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.