8-KOther Events

FREEPORT-MCMORAN INC 8-K Report (Aug 2, 2001)

Filed August 2, 2001For Securities:FCX

Summary

Freeport-McMoRan Copper & Gold Inc. (FCX) announced on August 2, 2001, the pricing of a private offering of $525 million in convertible senior notes due January 31, 2006. These notes carry an 8.25% annual interest rate and are convertible into FCX's common stock at a significant premium, indicating management's confidence in future stock performance. The primary use of the net proceeds, estimated at $506 million, is to repay a portion of the company's outstanding borrowings under its bank credit facilities. A portion of the proceeds will also be used to purchase U.S. government securities for an escrow account, intended to cover interest payments for the first three years. The offering is being made to qualified institutional buyers under Rule 144A and is expected to close on August 7, 2001.

Key Highlights

  • 1FCX priced a private offering of $525 million in convertible senior notes due 2006.
  • 2The notes have an 8.25% annual interest rate.
  • 3Each $1,000 note is convertible into 69.93 shares of common stock.
  • 4The conversion price represents a 30% premium over the August 1, 2001 closing price of FCX's Class B shares.
  • 5Net proceeds are estimated at $506 million.
  • 6Proceeds will be used primarily to repay existing bank borrowings.
  • 7A portion of proceeds will fund an escrow account for the first three years of interest payments.

Frequently Asked Questions

The primary purpose of this offering is to raise capital to repay a portion of Freeport-McMoRan's existing bank credit facility borrowings, thereby reducing leverage and improving its balance sheet.

The notes are for $525 million, mature on January 31, 2006, carry an 8.25% annual interest rate, and are convertible into approximately 69.93 shares of common stock per $1,000 note, which represents a 30% premium over the stock price on August 1, 2001.

Net proceeds, estimated at $506 million, will be used to repay bank borrowings. Additionally, some funds will be placed in an escrow account to cover interest payments for the first three years of the notes' term.

The offering is being conducted privately and is limited to qualified institutional buyers, in accordance with Rule 144A of the Securities Act of 1933. The notes and the underlying common stock have not been registered under the Securities Act.