AngloGold Ashanti Holdings to repurchase bonds to cut debt
AngloGold Ashanti on Monday announced that its wholly owned subsidiary, AngloGold Ashanti Holdings plc (AGAH), is offering to buy back up to $810 million in aggregate principal amount of its outstanding 8.5 per cent high-yield bonds that mature in 2020.
This move is part of its strategy to reduce debt and lower interest payments.
A statement issued by AngloGold Ashanti and copied to ghanabusinessnews.com said it will use cash on hand to repurchase this debt, following the concluded sale of its Cripple Creek & Victor mine in the United States, and borrowings under existing credit facilities if necessary.
“The repurchase will utilise cash that is attracting little or no interest, to eliminate debt on which the company is currently paying 8.5 per cent interest,” the statement said.
“This is another decisive step forward in our strategy of cutting debt and reducing our interest bill in order to improve free cash flow. Our aim remains to sustainably improve cash flow, through operational improvements and lowering interest costs, whilst maintaining sufficient liquidity”, Christine Ramon, Chief Financial Officer of AngloGold Ashanti was quoted as saying.
AngloGold Ashanti says it has cut overhead expenditure by more than two-thirds and lowered all-in sustaining costs by about a quarter, since the end of 2012 in response to lower gold prices.
In addition, the group says it has introduced two new low-cost mines, closed higher-cost assets, removed unprofitable ounces from its portfolio and sold Cripple Creek and Victor for $820m, plus a net smelter returns royalty, to reduce net debt.
AngloGold says it is now “intensifying efficiency efforts to complement cost benefits from weakening local currencies and falling oil prices.”
AngloGold Ashanti projects its annual cash interest expense to decline by about $69 million, to about $170 million if the offer is fully taken up.
The Company said by current exchange rates, it will continue to have “significant sources of liquidity, including undrawn headroom in its various revolving credit facilities, of about $1.1 billion, and cash of approximately $400 million” which it could use to weather gold price volatility and unforeseen interruptions in production if required.
By Emmanuel Odonkor