Nashville, March 25 - Freeport McMoRan Copper & Gold Inc. sold $1 billion of perpetual convertible preferred stock at par of $1,000 to yield 5.5% with a 40% initial conversion premium, via joint book runners Morgan Stanley and Merrill Lynch & Co.
The Rule 144A deal sold at the cheap end of price talk which had put the dividend at 5.0% to 5.5% and the initial conversion premium at 40% to 45%.
Holders will have dividend protection for common dividends over 20 cents per share per quarter.
The New Orleans-based mining concern has earmarked proceeds to fund the buyback of 23.93 million of its class B shares from a subsidiary of Rio Tinto plc. Rio Tinto acquired these shares in mid-1995 for $20.90 per share in connection with Freeport's spin-off from its former parent and Rio Tinto's participation in a major expansion project of Freeport's subsidiary, PT Freeport Indonesia.
Terms of the deal are:
| Issuer: | Freeport McMoRan Copper & Gold Inc.
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| Issue: | Convertible perpetual preferred stock
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| Bookrunners: | Morgan Stanley and Merrill Lynch
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| Amount: | $1 billion
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| Greenshoe: | $100 million
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| Maturity: | Perpetual
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| Dividend: | 5.5%
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| Price: | Par of $1,000
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| Yield: | 5.5%
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| Conversion premium: | 40%
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| Conversion price: | $53.186
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| Conversion ratio: | 18.8019
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| Call: | Non-callable for 5 years, then with 130% trigger for life
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| Rating: | S&P: CCC
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| Price talk: | 5.0-5.5%, up 40-45%
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| Pricing date: | March 24, after the close
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| Settlement date: | March 30
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| Distribution: | Rule 144A
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