Summary
Freeport-McMoRan Inc. (FCX) has announced the successful completion of a private offering of its Senior Notes, totaling $7.5 billion across four tranches: 2.375% due 2018, 3.100% due 2020, 3.875% due 2023, and 5.450% due 2043. These notes were offered to qualified institutional buyers and non-U.S. persons, and were not registered under the Securities Act of 1933. The issuance of these notes is directly linked to FCX's pending merger with Plains Exploration & Production Company (PXP). Crucially, these notes will initially be unsecured obligations of FCX and will not be guaranteed by its subsidiaries. However, upon the consummation of the PXP merger, PXP will unconditionally guarantee these notes. This filing also outlines specific redemption provisions, including a special mandatory redemption if the PXP merger is not completed by a certain date or if the guarantee requirement is not met. Investors should note the terms related to optional redemption and repurchase upon a change of control, as well as covenants restricting FCX's ability to incur secured debt or engage in certain transactions.
Key Highlights
- 1FCX completed a private offering of $7.5 billion in Senior Notes across four maturity dates (2018, 2020, 2023, 2043) with varying interest rates.
- 2The notes were offered through Rule 144A and Regulation S, meaning they were not registered with the SEC and are restricted securities.
- 3Initially, the notes are unsecured obligations of FCX and are not guaranteed by its subsidiaries.
- 4Upon completion of the Plains Exploration & Production Company (PXP) merger, PXP will provide an unconditional guarantee for these notes.
- 5A 'special mandatory redemption' clause exists, requiring FCX to redeem the 2020, 2023, and 2043 Notes at 101% of their principal amount plus accrued interest if the PXP merger is not consummated by a specified date (initially June 5, 2013, with potential extensions) or if the PXP guarantee is not satisfied.
- 6The notes are senior unsecured obligations of FCX, ranking equally with existing and future unsecured and unsubordinated debt, but effectively subordinated to any future secured debt.
- 7The Indenture includes covenants restricting FCX's ability to incur secured debt, engage in sale and leaseback transactions, and merge or sell substantially all assets, subject to exceptions.
- 8Registration Rights Agreements were entered into, obligating FCX (and PXP post-merger) to use reasonable best efforts to register the notes for resale via an exchange offer or a shelf registration statement, with potential for additional interest if registration defaults occur.