Summary
Freeport-McMoRan Inc. (FCX) has entered into a material definitive agreement to purchase $500 million of 5.75% Convertible Perpetual Preferred Stock from McMoRan Exploration Co. (MMR). This investment is structured to occur concurrently with MMR's acquisition of oil and gas properties from Plains Exploration & Production Company (PXP) and a $400 million financing transaction by MMR. The preferred stock is convertible into MMR's common stock at an initial conversion price of $16.00 per share, with an initial conversion rate of 62.5 shares of common stock per preferred share. This transaction is expected to result in FCX beneficially owning approximately 14% of MMR's outstanding common stock on a fully diluted basis. The agreement includes provisions for FCX to nominate directors to MMR's board and registration rights for the convertible preferred stock.
Key Highlights
- 1FCX is investing $500 million in McMoRan Exploration Co. (MMR) by purchasing convertible preferred stock.
- 2The investment is contingent on the successful closing of MMR's acquisition of oil and gas properties from Plains Exploration & Production Company (PXP) and MMR's concurrent $400 million financing.
- 3The purchased preferred stock is convertible into MMR common stock at an initial price of $16.00 per share.
- 4Upon closing, FCX anticipates holding approximately 14% of MMR's outstanding common stock on a fully diluted basis.
- 5FCX will have the right to nominate directors to MMR's board of directors based on its ownership stake.
- 6FCX will receive registration rights for the convertible securities to facilitate potential resale.
- 7There are significant overlapping directors and officers between FCX and MMR, with the transaction negotiated by special committees.