Freeport-McMoRan Swaps Debt for Equity

In a filing with the U.S. Securities and Exchange Commission (SEC) Friday morning, Freeport-McMoran Inc. (NYSE: FCX) announced a debt-for-equity swap in which the company issued 19.9 million shares of common stock and paid approximately $3.1 million of unpaid and accrued interest in exchange for a total of $268.5 million in senior notes.

The new equity represents about 1.59% of Freeport’s outstanding shares at the end of the March quarter.

The notes included in the exchange include:

• $85.5 million aggregate principal amount of its 3.550% Senior Notes due 2022
• $80.5 million aggregate principal amount of its 5.450% Senior Notes due 2043
• $52.5 million aggregate principal amount of its 3.875% Senior Notes due 2023
• $50.0 million aggregate principal amount of its 5.400% Senior Notes due 2034

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In the announcement Freeport said:

The Company continues to take steps to strengthen its balance sheet and is evaluating opportunities for transactions, which may include open market purchases of its debt, debt for debt exchanges, or privately negotiated exchanges of its debt for equity or equity-linked securities. The completion and amount of these transactions, if any, are subject to a number of factors, including market conditions, the Company’s financial position and the Company’s ability to complete such transactions on economically attractive terms.

Shares traded down more than 6% in Friday’s premarket session at $11.03, but that’s its U.K. competitor Rio Tinto and Brazil’s Vale, both down around 11% as a result of the U.K. vote to leave the European Union. That is likely due in large part to Freeport’s gold production. Gold producers like Barrick are up more than 10% in premarket trading.