Barminco repurchases additional US high yield bonds
Barminco is pleased to announce it has successfully repurchased a further US$20.0 million of its US High Yield Bonds.
Today's announcement follows Barminco previously repurchasing US$36.9 million of its US High Yield Bonds, as announced on 16 December 2014.
The total value of US High Yield Bonds repurchased (US$56.9 million) will deliver Barminco an annual saving in cash interest costs of $A3.7 million.
The repurchase of US$20 million of Barminco's US High Yield Bonds was agreed following negotiations with one of the Company's major bond holders.
As with the previous repurchase, the US$20 million repurchase was fully funded through utilising a favourable AUD-USD exchange rate movement since the original issuance of the bonds in May 2013. It did not require the use of existing cash reserves.
In May 2013, Barminco raised US$485 million in US High Yield Bonds to replace a legacy debt structure. At that time the Company established a cross-currency swap to fix both the principal and interest amounts, at an exchange rate of $0.994. Given the material devaluation in the AUD since that date, Barminco has the ability to liberate part of the value held in the difference between the exchange rate in the swap and the current market rate.
Essentially, Barminco released a further portion of the value in the swap and used the proceeds to repurchase bonds. The Company simultaneously entered into a new swap, meaning the value of the bonds to be paid at maturity in AUD remains unchanged.
Barminco Chief Financial Officer Peter Bryant said: "We are pleased to have agreed on the additional repurchase of some bonds, which will further reduce ongoing cash interest expenses that will benefit the bottom line."
Barminco continues to have significant liquidity, with cash holdings of A$109 million, a A$50 million Revolving Credit Facility (which is effectively undrawn), and undrawn equipment finance facilities of A$40 million, as at 31 December 2014.