Freeport-McMoRan to redeem 5.5% convertible preferreds on Sept. 21

By Devika Patel

Knoxville, Tenn., Sept. 1 - Freeport-McMoRan Copper & Gold Inc. said it will redeem its 5.5% convertible perpetual preferred stock on Sept. 21.

The company may redeem the preferreds if the closing price of its common stock exceeds 130% of the $46.45 per share conversion price for 20 days in any 30-trading-day period.

Freeport-McMoRan will pay $1,000 per preferred, and holders may elect to convert their securities until 5 p.m. ET on Sept. 18 at a conversion rate equal to 21.5305 shares of common stock per preferred. In lieu of issuing any fractional shares of common stock, the company will pay an equivalent amount in cash.

On Aug. 31, the closing price of the common stock (NYSE: FCX) was $62.98. At current market prices, the market value of the common stock issuable upon conversion is significantly greater than the cash redemption value. The company therefore expects holders will elect to convert their preferreds before the redemption date.

There are 831,554 preferreds outstanding, equivalent to about $832 million in redemption value.

If all the preferreds are converted, Freeport-McMoRan would issue 17.9 million common shares. Annual preferred dividend savings would be approximately $46 million.

The mining company has headquarters in Phoenix.

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