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Freeport-McMoRan extends early conversion offer for 7% convertibles
By Jennifer Chiou
New York, Aug. 31 - Freeport-McMoRan Copper & Gold Inc. said its offer to exchange of its 7% convertible senior notes due 2011 will now end at 5 p.m. ET on Sept. 8, pushed back from midnight ET on Sept. 7.
Freeport-McMoRan previously said it will pay in cash $90.00 for each $1,000 principal amount of notes exchanged.
The company will also pay accrued interest up to but excluding the conversion date.
The $293.2 million of outstanding notes are convertible at a price of $30.872 per share of Freeport-McMoRan common stock. The company's shares closed at $57.08 on Wednesday (NYSE: FCX).
Freeport-McMoRan said 49% of the $575 million issued convertibles have been converted in privately negotiated transactions since September 2005. This latest offer seeks to induce early conversion of the remaining notes.
The notes are not callable prior to the 2011 maturity date.
Full conversion of the notes would cost Freeport-McMoRan $27 million, including accrued interest, and reduce the company's consolidated debt by $293.2 million and annual interest expense by $21 million.
The company said it will fund the cash payment with cash on hand and record it as a charge to net income for the third quarter of 2006.
The 9.5 million common shares issuable upon conversion of all of the notes would increase the company's outstanding common shares to about 197.1 million.
Freeport-McMoRan said it expects that tendering noteholders will be eligible for the supplemental stock dividend of $0.75 per share it plans to pay on Sept. 28 to shareholders of record as of Sept. 14 because the tendered notes are expected to be converted on Sept. 11.
The supplemental dividend is in addition to the company's regular quarterly common stock dividend of $0.3125 per share.
Freeport-McMoRan is a New Orleans-based explorer, miner and producer of copper, gold and silver.
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