Freeport-McMoRan Copper & Gold Inc. To Acquire Plains Exploration & Production Company And McMoRan Exploration Co. In Transactions Totaling $20 Billion, Creating A Premier U.S. Based Natural Resource Company
At closing, FCX will add to its board of directors James C. Flores and two other members from PXP’s board.
The corporate headquarters of the combined company will be located in Phoenix, Arizona, and the combined company will also maintain offices in Houston, Texas and New Orleans, Louisiana, to support its oil and gas operations and existing administrative functions.
FINANCING FOR TRANSACTIONS
FCX has received $9.5 billion in financing commitments from JPMorgan Chase Bank, N.A. to fund the cash portion of the merger consideration for both transactions and to repay debt outstanding under PXP’s existing term loans and revolver. FCX intends to provide a guarantee for all existing PXP bonds and PXP in turn will provide guarantees for all current and future FCX bonds and term loans. After giving effect to the transaction, estimated pro forma total debt at September 30, 2012, is approximately $20.0 billion, or approximately $16.3 billion net of cash.COMBINED CASH FLOWS For the year 2013, assuming prices of $3.50 per pound for copper, $1,500 per ounce for gold, $12 per pound for molybdenum, $100 per barrel for Brent crude and $4.50 per MMbtu for natural gas and current estimates of production, the combined company’s estimated EBITDA would approximate $12 billion and operating cash flows would approximate $9 billion. FINANCIAL POLICY FCX has an established financial policy of maintaining a strong financial position, investing in projects with attractive rates of return and returning excess capital to shareholders. Following the transaction, FCX intends to use cash flows to invest in development projects and to repay debt. FCX currently expects to continue its regular annual common dividend of $1.25 per share. FCX is committed to its long-standing tradition of maximizing value for shareholders. WEBCAST INFORMATION Management will host a webcast for investors at 11:00 a.m. Eastern Time, Wednesday, December 5, 2012, to discuss the details of the transaction. The conference call will be broadcast on the Internet along with slides. Interested parties may listen to the conference call live and view the slides by accessing " www.fcx.com." A replay of the webcast will be available through Friday, January 4, 2013. ADVISORS AND COUNSEL Credit Suisse Securities (USA) LLC acted as financial advisor to the special committee of the FCX board of directors and rendered fairness opinions in connection with both transactions. Wachtell, Lipton, Rosen & Katz acted as legal advisor to the special committee of the FCX board of directors. Evercore Partners acted as financial advisor to the special committee of the MMR board of directors and rendered a fairness opinion in connection with the transaction. Weil, Gotshal & Manges LLP served as legal advisor to the special committee of the MMR board of directors. Barclays served as financial advisor to PXP and rendered a fairness opinion in connection with the transaction. Latham & Watkins LLP served as legal advisor to PXP.
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