Freeport talks $1 billion three-year mandatory convertible preferreds at 6.75%-7.25%, up 18%-22%

By Kenneth Lim

Boston, March 19 - Freeport-McMoRan Copper & Gold Inc. plans to price $1 billion of three-year mandatory convertible preferred stock on Thursday after the market closes, talked at a dividend rate of 6.75% to 7.25% and an initial conversion premium of 18% to 22%.

The 10 million preferred shares will be offered at par of $100 each.

There is an over-allotment option for a further $150 million.

The company is concurrently offering 35 million shares of its common stock.

Merrill Lynch and JP Morgan are the bookrunners of the registered deals.

The convertibles will be non-callable and may not be put.

The convertibles will be mandatorily converted into Freeport-McMoRan common stock in the third year.

There will be dividend and takeover protection.

Freeport-McMoRan, a New Orleans-based copper, gold and silver mining company, said the proceeds of the deal will be used to repay two outstanding term loans due 2012 and 2014 that were used to help fund its acquisition of Phelps Dodge Corp.

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