Anglo American completes bond buybacks, delivering $190 million net debt benefit
22 March, 2016
Anglo American plc (“Anglo American”) announces the successful completion of its bond buy-back programme launched on 18 February 2016, consisting of Euro, Sterling and US dollar denominated maturities from December 2016 to September 2018.
The Group used $1.7 billion of cash to retire $1.83 billion of contractual repayment obligations (including derivatives hedging the bonds), resulting in an immediate reduction in net debt of $130 million.
Anglo American’s bond maturities have been reduced by $250 million, $680 million and $900 million for 2016, 2017 and 2018 respectively, reducing the Group’s bond repayment obligations at original hedged rates to $1.4 billion, $1.9 billion and $2.5 billion respectively for these years. The notes purchased by Anglo American have been cancelled.
Anglo American Finance Director, René Médori said: "The bond buybacks will benefit Anglo American by $190 million in total. We will continue to actively manage our debt profile as we progress with the Group's portfolio restructuring."
The total net debt benefit of the buy-back programme amounts to $190 million by September 2018 ($130 million realised upfront through the discounts achieved on the notes and settlement of derivatives and an additional $60 million over two years through interest savings before fees and expenses).
Although the bond buy-back was funded from cash reserves, Anglo American has maintained its conservative levels of liquidity ($14.8 billion at 31 December 2015) by entering into a $1.5 billion Club Facility with three international banks. This facility has a 2-year maturity, closely matching the weighted average maturity of the bonds targeted and is broadly on the same terms as Anglo American’s existing core $5 billion Revolving Credit Facility, with no financial covenants.