Published: May 20, 2009
AngloGold Ashanti, the world’s third-largest producer of the metal, announced the pricing of an offering of US$650mn convertible bonds due 2014 by its wholly-owned subsidiary, AngloGold Ashanti Holdings Finance.
The bonds have a coupon of between 3.5-4% and Barclays Capital and Morgan Stanley are the managers. AngloGold, whose stock dropped the most in six weeks, will also use the proceeds for “general corporate purposes”, the company said in a statement to the Johannesburg stock exchange.
The bonds will be convertible into American Depositary Shares (ADSs) of AngloGold Ashanti, subject to certain restrictions and the right of the issuer to elect to settle in cash in certain circumstances. AngloGold Ashanti shareholders will be requested to grant specific authority for the directors to issue ordinary shares pursuant to the conversion rights which will attach to the bonds.
Each ADS currently represents one ordinary share of the company. Conversion in full of the bonds (at the initial conversion price of US$47.6126 per ADS, and without taking the option into account) would result in the issuance of a maximum of 13,651,848 ADSs. The proceeds of the offering of the bonds will be used to refinance AngloGold Ashanti’s debt facilities and for general corporate purposes.
The closing and settlement date of the offering is expected to occur on or about 22 May, 2009. The conversion premium to the reference volume weighted average price of the ADSs on the NYSE on May 18 of US$34.6272 was approximately 37.50%.
The bonds will be offered and sold to non-US persons outside the US and will be offered and sold in the US to qualified institutional buyers in reliance on rule 144A under the securities act.
Approval-in-principle has been received for the listing of the bonds on the Singapore Exchange Securities.
AngloGold Ashanti also announced that the managers have exercised their option to subscribe for additional bonds in an aggregate principal amount of US$82.5mn.
The exercise of the option increases the size of the offering to US$732.5mn. The bonds will be issued by the issuer and will, subject to the terms and conditions of the bonds, be convertible into a maximum of 15,384,583 American Depositary Shares of AngloGold Ashanti Limited, at the initial conversion price of US$47.6126.
In May the company posted its first profit in seven quarters after gold prices rose and the company cut fixed-price forward sales. Net income was 1 million rand ($120,000) in the three months through March 31.
AngloGold declined 21.50 rand, or 6.6%, to close at 302.50 rand in Johannesburg. The drop, the biggest since April 3 based on closing prices, cut this year’s advance to 20%.