"The bonds they are buying back are being bought back at a...

"The bonds they are buying back are being bought back at a premium, meaning for more than $100 face value. This is a loss as they sold something at $100 and are buying it back at $103"However, in reality, the old interest expense on the 4 years remaining of the 2019 bonds equates to the sum of the premium they are paying to buy back the 2019 bonds PLUS the new interest "

I am not sure it is entirely true in this case as the 3% penalty is when spread over 4years is ~70 basis point each year. Given their improved debt rating and the drop in interest rate, they are likely to be able to achieve a far great drop in the new debt.