Barrick Repurchases $595 Million of Corporate Loan
- By Alberto Abaterusso
Barrick Gold Corp. (ABX) reported Friday the conclusive results of its tender offer to buy back a certain amount of its 4.40% notes with maturity in 2021, 4.10% notes with maturity in 2023 and 3.85% notes with maturity in 2022.
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The intrinsic value of ABX
The company announced on Nov. 17 that it would increase the amount of the notes to be repurchased from $350 million, as originally planned, to $650 million. Friday the gold miner announced the extinguishment of $595,328,000 of its corporate loan consisting of 4.40% notes with maturity in 2021.
The company says it "has now reduced its total debt by approximately $2 billion in 2016," achieving another debt target reduction.
Considering its remarkable total amount of cash on hand that amounted to $2.648 billion in the third quarter, it is possible that the Canadian gold producer will use part of its liquidity to further reduce its total outstanding debt that now amounts to about $7.74 billion.
Since approximately 65% of the total long-term debt is not due until 2033, there isn't any financial urgency that is impelling Barrick to accomplish supplementary debt curtailments.
The series of notes that were tendered before Nov. 16, as previously communicated by the world's largest gold mining company, consisted of an outstanding amount of $1.2 billion of 4.40% notes with maturity in 2021, $470.7 million of an outstanding amount of $731.4 million of 4.10% notes with maturity in 2013 and $63.6 million of an outstanding amount of $337.2 million of 3.85% notes with maturity in 2022.
The picture below shows the amount of the bonds that Barrick will not repurchase which the bondholders must keep until the maturity date unless Barrick decides to issue another offer to buy back its corporate loan that matures before 2024.
Source: Barrick Gold's NR
Barrick Gold closed at $15.67 Friday, up 65 cents (or 4.33%) from the previous trading day with a volume of 18,974,348 traded on the New York Stock Exchange versus a volume of 17.38 million shares traded over the last three months and a volume of 16.51 million shares traded over the last 10 trading days.
The gold stock gained 112.2% year to date and 6.1% over the last week. In November Barrick Gold attributed the 7.9% collapse in gold prices to the factors explained in this article and lost 14.61%.
Disclosure: I have no position in Barrick Gold Corp.
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This article first appeared on GuruFocus.
Warning! GuruFocus has detected 2 Warning Signs with ABX. Click here to check it out.
The intrinsic value of ABX
