Taking advantage of its strong liquidity position, Rio Tinto has launched another buyback of its outstanding notes, this time aiming to reduce its debt bill by up to US$3 billion, according to a Sept. 26 statement.
Under the plan, the global mining giant will redeem about US$1.5 billion of its 2017 and 2018 U.S. dollar-denominated notes, and started a cash tender offer to buy back up to about US$1.5 billion of its 2019, 2020, 2021 and 2022 notes.
Earlier in the year, the company completed US$4.5 billion in cash tender offers. This included repaying with cash US$1.5 billion of notes that matured in June.
The company now plans to redeem its outstanding 2.000% notes due March 2017, 1.625% notes due August 2017, and 2.250% notes due December 2018, as well as 6.500% notes due July 2018.
Under the cash tender offer, Rio Tinto will purchase 3.500% and 2.875% notes due 2022, 9.000% notes due 2019, and 3.500% notes due 2020.
The offer also includes the repurchase of 4.125% and 3.750% notes due 2021.
The diversified miner has US$988.5 million of its 3.500% notes, US$985.4 million of its 2.875% notes, and US$1.5 billion of its 9.000% notes outstanding. Some US$512.4 million of its 3.500%, US$662.1 million of its 4.125% and US$749.2 million of its 3.750% notes also remain outstanding.
The company will pay a US$30 premium per US$1,000 principal amount of its notes for tenders received by Oct. 7.
The offer is set to close on Oct. 24.
BNP Paribas Securities Corp., Credit Agricole Securities (USA) Inc. and Credit Suisse Securities (USA) LLC are the lead dealer managers for the offer, while Bank of China Ltd. London branch and UniCredit Bank AG are acting as co-dealer managers.