Exxaro Resources: Debt raised to diversify fund sources

Exxaro Resources raised R1 billion in debt to broaden its funding sources. The company sold R520 million of five-year floating-rate notes paying a coupon 195 basis points above the three-month Johannesburg interbank agreed rate (Jibar), now at 5.8 percent. It also sold R480m of three-year floating-rate securities paying 170 points above Jibar. The issuances are part of the producer’s R5bn medium-term debt programme. “This transaction marks Exxaro’s successful entrance into the rand-debt capital markets and is in line with its strategy to diversify its funding sources,” it said. Revenue and earnings fell last year, while the company forecast stable demand for steam and metallurgical coal this year. Eskom is spending R500bn retooling old-generation plants and building new ones to avoid a repeat of blackouts that halted output at factories and mines for five days in 2008. The miner’s offer of R1bn was more than five times oversubscribed, Standard Bank said in a note to clients yesterday. Exxaro inched up 0.23 percent to close at R143.33 yesterday. – Bloomberg