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Freeport-McMoRan to redeem its $1 billion floaters at 101 on April 1
By Susanna Moon
Chicago, March 2 - Freeport-McMoRan Copper & Gold Inc. said it plans to redeem all of its outstanding senior floating-rate notes due 2015 on April 1.
There is $1 billion principal amount of the notes outstanding.
Freeport-McMoRan said it will pay 101% of par plus accrued interest from Oct. 1 to the redemption date.
The notes bear interest at Libor plus 325 basis points.
The company said that it would save about $58 million annually in interest cost savings over the life of the notes, based on current forward Libor rates through maturity.
The company said it expects to record a $20 million charge to net income in the second quarter of 2010 in connection with the redemption.
The Bank of New York Mellon is trustee.
Freeport-McMoRan said on Jan. 21 that it was analyzing opportunities to use some of its cash to further reduce its debt maturing in 2015 and beyond.
"Our financial policy is to focus on having a strong balance sheet and liquidity position," Richard C. Adkerson, chief executive officer of Freeport-McMoRan, said during the company's fourth-quarter and year-end conference call.
From Jan. 1 to Jan. 20, the company repaid $75 million of its 8¼% notes through open-market purchases at a cost of $82 million.
"The cash flows that we've generated have allowed us to strengthen our balance sheet. This gives us the enhanced financial and liquidity position that positions our company well to take advantage of what we believe is going to be a very positive long-term outlook for the commodity businesses that we're in," Adkerson said.
Phoenix-based Freeport-McMoRan is a mining company.
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