The amount constitutes around 8% of the company’s $485 million of US bonds, which are due in 2018.
 
The repurchase was funded by utilising a favourable exchange rate movement and used no cash.
 
When the bonds were issued last year, the company established a cross-currency swap to fix the principal and the interest amounts at an exchange rate of 99.4c when the bonds were issued.
 
Barminco said it released a portion of the value in the swap and used the proceeds to repurchase bonds, simultaneously entering into a new swap, meaning the value of the bonds to be paid at maturity in Australian dollars remains unchanged.
 
The final purchase price of the bonds, which have a face value of $1 each, was 92.5c – reflecting a slight premium of the last traded value of 89.5c.
 
The repurchase will save Barminco around $A2.5 million annually in cash interest costs.
 
The company completed the repurchase via a cash tender offer in New York on Friday and said it understood it was the first time an Australian company had executed a buy-back of US high-yield bonds.
 
Barminco had set a maximum of up to $65 million of bonds to be repaid, with no minimum.
 
“We are pleased we have been able to repurchase some of our bonds to reduce ongoing cash interest expenses, which will flow straight through to the bottom line,” Barminco chief financial officer Peter Bryant said.
 
“While we are delighted some bondholders saw value in cashing out their bonds, it is equally encouraging that a number of our bondholders were reluctant to tender their debt.
 
“That shows their confidence in Barminco’s future.
 
“Feedback from our advisers in New York is that many of our bondholders believe the business is in a good place and they are not interested in reducing their exposure.”
 
Barminco had $A116 million cash, a $50 million undrawn credit facility and $40 million in undrawn equipment finance facilities at the end of September.
 
The company last month won a $110 million contract with MMG in Tasmania and was named as the preferred mining contractor for Sirius Resources’ Nova nickel mine.