Freeport reduces debt by converting notes

US giant copper and gold miner Freeport-McMoRan Copper & Gold Inc. (FCX) announced on Monday it had reduced debt through the early conversion of US$ 311 million notes into common stock through privately negotiated transactions.

In these transactions, holders representing approximately 51% of the $603.75 million in Notes agreed to convert their Notes into 21.76 million shares of FCX common stock (based on the $14.30 per share conversion price under the terms of the Notes). FCX agreed to pay an aggregate of $23 million in cash to the holders, which will be funded from restricted cash in the interest escrow associated with these Notes.

Final settlement of these transactions is expected by Wednesday, August 27, 2003.

FCX issued $603.75 million in Notes in August 2001 and deposited a portion of the proceeds in escrow to fund the first three years of interest payments. The Notes are callable at FCX's option after July 31, 2004.

As a result of these early conversions, the principal amount of outstanding Notes will be reduced to approximately $293 million and the interest cost savings will result in an annual increase to FCX's earnings and operating cash flows of approximately $25 million. After giving effect to these conversions, FCX shares outstanding will total approximately 170 million.

FCX subsidiary PT.Freeport Indonesia operates the world largest copper and gold mining complex in the easternmost province of Papua. (alex)