FREEPORT-McMoRan INC. (NYSE:FCX) Files An 8-K Entry into a Material Definitive Agreement
Item1.01.
| Entry into a Material Definitive Agreement. |
On December12, 2016, Freeport-McMoRan Inc. (FCX) issued a press
release announcing the early results of its previously announced
offers to eligible holders to exchange any and all of the
outstanding 6.125% Senior Notes due 2019, 61% Senior Notes due
2020, 6.625% Senior Notes due 2021, 6.75% Senior Notes due 2022
and 67% Senior Notes due 2023
(collectively, the Existing Notes) issued by Freeport-McMoRan Oil
Gas LLC (FM OG), FCX Oil Gas LLC and FMSTP Inc., as co-issuers
(the Co-Issuers), and guaranteed by FCX, for (1)new 6.125% Senior
Notes due 2019 (the 2019 Notes), 6.50% Senior Notes due 2020 (the
2020 Notes), 6.625% Senior Notes due 2021 (the 2021 Notes), 6.75%
Senior Notes due 2022 (the 2022 Notes) and 6.875% Senior Notes
due 2023 (the 2023 Notes and, together with the 2019 Notes, the
2020 Notes, the 2021 Notes and the 2022 Notes, the New Notes) to
be issued by FCX and guaranteed by FM OG and (2)cash
(collectively, the Exchange Offers), and of its previously
announced solicitation of consents from the holders of the
Existing Notes to amend the indentures governing the Existing
Notes (collectively, the Consent Solicitations).
A copy of
the press release announcing the early results of the Exchange
Offers and the Consent Solicitations is attached hereto as
Exhibit 99.1 and is incorporated herein by reference.
On
December13, 2016, FCX accepted for exchange the Existing Notes
that were validly tendered prior to the early tender deadline and
not validly withdrawn. In connection with the early settlement of
the Exchange Offers, FCX entered into an Indenture, dated as of
December13, 2016 (the Indenture), among FCX, Freeport-McMoRan Oil
Gas LLC, as guarantor (FM OG), and U.S. Bank National
Association, as trustee (the Trustee), and Registration Rights
Agreements, dated as of December13, 2016, with respect to each
series of New Notes (each, a Registration Rights Agreement and
collectively, the Registration Rights Agreements), among FCX, FM
OG and J.P. Morgan Securities LLC and Merrill Lynch, Pierce,
Fenner Smith Incorporated, as dealer managers and solicitation
agents (the Dealer Managers).
The New
Notes were not registered under the Securities Act of 1933, as
amended (the Securities Act), or the securities laws of any other
jurisdiction. The New Notes were offered only to (1)qualified
institutional buyers as defined in Rule 144A under the Securities
Act and (2)outside the United States to non-U.S. persons in
compliance with Regulation S under the Securities Act.
Indenture
and New Notes
to the
Indenture, on December13, 2016, FCX issued $177,168,000 aggregate
principal amount of its 2019 Notes, $551,919,000 aggregate
principal amount of its 2020 Notes, $227,640,000 aggregate
principal amount of its 2021 Notes, $403,019,000 aggregate
principal amount of its 2022 Notes and $726,518,000 aggregate
principal amount of its 2023 Notes. The 2019 Notes will mature on
June15, 2019, the 2020 Notes will mature on November15, 2020, the
2021 Notes will mature on May1, 2021, the 2022 Notes will mature
on February1, 2022 and the 2023 Notes will mature on February15,
2023. Interest will accrue on the New Notes on the basis of a
360-day year of twelve 30-day months.
Interest
will accrue on the 2019 Notes at a rate of 6.125%per annum, from
December13, 2016 or from the most recent interest payment date
(each such date, an Interest Payment Date) on which interest has
been paid or duly provided for semiannually on June15 and
December15 of each year, commencing on June15, 2017, to the
persons in whose names such Notes are registered in the security
register at the close of business on the June1 or December1
preceding the relevant interest payment date, except that
interest payable at maturity shall be paid to the same persons to
whom principal of such Notes is payable.
Interest
will accrue on the 2020 Notes at a rate of 6.50%per annum, from
December13, 2016 or the Interest Payment Date on which interest
has been paid or duly provided for semiannually on May15 and
November15 of each year, commencing on May15, 2017, to the
persons in whose names such Notes are registered in the security
register at the close of business on the May1 or November1
preceding the relevant interest payment date, except that
interest payable at maturity shall be paid to the same persons to
whom principal of such Notes is payable.
Interest
will accrue on the 2021 Notes at a rate of 6.625%per annum, from
December13, 2016 or the Interest Payment Date on which interest
has been paid or duly provided for semiannually on May1 and
November1 of each year, commencing on May1, 2017, to the persons
in whose names such Notes are registered in the security register
at the close of business on the April15 or October15 preceding
the relevant interest payment date, except that interest payable
at maturity shall be paid to the same persons to whom principal
of such Notes is payable.
Interest
will accrue on the 2022 Notes at a rate of 6.75%per annum from
December13, 2016 or the Interest Payment Date on which interest
has been paid or duly provided for semiannually on February1 and
August1 of each year, commencing on February1, 2017, to the
persons in whose names such Notes are registered in the security
register at the close of business on the January15 or July15
preceding the relevant interest payment date, except that
interest payable at maturity shall be paid to the same persons to
whom principal of such Notes is payable.
Interest
will accrue on the 2023 Notes at a rate of 6.875%per annum, from
December13, 2016 or the Interest Payment Date on which interest
has been paid or duly provided for semiannually on February15 and
August15 of each year, commencing on February15, 2017, to the
persons in whose names such Notes are registered in the security
register at the close of business on the February1 or August1
preceding the relevant interest payment date, except that
interest payable at maturity shall be paid to the same persons to
whom principal of such Notes is payable.
The New
Notes will be FCX and FM OGs senior unsecured obligations and
will rank senior in right of payment to any subordinated
indebtedness that FCX or FM OG may incur in the future and
equally in right of payment with all of FCX and FM OGs existing
and future unsecured and unsubordinated indebtedness.
Optional
Redemption. FCX may, at its option, redeem all or part of
the 2022 Notes and the 2023 Notes at a make-whole price, plus
accrued and unpaid interest, if any, to, but not including, the
date of redemption at any time prior to February1, 2018 in the
case of the 2022 Notes and February15, 2020 in the case of the
2023 Notes. The 2019 Notes, the 2020 Notes and the 2021 Notes are
not subject to redemption at a make-whole price.
In addition,
FCX may redeem the New Notes at any time and from time to time
during the periods set forth in the Indenture at fixed redemption
prices, plus accrued and unpaid interest, if any, to the date of
redemption. Such redemption prices reflect, in the case of the
2020 Notes and the 2021 Notes, an increase of 0.25% from the
Existing Notes for each redemption period other than the final
redemption period.
Repurchase upon
Change of Control. Upon the occurrence of a change of
control triggering event (as defined in the Indenture), each
holder of New Notes will have the right to require FCX to
purchase all or a portion of such holders New Notes to a change
of control offer (as defined in the Indenture), at a purchase
price equal to 101% of the principal amount thereof plus accrued
and unpaid interest, if any, to the date of purchase, subject to
the rights of holders of the New Notes on the relevant record
date to receive interest due on the relevant interest payment
date.
Other
Covenants. The Indenture contains covenants that restrict
FCXs ability, with certain exceptions, to (i)incur debt secured
by liens, (ii)engage in sale and leaseback transactions and
(iii)merge or consolidate with or into another entity, or sell,
transfer or lease all or substantially all of its properties and
assets. These covenants are subject to a number of important
exceptions and qualifications, as described in the
Indenture.
Events
of Default. The Indenture provides for customary events of
default (subject in certain cases to customary grace and cure
periods), which include non-payment, failure to comply with the
special mandatory redemption provisions, breach of other
covenants in the Indenture, unenforceability of a guarantee and
certain events of bankruptcy, insolvency or reorganization.
Generally, if an event of default
occurs, the
Trustee or holders of at least 25% in aggregate principal amount
of the outstanding debt securities of all of the affected series
of the New Notes may declare the principal of all debt securities
of such affected series immediately due and payable.
The
foregoing descriptions of the Indenture and the New Notes do not
purport to be complete and are qualified in their entirety by
reference to the Indenture and the forms of the New Notes which
are attached as Exhibit 4.1 and Exhibits 4.2, 4.3, 4.4, 4.5 and
4.6, respectively, to this Current Report on Form 8-K and which
are incorporated herein by reference.
Registration
Rights Agreements
In
connection with the offering of the New Notes, on December13,
2016, FCX, FM OG and the Dealer Managers entered into
Registration Rights Agreements with respect to each series of New
Notes. In each Registration Rights Agreement, FCX and FM OG have
agreed for the benefit of the holders of the applicable series of
New Notes to use their reasonable best efforts to (1)file a
registration statement on an appropriate registration form with
respect to a registered offer to exchange the New Notes for new
notes with terms substantially identical in all material respects
to the New Notes (except that the exchange notes will not contain
terms with respect to transfer restrictions or any increase in
annual interest rate), (2)cause the registration statement to be
declared effective under the Securities Act and (3)complete the
exchange offer described below with respect to the New Notes
within 365 days after the issue date of the New Notes.
After the
Securities and Exchange Commission (SEC) declares the exchange
offer registration statement related to the New Notes effective,
FCX will offer the exchange notes and the related guarantee in
return for the New Notes. The exchange offer will remain open for
at least 20 business days (or longer if required by applicable
law) after the date FCX mails or makes available notice of the
exchange offer to the holders of the New Notes. FCX will use its
reasonable best efforts to complete the exchange offer for the
New Notes not later than 60 days after the exchange offer
registration statement becomes effective.
If FCX
determines that a registered exchange offer is not available or
may not be completed as soon as practicable after the last date
for acceptance of the New Notes for exchange because it would
violate any applicable law or applicable interpretations of the
staff of the SEC or, if for any reason the exchange offer is not
for any other reason completed within 365 days after the issue
date of the New Notes, or, in certain circumstances, any Dealer
Manager so requests in connection with any offer or sale of New
Notes, in each case unless FCX and FM OG have previously done so,
FCX and FM OG will use their reasonable best efforts to file and
to have become effective a shelf registration statement relating
to resales of such series of New Notes and to keep that shelf
registration statement continuously effective for a period of 18
months from its effectiveness or such shorter period that will
terminate when all such New Notes cease to be registrable
securities (as defined in the Registration Rights Agreements),
including when all New Notes covered by the shelf registration
statement have been sold to the shelf registration statement. FCX
and FM OG will, in the event of such a shelf registration,
provide to each participating holder of New Notes copies of a
prospectus, notify each participating holder of New Notes when
the shelf registration statement has become effective and take
certain other actions to permit resales of the New Notes.
If a
registration default (as defined in each Registration Rights
Agreement) occurs with respect to New Notes of a particular
series that are registrable securities, then additional interest
shall accrue on the principal amount of the New Notes of such
series that are registrable securities at a rate of 0.25%per
annum for the first 90-day period beginning on the day
immediately following such registration default (which rate will
be increased by an additional 0.25%per annum for each subsequent
90-day period that such additional interest continues to accrue,
provided that the rate at which such additional interest accrues
may in no event exceed 0.50%per annum). The additional interest
will cease to accrue when the registration default is cured. A
registration default occurs with respect to each series of the
New Notes if (1)FCX has not exchanged exchange notes for all New
Notes validly tendered in accordance with the terms of the
exchange offer on or prior to the 365th day after the issuance of
New Notes or, if a shelf registration statement is required and
has not become effective, on or prior to the later of (a)the
365th day
after the
issuance of New Notes and (b)the 90th day after delivery of a
shelf registration request or (2)if applicable, a shelf
registration statement covering resales of the New Notes has
become effective and such shelf registration statement ceases to
be effective or the prospectus contained therein ceases to be
usable for resales of registrable securities at any time during
the required effectiveness period, and such failure to remain
effective or be usable exists for more than 60 days (whether or
not consecutive) in any 12-month period. A registration default
is cured with respect to a series of New Notes, and additional
interest ceases to accrue on any registrable securities of such
series of New Notes, when the exchange offer is completed or the
shelf registration statement becomes effective, or when the shelf
registration statement again becomes effective or the prospectus
again becomes usable, as applicable, or when the New Notes of
such series cease to be registrable securities.
The
foregoing description of the Registration Rights Agreements does
not purport to be complete and is qualified in its entirety by
reference to the Registration Rights Agreements which are
attached as Exhibits 4.7, 4.8, 4.9, 4.10 and 4.11 to this Current
Report on Form 8-K and which are incorporated herein by
reference.
The Dealer
Managers and their affiliates have, from time to time, provided
and/or are currently providing investment banking, commercial
banking and financial advisory services to FCX and its
affiliates. The Dealer Managers may in the future provide various
investment banking, commercial banking and other services to FCX
and its affiliates, for which they would receive customary
compensation from FCX. In addition, FCX may use all or a portion
of the proceeds from asset sales, including the previously
announced sale by FM OG of its Deepwater Gulf of Mexico
properties, to prepay or repay a portion of FM OGs outstanding
indebtedness to FCX and FCX may in turn prepay or repay a portion
of FCXs outstanding indebtedness to its lenders. The Dealer
Managers or their affiliates would receive such proceeds to the
extent FCX elects to use such proceeds to prepay or repay
indebtedness held by the Dealer Managers or their
affiliates.
Twentieth
Supplemental Indenture
In
connection with the receipt of the requisite consents in the
Consent Solicitation, on December13, 2016, the Co-Issuers, FCX,
as guarantor, and Wells Fargo, N.A., as trustee, entered into a
supplemental indenture (the Twentieth Supplemental Indenture) to
the indenture governing the Existing Notes, dated as of March13,
2007, as amended and supplemented, to effect the proposed
amendments described in the Offering Memorandum and Consent
Solicitation Statement dated November29, 2016. The Twentieth
Supplemental Indenture eliminates certain of the covenants,
restrictive provisions and events of default and conforms certain
covenants to those in the outstanding notes of FCX.
The
foregoing description of the Twentieth Supplemental Indenture
does not purport to be complete and is qualified in its entirety
by reference to the Twentieth Supplemental Indenture which is
attached as Exhibit 4.12 to this Current Report on Form 8-K and
which is incorporated herein by reference.
Item2.03.
Creation of a Direct Financial Obligation or an Obligation under
an Off-Balance Sheet Arrangement of a Registrant.
The
information in Item1.01 of this Form 8-K is hereby incorporated
by reference into this Item2.03.
| Item9.01. | Financial Statements and Exhibits. |
(d)
Exhibits.
The exhibits
included as part of this Current Report on Form 8-K are listed in
the attached Exhibit Index.
About FREEPORT-McMoRan INC. (NYSE:FCX)
Freeport-McMoRan Inc. (FCX) is a natural resource company with a portfolio of mineral assets, and oil and natural gas resources. The Company’s segments include the Morenci, Cerro Verde, Grasberg and Tenke Fungurume copper mines, the Rod & Refining operations and the U.S. Oil & Gas Operations. It has organized its operations into five primary divisions: North America copper mines, South America mining, Indonesia mining, Africa mining and Molybdenum mines. Its portfolio of assets includes the Grasberg minerals district in Indonesia, mining operations in North and South America, the Tenke Fungurume (Tenke) minerals district in the Democratic Republic of Congo (DRC) in Africa, and oil and natural gas assets in the United States. Its Atlantic Copper smelts and refines copper concentrates, and markets refined copper and precious metals in slimes. It has a smelter at its Miami, Arizona, mining operation, and molybdenum conversion facilities in the United States and Europe. FREEPORT-McMoRan INC. (NYSE:FCX) Recent Trading Information
FREEPORT-McMoRan INC. (NYSE:FCX) closed its last trading session down -0.39 at 14.65 with 35,342,225 shares trading hands.