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Freeport-McMoRan announces early conversion of 98% of 7% convertibles
By Laura Lutz
Des Moines, Sept. 11 - Freeport-McMoRan Copper & Gold Inc. announced holders of $286.1 million, or 98%, of its $293.2 million of outstanding 7% senior convertible notes due 2011 took advantage of the company's exchange offer.
The tendered securities will be converted into 9.3 million shares.
The offer ended on Sept. 8.
The notes were converted at a price of $30.872 per share of Freeport-McMoRan common stock. The company's shares closed at $58.31 on Sept 8 (NYSE: FCX).
Freeport-McMoRan said it will pay $25.7 million in cash for the early conversion premium of $90.00 for each $1,000 principal amount of notes exchanged.
The company will also pay $600,000 for accrued interest up to but excluding the conversion date.
Final settlement is expected on Sept. 12. The offer was originally set to expire on Sept. 7 but was extended to Sept. 8 on Aug. 31.
When the offer was announced, Freeport-McMoRan said 49% of the $575 million issued convertibles had been converted in privately negotiated transactions since September 2005. This offer sought to induce early conversion of the remaining notes.
The notes are not callable prior to the 2011 maturity date.
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 9.3 million common shares issued increased the company's outstanding common shares to about 197 million.
The company's total debt of $1.1 billion on June 30 will be reduced to $0.8 billion after the conversion.
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.
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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