McMoRan merger triggers put rights, ups conversion rates for four series of convertibles

By Toni Weeks

San Luis Obispo, Calif., May 3 - McMoRan Exploration Co. said that its upcoming acquisition by Freeport-McMoRan Copper & Gold Inc. will constitute a fundamental change for two series of convertible preferred stock and a change of control for two series of convertible senior notes, thereby enhancing the conversion rate for the two series of preferreds and triggering put rights for the convertible senior notes.

According to a press release, McMoRan has delivered notices regarding the merger's effects to holders of its 8% convertible perpetual preferred stock, 5.75% series 1 convertible perpetual preferred stock, 5.25% convertible senior notes due 2013 and 4% convertible senior notes due 2017.

The merger is expected to close on June 3.

Following this, the 8% preferreds and 5.75% preferreds may be converted at the current conversion rate plus a make-whole amount for 25 days following closing of the merger. The current conversion rate is 146.1454 common shares per 8% preferred and 62.5 common shares per 5.75% preferred.

In addition, holders of the 5.25% convertible senior notes may put their notes back to the company at par plus accrued interest. McMoRan must deliver put right notices within 30 days of the closing of the merger, and holders must exercise their put rights within 45 days after that. The current conversion rate for these notes is 60.3318 common shares per $1,000 principal amount of notes.

Holders of the 4% convertible senior notes may either put back their notes to the company or convert their notes at par plus accrued interest. The current conversion rate is 62.5 shares per $1,000 principal amount of notes.

Also as a result of the merger, the release said that McMoRan stockholders are entitled to receive a per-share consideration of $14.75 and 1.15 units of Gulf Coast Ultra Deep Royalty Trust, which will hold a 5% overriding royalty interest in future production from 20 specified ultra-deep exploration prospects.

McMoRan is a New Orleans-based oil and gas exploration and development company. Phoenix-based Freeport-McMoRan explores for copper, gold and molybdenum.

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