By Ronda Fears
Nashville, Feb. 6 - Freeport McMoRan Copper & Gold Inc. sold an upsized $500 million of non-callable eight-year convertible senior notes at par to yield 7.0% with a 70% initial conversion premium in the Rule 144A market via sole lead manager Merrill Lynch & Co.
The drive-by deal, which was sold before the market open, was upsized from $350 million.
It priced at the middle of yield guidance that put the coupon between 6.75% and 7.25% and the cheap end of premium guidance of 70% to 75%.
Freeport said about $486 million of proceeds would be used to repay all outstanding bank debt, for working capital requirements and general corporate purposes. The company said it plans to terminate its existing bank credit facilities and replace them with a new bank credit facility.
Upon completion of the offering and the planned termination of its bank credit facilities, Freeport said its board of directors has authorized a new annual cash dividend policy for its common stock of 36c per share, payable quarterly at 9c per share, with the initial quarterly dividend expected to be paid on May 1.
"Our strong financial performance and outlook and recent financing transactions enable our company to return a portion of our free cash flows to shareholders," said Freeport chief executive James R. Moffett, in a company statement.
"Our financial policy will allow us to continue to reduce our debt significantly while providing returns to shareholders."
Terms of the deal are:
| Issuer: | Freeport McMoRan Copper & Gold Inc.
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| Amount: | $500 million, up from $350 million
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| Greenshoe: | $75 million, up from $52.5 million
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| Lead manager: | Merrill Lynch & Co.
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| Maturity: | February 2011
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| Coupon: | 7.0%
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| Issue price: | Par
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| Yield: | 7.0%
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| Conversion premium: | 70%
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| Conversion price: | $30.87
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| Conversion ratio: | 32.918
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| Call: | Non-callable
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| Settlement date: | Feb. 11
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