach to Rio Tinto in July 2014.
Shares rallied 16% today to 79.4p.