8-KSecurities & Listing

FREEPORT-MCMORAN INC 8-K Report, Unregistered Securities Sale (Sep 4, 2009)

Filed September 4, 2009For Securities:FCX

Summary

Freeport-McMoRan Inc. (FCX) has announced a significant event concerning its 5½% Convertible Perpetual Preferred Stock. The company has engaged in privately negotiated transactions to incentivize holders of this preferred stock to convert their holdings into FCX common stock. This initiative resulted in the conversion of approximately 385,500 shares, representing 46% of the total outstanding preferred stock, into roughly 8.3 million shares of FCX common stock. To further encourage these early conversions, FCX paid an aggregate of $1.0 million in cash to the converting shareholders. These conversions were executed under the exemption provided by Section 3(a)(9) of the Securities Act of 1933. This move is strategically timed as FCX had previously called for the redemption of its 5½% Convertible Perpetual Preferred Stock on September 21, 2009. Holders had the option to convert their preferred shares into common stock until September 18, 2009, at a conversion rate equivalent to a common stock price of approximately $46.45 per share. Given that the market value of the common stock significantly exceeded the cash redemption value ($1,000 per share), FCX anticipates that most, if not all, remaining preferred stockholders will elect to convert into common stock rather than accept the redemption price. This conversion process will reduce the outstanding preferred stock, with approximately 446,100 shares remaining after these induced conversions.

Key Highlights

  • 1FCX incentivized the conversion of 46% (approximately 385,500 shares) of its outstanding 5½% Convertible Perpetual Preferred Stock into common stock.
  • 2Approximately 8.3 million shares of FCX common stock were issued as a result of these conversions.
  • 3FCX paid $1.0 million in cash to holders to induce these early conversions.
  • 4The conversions were conducted through privately negotiated transactions and are exempt from registration under Section 3(a)(9) of the Securities Act of 1933.
  • 5FCX had previously called for redemption of this preferred stock on September 21, 2009, with a $1,000 per share redemption price.
  • 6The conversion price for the preferred stock into common stock was approximately $46.45 per common share.
  • 7FCX expects remaining preferred stockholders to convert to common stock due to the common stock's market value exceeding the redemption value.

Frequently Asked Questions

This filing announces that Freeport-McMoRan Inc. (FCX) has completed privately negotiated transactions to induce holders of its 5½% Convertible Perpetual Preferred Stock to convert their shares into FCX common stock. This action is in anticipation of a scheduled redemption of the preferred stock.

Approximately 385,500 shares of 5½% Convertible Perpetual Preferred Stock, representing 46% of the total outstanding, were converted. This resulted in the issuance of approximately 8.3 million shares of FCX common stock.

FCX paid an aggregate of $1.0 million in cash to the holders of the 5½% Convertible Perpetual Preferred Stock to incentivize them to convert their shares early, ahead of the redemption date. This measure was taken to ensure a smooth transition and reduce the outstanding preferred stock.

FCX had called for the redemption of the remaining preferred stock on September 21, 2009. Given that the market value of FCX common stock significantly exceeded the $1,000 per share redemption value, FCX anticipates that most, if not all, remaining holders will elect to convert their preferred stock into common stock by the September 18, 2009 deadline.