AngloGold has secured lower pricing on its recently refinanced $600 million, three-year revolver due to stronger company performance and a globalization strategy. The new credit is priced at LIBOR plus 70 basis points compared to the 90 basis points spread on its former $350 million, three-year revolver, which was set to mature on Feb. 12. The globalization strategy, which has led the company to earn roughly half of its EBITDA outside of its South African base, has lowered its credit risk in the eyes of its lenders, said Jonathan Best, finance director of AngloGold. "Our plan has been to diversify away from purely deep mines in South Africa," he said, adding, "This is not an exit South Africa strategy but one to diversify geopolitical risk and mining risk in order to lower the cost of capital."
Citibank, Deutsche Bank, Dresdner Bank, Dai-Ichi Kangyo Bank, and Credit Argicole were chosen to lead the 24 multinational-bank syndicate and all had past relationships with the company, said Best. The company also considered "[each bank's] track record of being able to underwrite and deliver a facility of this size, " he added. Dresdner, Deutsche Bank, and Citibank were among the lead arrangers on the former $350 million credit.
The company decided to increase the revolver so that it would have the flexibility to use the funds to pay down an exisitng Credit Argicole-led $120 million bilateral credit maturing in June priced at LIBOR plus 75 basis points, explained Best. The new credit will also be used to fund additional capital expenditures, he said. The company was formed in 1998 through the consolidation of a number of South African gold mining companies.