Freeport-McMoRan Copper & Gold Inc. (NYSE: FCX) announced today that it has completed the sale of $6.5 billion of senior notes in four tranches, consisting of 5-year, 7-year, 10-year and 30-year senior notes. The offering generated net proceeds of approximately $6.4 billion, which FCX expects to use, together with the net proceeds of its $4.0 billion term loan, primarily to fund the acquisitions of Plains Exploration & Production Company (PXP) and McMoRan Exploration Co. (MMR), including for the payment of cash consideration for the acquisitions and the repayment of certain indebtedness of PXP.
Following is a summary of the four new tranches of debt, which will have an annual aggregate weighted-average interest cost of approximately 3.9%:
|2.375% Senior Notes (1)||$1.5 Billion||Due March 15, 2018|
|3.100% Senior Notes (2)||$1.0 Billion||Due March 15, 2020|
|3.875% Senior Notes (3)||$2.0 Billion||Due March 15, 2023|
|5.450% Senior Notes (4)||$2.0 Billion||Due March 15, 2043|
|(1) Priced at 99.990% to yield 2.377%|
|(2) Priced at 99.962% to yield 3.106%|
|(3) Priced at 99.941% to yield 3.882%|
|(4) Priced at 99.544% to yield 5.481%|
James R. Moffett, Chairman of the Board and Richard C. Adkerson, President and Chief Executive Officer said, "We are pleased to complete the financing requirements for our pending acquisitions of Plains Exploration & Production Company and McMoRan Exploration Co. on attractive terms. The combined bank and bond financings totaling $10.5 billion have a weighted average current interest cost of 3.1% and will enable us to fund the approximate $5.6 billion cash portion of the acquisitions and repay higher-cost debt of the targets upon completion of the transactions. We look forward to completing the pending acquisitions in the second quarter of 2013, and to pursuing our strategy of generating values for shareholders from our large mining and oil and gas resource position."
If the PXP acquisition does not close, FCX will be required to redeem all of the outstanding 7-year, 10-year and 30-year notes at 101% plus accrued and unpaid interest. As previously announced, PXP and MMR stockholder meetings to approve the acquisitions will be held after the U.S. Securities and Exchange Commission has declared effective the respective registration statements on Form S-4 filed in connection with the acquisitions. The transactions are expected to close in second-quarter 2013.
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