Anglo launches $1.5bn bond

Johannesburg - Resources giant Anglo American plc said on Thursday it intends to make an offering of $1.5bn principal amount of convertible bonds due 2014 in order to further strengthen its balance sheet, diversify its sources of funding and lengthen its debt maturity profile.

The proceeds of the offering will be used for general corporate purposes. Under the terms of the offering, there will be a 90-day lock-up period on issuances or sales of shares or equity-linked securities by the company, subject to certain customary exceptions.

The aggregate principal amount of the issue is $1.5bn which may be increased to $1.7bn in the event the over-allotment option granted to the Joint Bookrunners is exercised in full, it said.

The bonds will be convertible into new ordinary shares of Anglo American and are expected to have a semi-annual coupon in the range of 4.25-4.75% per annum and an expected initial conversion price at a premium of 30-35% above the weighted average price of the shares during the course of today up to the time of pricing.

The bonds will be issued at 100% of their principal amount and, unless previously redeemed, converted or cancelled, will mature on the fifth anniversary of the issue of the Bonds in 2014.

The company will have the option to call the bonds after the first three years, should the price of the shares exceed 130% of the then prevailing conversion price over a specified period. The final terms of the bonds are expected to be announced today.

The offering is lead-managed by Goldman Sachs International and Morgan Stanley & Co International plc acting as Joint Lead-Managers and Joint Bookrunners.

- I-Net Bridge