AngloGold offers to buy back bonds to cut debt

Johannesburg -  AngloGold Ashanti [JSE:ANG] offered to buy back $810m of high-yield bonds to cut the third-largest gold producer’s interest payments by almost a third.

The company will pay $1 075 for every $1 000 of bonds for the first 10 days of the offer and $1 045 thereafter, it said on Monday in a statement. It traded at a bid price of 102.695, or $1 027 for every $1 000 of bonds by 12:24 in Johannesburg. The company has an option to call the bonds in July 2016.

AngloGold sold $1.25bn of the bonds due July 2020 with a coupon of 8.5% in July 2013 after the price of gold plunged by a quarter during the first half of the year.

The company will pay for the bonds from the sale of its Cripple Creek & Victor mine to Newmont Mining for $820m. If the offer is fully taken up, annual interest costs will drop by $69m to $170m, AngloGold 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,” chief financial officer Christine Ramon said.