Swiss commodities giant Glencore announced Wednesday it was selling nearly half of its vast agriculture business to a Canadian pension fund for $2.5 billion (2.2 billion euros), in cash.

Glencore said it would sell 40 percent of its Agricultural Products business to a wholly-owned subsidiary of the Canada Pension Plan Investment Board (CPPIB).

"The proceeds from the transaction will be used by Glencore to reduce net indebtedness," said the company, which is undergoing a dramatic restructuring to trim its towering debt.

The deal announced Wednesday, which is subject to regulatory approvals and is expected to close during the second half of the year, values Glencore's entire Agricultural Products business at $6.25 billion.

It also recognises $600 million in debt and $3.0 billion in working capital, which Glencore said it "intends to finance with short term debt on closing."

"We are pleased to be partnering with CPPIB as we embark on the next stage of the development of Glencore Agri," Glencore chief Ivan Glasenberg said in the statement.

The deal is only the latest in a long line of shifts Glencore has announced in recent months to cut back its debt-load, which at the end of 2015 stood at nearly $26 billion, including scrapping its dividend, suspending production at a number of mines, and selling off assets.

Mark Jenkins, the senior managing director at CPPIB also hailed the deal.

"As an asset class, agriculture is an excellent fit for a long-term investor like CPPIB, and we are excited about the opportunity to acquire a significant stake in Glencore Agri," he said.

At arm's length from the Canadian government, the CPPIB invests the funds not needed by the Canada Pension Plan (CPP) to pay current benefits to 19 million pension contributors, placing the funds in equities, real estate, infrastructure, and fixed income instruments.

At the end of 2015, the CPP Fund totalled nearly $283 billion.

Glencore Agri meanwhile trades major agricultural commodities like grains, oilseeds products, rice, sugar and cotton, and counts more than 200 storage facilities, 31 processing facilities, and 23 ports worldwide.

When the deal closes, Glencore Agri will continue to be run by current chief Chris Mahoney and will be governed by its own board of directors, including two appointed by CPPIB and two appointed by Glencore.

In addition, the two sides have agreed to an initial four-year lock-up period during which Glencore can sell CPPIB up to a further 20-percent stake in the agri-business, and to a provision allowing either side to call for the business to go public after eight years.