AngloGold Ashanti Ltd. (ANG) said it plans to buy back all $732.5 million of its bonds that can be converted into stock as the world’s third-biggest producer of the metal prepares to sell new bonds in the U.S. currency.
The company, based in Johannesburg, is offering $1,015 for each $1,000 of principal, together with accrued and unpaid interest on the securities that mature next May, it said in a statement today. The purchase depends on the completion of the dollar-debt sale and whether AngloGold raises no less than the amount needed to buy back the convertibles, it said. The bonds can be exchanged when the company’s share price reaches $47.61. The shares (AU:US) dropped 3.4 percent to $13.93 at 1:37 p.m. in New York, extending their decline this year to 56 percent.
AngloGold plans to write down the value of its assets and stockpiles by as much as $2.6 billion after the price of the metal plunged. Gold has climbed 7.7 percent this month after a record three-month drop in the second quarter. The company, which is also South Africa’s biggest producer of bullion, is facing demands by some South African unions for wages to be more than doubled for entry-level employees.
“There doesn’t appear to be an economic reason to buy back the convertibles,” Haidje Rustau, a credit analyst at Mitsubishi UFJ Securities International Plc in London, said by phone. “It matures next year so they are probably acting ahead of time. They’re very disciplined.”
Citigroup Inc., Deutsche Bank AG and Goldman Sachs Group Inc. are managing the offering and have meetings with investors in Europe and the U.S., AngloGold said in the prospectus for the dollar-bond sale last week. The company is offering the debt after having its rating cut to the highest junk level by Standard & Poor’s on July 17. Moody’s Investors Service reduced its assessment by one step to the lowest investment grade five days before S&P’s action.
Yields on the company’s dollar bonds due in April 2020 surged 73 basis points to record 8.07 percent today, according to data compiled by Bloomberg, while the rate on debt due in August 2022 climbed 75 basis points, or 0.75 percentage point, to 8.12 percent, also the highest yet. The securities are the two most-traded emerging-market bonds by number of trades today, according to Trace, the bond-price reporting system of the Financial Industry Regulatory Authority.
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