Fixed Income: Sinking fund provision

[stuartbale1]

Can someone explain the concept this paragraph is conveying.
The price at which bonds are redeemed under a sinking fund provision is typically par but can be different from par. If the market price is less than sinking fund redemption price the issuer can satisfy the sinking fund provision by buying bonds in open market with a par value equal to the amount of bonds that must be redeemed. This would be the case if interest rates had risen since issuance so that the bonds were trading below the sinking fund redemption price.

 

[S2000magician]

Suppose that the sinking fund provision requires that the company pay off $1 million par of bonds this year.
If the bonds are trading at $1,100, the company will exercise the sinking fund provision, randomly select 1,000 outstanding bonds, and redeem them at par; this will cost the company $1 million.
If the bonds are trading at $900, the company will purchase 1,000 bonds on the open market and turn them over to the trustee to be retired; this will cost the company only $900,000.

 

[stuartbale1]

@S2000 Magician
So in both cases company will benefit from this.

 

[S2000magician]

Correct.