Koppers Inc., a wholly-owned subsidiary of Koppers Holdings Inc. (NYSE: KOP), recently announced that The Bank of New York Mellon, trustee under the Indenture for the company's 9 7/8% Senior Secured Notes due 2013 (Senior Secured Notes), is providing notice to bondholders that Koppers will redeem the remaining outstanding $185.8 million face amount of the Senior Secured Notes on October 15, 2009.
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The Senior Secured Notes will be redeemed at a price equal to 103.292% of the principal amount in accordance with the Indenture, plus any accrued and unpaid interest to the Redemption Date. The company intends to finance the redemption of the Senior Secured Notes by borrowing on its existing and currently undrawn $300 million secured revolving credit facility which matures October 31, 2012. On an annual basis, the reduction in interest expense is estimated to be approximately $12 million based on current borrowing rates under the company's credit facility. In addition to the call premium of approximately $6 million, the company will incur charges for the write-off of deferred financing costs of approximately $3 million. "The early redemption of these bonds reflects what we see as increased stability in our core end markets, allowing us to move forward from an extremely conservative balance sheet position," said Walt Turner, President and CEO of Koppers. Mr. Turner continued, "We believe that this redemption will result in a significant reduction in interest expense by exchanging bond debt for bank debt and will also preserve a substantial amount of liquidity if acquisition opportunities present themselves. Given our continuing strong cash position and availability under our revolving credit agreement, we are confident that we are in a position to take advantage of opportunities to grow our core businesses and reap the benefits of a strong balance sheet created by our ability to generate enhanced and consistent cash flows."
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