Freeport-McMoRan says holders of $180 million 8¼% convertibles take up incentive

New York, Jan. 7 - Freeport-McMoRan Copper & Gold Inc. said holders of $180 million of its 8¼% senior convertible notes due 2006 accepted its offer of an incentive to convert the securities to stock.

The response represents 62% of the $292.6 million of the outstanding convertibles.

Freeport-McMoRan issued 12.6 million shares for the converted notes and paid $10 million of cash, including accrued interest, which will be funded from restricted cash in the interest escrow. The escrow was set up to cover the first three years' interest payments.

On Dec. 8 Freeport-McMoRan announced it was offering a cash incentive to encourage conversion of the 8¼% convertibles.

The New Orleans copper, gold and silver miner offered $20 plus accrued interest through the conversion date per $1,000 principal amount of the notes that are converted by Jan. 6.

The notes are currently convertible at a price of $14.30 per share.

Freeport added that it intends to redeem any notes that remain outstanding when they become convertible on July 31, 2004.

The company had already reduced the amount of the convertibles from the original $603.75 million through privately negotiated transactions in August.

"This transaction is an additional step to reduce debt and enhance our financial flexibility," said Richard Adkerson, Freeport-McMoRan's president and chief executive officer, in a news release.

"The conversions of these notes to equity further strengthen our balance sheet and will result in annual cash savings of approximately $5 million at the current level of common stock dividend."

Following the transaction, Freeport-McMoRan now has $113 million of the notes outstanding.

Georgeson Shareholder Communications Inc. was information agent for the tender offer (800 843-0129).

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