SC 13E4
1
As filed with the Securities and Exchange Commission on March 24, 1995
_____________________________________________________________________________
_____________________________________________________________________________
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
____________________
SCHEDULE 13E-4
RULE 13E-4 TRANSACTION STATEMENT
(PURSUANT TO SECTION 13(e) OF THE SECURITIES EXCHANGE ACT OF 1934)
FREEPORT-McMoRan Inc.
(Name of Issuer)
FREEPORT-McMoRan Inc.
(Name of Person(s) Filing Statement)
$4.375 Convertible Exchangeable Preferred Stock
(Title of Class of Securities)
356714303
(CUSIP Number of Class of Securities)
John G. Amato, Esq.
General Counsel
Freeport-McMoRan Inc.
1615 Poydras Street
New Orleans, Louisiana 70112
(504) 582-4000
(Name, Address and Telephone Number of Persons Authorized to Receive Notice
and Communications on Behalf of Person(s) Filing Statement)
Copy to:
E. Deane Leonard, Esq.
David W. Ferguson, Esq.
Davis Polk & Wardwell
450 Lexington Avenue
New York, NY 10017
(212) 450-4000
____________________
This statement is filed in connection with (check the appropriate box):
a.[ ]The filing of solicitation materials or an information statement
subject to Regulation 14A, Regulation 14(C) or Rule 13e-3(c) under the
Securities Exchange Act of 1934.
b.[ ]The filing of a registration statement under the Securities Act of
1933.
c.[X]A tender offer.
d.[ ]None of the above.
Check the following box if the soliciting materials or information statement
referred to in checking box (a) are preliminary copies: [ ]
Calculation of Filing Fee
_____________________________________________________________________________
_____________________________________________________________________________
Transaction Valuation* Amount of Filing Fee
_____________________________________________________________________________
$250,000,000 $50,000
_____________________________________________________________________________
[ ] Check box if any part of the fee is offset as provided by Rule 0-11(a)(2)
and identify the filing with which the offsetting fee was previously paid.
Identify the previous filing by registration statement number, or the form or
schedule and the date of its filing.
Amount previously paid:N/A Filing party:N/A
Form or registration No.:N/A Date filed:N/A
_____________________________________________________________________________
_____________________________________________________________________________
*Determined on the basis of (i) the maximum number of shares of $4.375
Convertible Exchangeable Preferred Stock of the Company to be exchanged by
holders (5,000,000) and (ii) the book value of the securities computed as of
March 23, 1995 ($50.00).
Item 1. Security and Issuer.
(a) The name of the issuer is Freeport-McMoRan Inc., a Delaware
corporation (the "Company"), which has its principal executive offices at
161 Poydras Street, New Orleans, Louisiana 70112 (telephone number (504)
582-4000).
(b) This schedule relates to the offer by the Company to exchange 2.85
shares of Common Stock, $1.00 par value, of the Company (the "Common Stock")
for each share of $4.375 Convertible Exchangeable Preferred Stock, $1.00 par
value, of the Company (such shares together with all other issued and
outstanding shares of $4.375 Convertible Exchangeable Preferred Stock of the
Company are herein referred to as the "Preferred Stock") upon the terms and
subject to the conditions set forth in the Offer to Exchange dated March 24,
1995 (the "Offering Circular"), and related Letter of Transmittal, copies of
which are attached hereto as Exhibits (a)(1) and (a)(2), respectively. The
information set forth under "Purpose of the Exchange Offer", "The Exchange
Offer -- Terms of the Exchange Offer", "The Exchange Offer -- Transactions and
Agreements Concerning the Preferred Stock and the Common Stock", "The Exchange
Offer -- Interests of Certain Persons in the Transaction" and "Description of
the Capital Stock" in the Offering Circular is incorporated herein by
reference.
(c) The Preferred Stock has been designated as a security eligible
for trading in the Private Offerings, Resales and Trading through Automated
Linkages ("PORTAL") Market. The Common Stock is listed for trading on the
New York Stock Exchange. The information set forth under "Price Range of
the Common Stock" in the Offering Circular is incorporated herein by
reference.
(d) Not applicable.
Item 2. Source and Amount of Funds or Other Consideration.
(a) See Item (1)(b) above.
(b) Not applicable.
Item 3. Purpose of the Tender Offer and Plans or Proposals of the Issuer or
Affiliate.
(a)-(j) The information set forth under "The Company -- Copper and
Gold", "Purpose of the Exchange Offer", "Capitalization", "Dividends", "The
Exchange Offer -- Certain Effects of the Exchange Offer" and "The Exchange
Offer -- Extension of the Exchange Offer Period; Termination; Amendments" in
the Offering Circular is incorporated herein by reference.
Item 4. Interest in Securities of the Issuer.
The information set forth under "The Company -- Copper and Gold", "The
Exchange Offer -- Transactions and Agreements Concerning the Preferred Stock
and the Common Stock", "The Exchange Offer -- Interests of Certain Persons in
the Transaction" and "Purpose of the Exchange Offer -- Background to the
Exchange Offer" in the Offering Circular is incorporated herein by reference.
Item 5. Contracts, Arrangements, Understandings or Relationships With Respect
to the Issuer's Securities.
The information set forth under "Purpose of the Exchange Offer", "The
Exchange Offer -- Certain Conditions of the Exchange Offer", "The Exchange
Offer -- Transactions and Agreements Concerning the Preferred Stock and the
Common Stock", "The Exchange Offer -- Interests of Certain Persons in the
Transaction" and "Description of the Capital Stock" in the Offering Circular
is incorporated herein by reference.
Item 6. Persons Retained, Employed or to be Compensated.
The information set forth under "The Exchange Offer -- Solicitation of
Tenders; Fees" in the Offering Circular is incorporated herein by reference.
Item 7. Financial Information.
(a) The financial information set forth under "Summary Financial
Information" and "Capitalization" in the Offering Circular is incorporated
herein by reference.
(b) The financial information set forth under "Summary Financial
Information" and "Capitalization" in the Offering Circular is incorporated
herein by reference.
Item 8. Additional Information.
(a)-(d) Not applicable.
(e) Additional information is contained in the Offering Circular and
Letter of Transmittal, which are attached hereto as Exhibits (a)(1) and
(a)(2), respectively, and incorporated herein by reference.
Item 9. Material to be Filed as Exhibits.
(a)(1) Offering Circular dated March 24, 1995.
(a)(2)Form of Letter of Transmittal dated March 24, 1995.
(a)(3)Letter from Freeport-McMoRan Inc. to brokers, dealers, commercial
banks, trust companies and other nominees dated March 24, 1995.
(a)(4)Letter from brokers, dealers, commercial banks and trust companies
to their clients dated March 24, 1995.
(a)(5) Press Release dated March 24, 1995.
(b) Not applicable.
(c) Not applicable.
(d) Not applicable.
(e) Not applicable.
(f) Not applicable.
SIGNATURE
After due inquiry and to the best of my knowledge and belief, I
certify that the information set forth in this statement is true, complete
and correct.
Dated: March 24, 1995 FREEPORT-McMoRan INC.
By: /s/ Charles W. Goodyear
-----------------------
Charles W. Goodyear
Senior Vice President
EXHIBIT INDEX
Sequentially
Exhibit Numbered
Number Description Page
------- ----------- ------------
(a)(1) Offering Circular dated March 24, 1995.................
(a)(2) Form of Letter of Transmittal dated March 24, 1995.....
(a)(3) Letter from Freeport-McMoRan Inc. to brokers, dealers,
commercial banks, trust companies and other nominees
dated March 24, 1995...................................
(a)(4) Letter from brokers, dealers, commercial banks and trust
companies to their clients dated March 24, 1995........
(a)(5) Press Release dated March 24, 1995.....................
EX-99.(A)(1)
2
OFFERING CIRCULAR
FREEPORT-McMoRan INC.
OFFER TO EXCHANGE
2.85 SHARES OF ITS COMMON STOCK FOR
EACH SHARE OF ITS $4.375 CONVERTIBLE EXCHANGEABLE PREFERRED STOCK
THE EXCHANGE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 5:00 P.M., NEW YORK
CITY TIME,
ON FRIDAY, APRIL 21, 1995, UNLESS THE EXCHANGE OFFER IS EXTENDED (THE
"EXPIRATION DATE").
Freeport-McMoRan Inc., a Delaware corporation (the "Company"), hereby
offers to exchange 2.85 shares of its Common Stock, $1.00 par value (the
"Common Stock"), for each share of its $4.375 Convertible Exchangeable
Preferred Stock, $1.00 par value (the "Preferred Stock"), upon the terms and
subject to the conditions set forth herein and in the related Letter of
Transmittal (which together constitute the "Exchange Offer").
Although the Common Stock is listed and principally traded on the New
York Stock Exchange, Inc. (the "NYSE"), the Preferred Stock and the Common
Stock issuable on conversion of the Preferred Stock and the Common Stock being
offered in the Exchange Offer have not been registered under the Securities
Act of 1933 (the "Securities Act"); however, because the Preferred Stock was
issued more than three years before the Expiration Date, and because the
Common Stock being offered in this Exchange Offer is being issued pursuant to
the exemption afforded by Section 3(a)(9) of the Securities Act, stockholders
of the Company will be able to sell the Common Stock received in this Exchange
Offer free of the registration requirements of the Securities Act. See
"Termination of Transfer Restrictions". The Preferred Stock has been
designated as a security eligible for trading in the Private Offerings,
Resales and Trading through Automated Linkages ("PORTAL") Market. On March
23, 1995, the last full day of trading prior to the first public announcement
of the Exchange Offer, the closing sales price of the Common Stock on the NYSE
as reported on the Composite Tape was $18.25. Stockholders are urged to obtain
current market quotations for the Common Stock.
THE EXCHANGE OFFER IS BEING MADE FOR ANY AND ALL SHARES OF THE COMPANY'S
PREFERRED STOCK AND IS NOT CONDITIONED UPON ANY MINIMUM NUMBER OF SHARES OF
PREFERRED STOCK BEING TENDERED.
IMPORTANT
The Company understands that all shares of Preferred Stock are currently
represented by a global share certificate deposited with The Depository Trust
Company ("DTC") and registered in the name of DTC's nominee, Cede & Co.
Tenders of Preferred Stock will only be accepted by book-entry transfer of
such stock to the account of Mellon Securities Trust Company (the "Exchange
Agent") at DTC. Any stockholder desiring to tender all or any portion of his
Preferred Stock should request his broker, dealer, commercial bank, trust
company or nominee to effect the transaction for him. If a definitive share
certificate representing shares of Preferred Stock is issued or acquired by
any stockholder pursuant to a transfer out of the global certificate deposited
with DTC, such stockholder should contact the Exchange Agent at the telephone
numbers and addresses set forth at the end of this Offering Circular to obtain
instructions on procedures for tendering such Preferred Stock.
NEITHER THE COMPANY NOR ITS BOARD OF DIRECTORS MAKES ANY RECOMMENDATION
TO ANY STOCKHOLDER AS TO WHETHER TO TENDER OR REFRAIN FROM TENDERING ANY
PREFERRED STOCK. EACH STOCKHOLDER MUST MAKE HIS OWN DECISION AS TO WHETHER
TO TENDER PREFERRED STOCK AND, IF SO, HOW MANY SHARES OF PREFERRED STOCK TO
TENDER.
THIS TRANSACTION HAS NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION NOR HAS THE COMMISSION PASSED UPON THE FAIRNESS OR
MERITS OF SUCH TRANSACTION NOR UPON THE ACCURACY OR ADEQUACY OF THE
INFORMATION CONTAINED IN THIS OFFERING CIRCULAR. ANY REPRESENTATION TO THE
CONTRARY IS UNLAWFUL.
Questions and requests for assistance may be directed to the Exchange
Agent at the telephone numbers and addresses set forth at the end of this
Offering Circular. Additional copies of this Offering Circular, the Letter
of Transmittal and other related materials may be obtained from brokers,
dealers, commercial banks and trust companies.
The Date of this Offering Circular is March 24, 1995
Each of the shares of Preferred Stock has a liquidation value of $50 and
is currently convertible into the Company's Common Stock at a conversion price
of $21.26, or the equivalent of 2.35 shares of Common Stock for each share of
Preferred Stock, as compared to the 2.85 shares of Common Stock per share of
Preferred Stock being offered by the Company in the Exchange Offer. As of
March 23, 1995, the day prior to the announcement of the Exchange Offer, the
closing price of the Common Stock on the NYSE as reported on the Composite
Tape was $18.25. Based on this price, the Common Stock being offered per
share of Preferred Stock have an aggregate market value which is $2.01 higher
than the liquidation value of the Preferred Stock.
The Company's basic reason for making the Exchange Offer relates to the
Company's previously announced intention to effect the tax-free distribution
to its Common Stockholders, on a pro-rata basis, of all of the Class B Common
Stock of Freeport-McMoRan Copper & Gold Inc. ("FCX") which the Company owns at
the time of the distribution (the "Distribution"). See "Purpose of the
Exchange Offer -- Background to the Exchange Offer". By accepting the
Exchange Offer, the holders of Preferred Stock will receive more shares of
Common Stock than they would receive upon conversion at the current conversion
price and, by being holders of Common Stock, will be able to participate fully
in the Distribution.
If the Distribution is made, any shares of Preferred Stock remaining
outstanding will be convertible into the Common Stock of the Company as it
will exist following the Distribution, but will not participate in the
Distribution. Following the Distribution, the Company will have no
continuing interest in the copper, gold and silver business conducted by FCX,
and the only material portion of its current business which will continue will
be its interest in Freeport-McMoRan Resource Partners, Limited Partnership
("FRP") and in the sulphur and agricultural minerals businesses conducted by
FRP. See "The Company -- Agricultural Minerals". Because of the
anti-dilution provisions of the Preferred Stock, the number of shares of
Common Stock into which each share of Preferred Stock will be convertible
following the Distribution will be significantly increased, in an amount that
will depend upon the value of the FCX Class B common stock distributed with
respect to the Common Stock of the Company and the number of shares of Common
Stock then outstanding, which in turn will be affected by a number of factors
including the degree of acceptance of the Exchange Offer. See "The Exchange
Offer -- Certain Effects of the Exchange Offer". Each of such shares of
Common Stock of the Company will have a greatly reduced market value, however,
as a result of the Distribution and, following the Distribution, the cash flow
available for the payment of dividends on the Preferred Stock will be
significantly smaller than at present. The Company is not able to determine
whether the actual value of the shares of Common Stock receivable on
conversion of a share of Preferred Stock following the Distribution will be
greater or less than that of the shares being offered in the Exchange Offer.
It is certain, however, that, if the Distribution is made, the nature of the
businesses represented by the Common Stock will be significantly different
than that of the businesses currently represented by the Common Stock and that
holders of Preferred Stock who accept the Exchange Offer and hold the Common
Stock on the record date of the Distribution will have the opportunity to
continue to participate in the businesses carried on by FCX.
NO PERSON HAS BEEN AUTHORIZED TO MAKE ANY RECOMMENDATION ON BEHALF OF THE
COMPANY AS TO WHETHER STOCKHOLDERS SHOULD TENDER PREFERRED STOCK PURSUANT TO
THE EXCHANGE OFFER. NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR
TO MAKE ANY REPRESENTATIONS IN CONNECTION WITH THE EXCHANGE OFFER OTHER THAN
THOSE CONTAINED HEREIN OR IN THE LETTER OF TRANSMITTAL. IF GIVEN OR MADE,
SUCH RECOMMENDATION AND SUCH INFORMATION AND REPRESENTATIONS MUST NOT BE
RELIED UPON AS HAVING BEEN AUTHORIZED BY THE COMPANY.
This Offering Circular does not constitute an offer to exchange, or a
solicitation of an offer to exchange, any securities other than the securities
covered by this Offering Circular, by the Company or any other person, nor
does it constitute an offer to exchange or a solicitation of an offer to
exchange any such securities by the Company, or any such other person, in any
jurisdiction in which or to any person to whom it is unlawful to make any such
offer or solicitation.
The Exchange Offer is being made by the Company in reliance on the
exemption from the registration requirements of the Securities Act of 1933, as
amended, afforded by Section 3(a)(9) thereof. The Company therefore will not
pay any commission or other remuneration to any broker, dealer, salesman or
other person for soliciting tenders of shares of the Preferred Stock. Regular
employees of the Company may solicit exchanges from holders of the Preferred
Stock, but they will not receive additional compensation therefor.
IN MAKING AN INVESTMENT DECISION INVESTORS MUST RELY ON THEIR OWN
EXAMINATION OF THE COMPANY AND THE TERMS OF THE OFFERING, INCLUDING THE MERITS
AND RISKS INVOLVED. THESE SECURITIES HAVE NOT BEEN RECOMMENDED BY ANY FEDERAL
OR STATE SECURITIES COMMISSION OR REGULATORY AUTHORITY. FURTHERMORE, THE
FOREGOING AUTHORITIES HAVE NOT CONFIRMED THE ACCURACY OR DETERMINED THE
ADEQUACY OF THIS DOCUMENT. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL
OFFENSE.
AVAILABLE INFORMATION
The Company's 1994 Annual Report and its Proxy Statement with respect to
its 1995 annual meeting have been filed with the Securities and Exchange
Commission (the "Commission"). Copies of such documents, as well as the
Company's Annual Report on Form 10-K for the year ended December 31, 1994, may
be obtained from the Company's Secretary, 1615 Poydras Street, New Orleans,
Louisiana 70112, telephone (504) 582-4000.
The Company is subject to the informational filing requirements of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), and in
accordance therewith is obligated to file reports and other information with
the Commission relating to its business, financial statements and other
matters. Certain information as of particular dates, concerning the
Company's directors and officers, their remuneration, options granted to them,
the principal holders of the Company's securities and any material interest of
such persons in transactions with the Company is filed with the Commission.
Such reports, as well as such other material, may be inspected and copies
obtained at prescribed rates at the Commission's public reference facilities
at 450 Fifth Street, N.W., Washington, D.C. 20549; 7 World Trade Center, 13th
Floor, New York, New York 10048; and 500 West Madison Street, Chicago,
Illinois 60661. The Company has also filed with the Commission a statement on
Schedule 13E-4 that contains additional information with respect to the
Exchange Offer. Such Schedule and certain amendments thereto may be examined
and copies may be obtained at the same places and in the same manner as set
forth above (except that such Schedule may not be available in the regional
offices of the Commission).
TABLE OF CONTENTS
Page
----
Available Information 3
Summary 5
The Company 8
Summary Financial Information 11
Capitalization 16
Price Range of the Common Stock 17
Dividends 17
Purpose of the Exchange Offer 17
The Exchange Offer 20
Terms of the Exchange Offer 20
Certain Effects of the Exchange Offer 21
Procedure for Tendering Preferred Stock 22
Withdrawal Rights 22
Acceptance of Preferred Stock for Exchange 23
Certain Conditions of the Exchange Offer 23
Transactions and Agreements Concerning the Preferred Stock
and the Common Stock 25
Extension of the Exchange Offer Period; Termination; Amendments 25
Solicitation of Tenders; Fees 26
Interests of Certain Persons in the Transaction 26
Certain Federal Income Tax Consequences 26
Description of the Capital Stock 27
Termination of Transfer Restrictions 30
SUMMARY
The following is a summary of certain terms of the Exchange Offer and
certain of the other information contained in this Offering Circular. It is
not intended to be complete and is qualified in its entirety by the more
detailed information contained elsewhere in this Offering Circular.
The Company
Freeport-McMoRan Inc. (the "Company") was formed in 1981 through the
combination of Freeport Minerals Company and McMoRan Oil & Gas Co. The
Company is a leading and diversified natural resource company currently
engaged in the exploration for and mining, production and/or processing of
copper, gold, silver, sulphur, phosphate rock, phosphate-based fertilizers,
uranium, oil and gas and other natural resources. The Company engages in such
activities primarily through the following entities: Freeport-McMoRan Copper
& Gold Inc. ("FCX"), a Delaware corporation in which the Company owned an
approximate 68.9% interest at March 10, 1995, and Freeport-McMoRan Resource
Partners, Limited Partnership ("FRP"), a Delaware limited partnership in which
the Company owned an approximate 51.4% interest at March 10, 1995.
In May 1994, the Company announced its intention to distribute to its
Common Stockholders, on a tax-free and pro-rata basis, all of the Class B
common stock of FCX that it owns at the time of such distribution (the
"Distribution"). As a result of the Distribution, which will require a series
of steps to implement, the Company would no longer have a continuing interest
in FCX. The Distribution, which is expected to take place prior to June 30,
1995, is contingent on a number of factors including (1) assurance that the
Distribution will be tax-free, (2) completion of a restructuring (the "Company
Restructuring") of the liabilities of the Company including its long-term
debt, which may include the use of a portion of the FCX shares currently owned
by the Company, which is in the process of being completed, and (3) changing
the voting rights of the FCX common stock and preferred stock so that the
Class B stockholders of FCX elect 80% of the FCX directors and the Class A
stockholders and preferred stockholders of FCX elect the balance, which change
has been approved by the FCX stockholders. However, there can be no assurance
that the Distribution will take place.
In March 1995, the Company and FCX signed letters of intent with The RTZ
Corporation PLC ("RTZ") and its subsidiary RTZ America Inc. ("RTZA")
providing for, among other things, an investment by RTZA of up to $875 million
in the capital stock of FCX and an investment by RTZ of up to $850 million in
exploration and development projects on lands controlled by FCX's Indonesian
subsidiaries. See "The Company -- Copper and Gold".
Purpose of the Exchange Offer
The Company's basic reason for making the Exchange Offer relates to the
proposed Distribution. Although the Company is not making any recommendation
to the holders of the Preferred Stock as to whether or not they should accept
the Exchange Offer, the Company believes that it is desirable to afford
holders of the Preferred Stock a meaningful opportunity to participate in the
Distribution should they desire to do so. The holders of the Preferred Stock
currently have the ability to become holders of Common Stock by exercise of
their right to convert the Preferred Stock to Common Stock in accordance with
the conversion features of the Preferred Stock itself, and thus participate in
the Distribution. However, because the conversion price has been in excess of
the market price for the Common Stock, such a conversion could only be
effected on financially disadvantageous terms. The Exchange Offer ratio has
been set at a rate designed to remove this disadvantage.
The Company believes that the Exchange Offer also is advantageous to the
Company. After the Distribution, the remaining assets of the Company will be
substantially reduced, and, as a result, the Company needs to reduce its
ongoing fixed charges. The Company intends to accomplish this largely by
significantly reducing its debt obligations. This goal will be furthered to
the extent the Exchange Offer is successful in reducing or eliminating the
fixed charges represented by the dividends payable on the Preferred Stock. See
"Summary Financial Information".
The Exchange Offer
Exchange Ratio
2.85 shares of Common Stock for each share
of Preferred Stock.
Expiration Date
5:00 p.m., New York City time, on April 21,
1995, unless extended.
Number of Shares
Subject to the terms and conditions of the
Exchange Offer, any and all shares of the
Preferred Stock will be accepted if duly
tendered and not withdrawn prior to the
Expiration Date. The Exchange Offer is not
conditioned upon any minimum number of
shares being tendered.
Conditions of Exchange Offer
The Company's obligation to consummate the
Exchange Offer is subject to certain
conditions. See "The Exchange Offer --
Certain Conditions of the Exchange Offer".
Withdrawal Rights
Tenders may be withdrawn (i) at any time
before the Expiration Date and (ii) if not
yet accepted for exchange, at any time after
May 19, 1995. See "The Exchange Offer --
Withdrawal Rights".
How to Tender
Tenders of Preferred Stock will only be
accepted by book-entry transfer of such
stock to the account of the Exchange Agent
at DTC. Any stockholder desiring to tender
all or any portion of his Preferred Stock
should request his broker, dealer,
commercial bank, trust company or nominee to
effect the transaction for him. If a
definitive share certificate representing
shares of Preferred Stock is issued or
acquired by any stockholder, instructions
must be obtained from the Exchange Agent in
order to tender such Preferred Stock.
Questions regarding how to tender and
requests for information should be directed
to the Exchange Agent. See "The Exchange
Offer -- Procedures for Tendering Preferred
Stock".
Acceptance of Tenders and
Issuance of Common Stock
Subject to the terms and conditions of the
Exchange Offer, shares of Preferred Stock
validly tendered will be accepted on or
promptly after the Expiration Date. Subject
to such terms and conditions, shares of
Common Stock to be issued in exchange for
properly tendered shares of Preferred Stock
will be delivered by the Exchange Agent as
soon as practicable after acceptance of the
tendered shares. See "The Exchange Offer --
Acceptance of Preferred Stock for Exchange".
Preferred Stock
There were 5,000,000 shares of Preferred
Stock outstanding as of March 23, 1995.
Common Stock
There were 136,519,277 shares of Common
Stock outstanding as of March 23, 1995.
Trading and Market Price
The Common Stock (Symbol: FTX) is presently
traded on the NYSE. On March 23, 1995, the
last trading day prior to the announcement
of the Exchange Offer, the closing price for
the Common Stock reported on the NYSE
Composite Tape was $18.25. See "Price Range
of the Common Stock". The Preferred Stock
has been designated as a security eligible
for trading in the Private Offerings,
Resales and Trading through Automated
Linkages ("PORTAL") Market.
Termination of Transfer Restrictions
Stockholders of the Company will be able to
sell the Common Stock being offered in this
Exchange Offer free of the registration
requirements of the Securities Act.
Federal Income Tax Considerations
Generally, no gain or loss will be
recognized for federal income tax purposes
by the holders of shares of Preferred Stock
upon the exchange of such shares for shares
of Common Stock pursuant to the Exchange
Offer. For a discussion of certain federal
income tax consequences of the Exchange
Offer, see "Certain Federal Income Tax
Consequences".
Fractional Shares
No fractional shares of Common Stock will be
issued. Instead, holders will receive cash
equal to any interest in a fractional share
from the Exchange Agent, which will sell the
aggregate fractional share interests on
behalf of the holders. See "The Exchange
Offer -- Terms of the Exchange Offer".
Exchange Agent
Mellon Securities Trust Company.
THE COMPANY
The Company was formed in 1981 through the combination of Freeport
Minerals Company and McMoRan Oil & Gas Co. The Company is a leading and
diversified natural resource company currently engaged in the exploration for
and mining, production and/or processing of copper, gold, silver, sulphur,
phosphate rock, phosphate-based fertilizers, uranium, oil and gas and other
natural resources. The Company engages in such activities primarily through
FCX and FRP. The Company maintains its principal executive offices at 1615
Poydras Street, New Orleans, Louisiana 70112. Its telephone number is (504)
582-4000.
Copper and Gold
FCX's principal operating subsidiary is P.T. Freeport Indonesia Company
("PT-FI"), a limited liability company organized under the laws of the
Republic of Indonesia and domesticated in Delaware. PT-FI engages in the
exploration for and development, mining, and processing of copper, gold and
silver in Indonesia and in the marketing of concentrates containing such
metals worldwide. The Company believes that PT-FI has one of the lowest cost
copper producing operations in the world, taking into account customary
credits for related gold and silver production. At March 10, 1995, FCX owned
81.28% of the outstanding common stock of PT-FI. Of the remaining 18.72% of
the outstanding PT-FI common stock, 9.36% is owned by the Government of the
Republic of Indonesia (the "Government") and 9.36% is owned by an Indonesian
limited liability company, P.T. Indocopper Investama Corporation, in which
FCX owns a 49% interest. In 1993 FCX acquired the Spanish company Rio Tinto
Minera, S.A. ("RTM") which is principally engaged in the smelting and
refining of copper concentrates in Spain through wholly owned subsidiaries.
RTM provides an additional market for a portion of PT-FI's copper
concentrates. FCX also owns Eastern Mining Company, Inc. ("Eastern Mining"),
a separate wholly owned Indonesian subsidiary.
PT-FI's Grasberg deposit in Irian Jaya, Indonesia contains the largest
single gold reserve of any mine in the world and one of the three largest
open pit copper reserves. PT-FI's proved and probable ore reserves at
December 31, 1994 were approximately 1,125.6 million tons(1) of ore
representing 28.0 billion recoverable pounds of copper, 39.6 million
recoverable ounces of gold and 80.8 million recoverable ounces of silver,
compared with approximately 8.3 billion recoverable pounds of copper, 8.1
million recoverable ounces of gold and 27.2 million recoverable ounces of
silver at December 31, 1989. Primarily as a result of the drilling
operations at the Grasberg mine, PT-FI's proved and probable copper and
gold reserves as of December 31, 1994 have increased, net of production,
since December 31, 1989 by approximately 237% and 389%, respectively. See
"Selected Operating and Reserve Data". This increase in proved and
probable reserves is largely the result of a drilling program that includes
data obtained from the surface down to approximately the 3,060 meter
elevation at the Grasberg ore body. PT-FI's proved and probable reserves
at Grasberg do not include any reserves below the 3,060 meter level, where
additional exploration drilling will be required. PT-FI has begun driving
an additional horizontal access adit from the mill site to a point below
the currently delineated Grasberg ore body at the 2,900 meter level. This
new adit, expected to be completed in 1996, will facilitate further deep
exploration to delineate the extent of the Grasberg deposit below the 3,060
meter level. Preliminary drilling from the existing 3,700 meter level adit
indicates significant additional mineralization below the existing proved
and probable reserves. There can be no assurance, however, that PT-FI
exploration programs will result in the delineation of additional reserves
in commercial quantities.
--------------------
1
As used herein, "ton" refers to a metric ton, which is equivalent to
2,204.62 pounds on a dry weight basis.
--------------------
A contract of work signed by PT-FI and the Government on December 30,
1991 (the "COW") covers both PT-FI's original 24,700 acre mining area ("Block
A") and an additional 4.875 million acre exploration area ("Block B", and,
together with Block A, the "COW Area"). In August 1994, a subsidiary of
Eastern Mining, P.T. Irja Eastern Minerals Corporation ("P.T. Irja"),
entered into a separate contract of work (the "Eastern Mining COW") with the
Government relating to 2.5 million acres adjacent to the COW Area (the
"Eastern Mining COW Area"). In addition to continued delineation of the
Grasberg deposit and the other existing deposits, PT-FI is continuing its
ongoing exploration program for copper, gold and silver mineralization within
Block A. As a result of this exploration effort, the 1994 year-end reserves
include additional reserves at Big Gossan. Big Gossan and the Wanagon
anomaly, another zone being currently investigated, are located west of the
Ertsberg open pit and southwest of the Grasberg copper/gold/silver ore body.
The third prospect within Block A, Lembah Tembaga, is located approximately
one kilometer southwest of the Grasberg deposit. Preliminary exploration of
the COW Area has indicated many promising targets. Extensive stream sediment
sampling within the new acreage has generated analytical results which are
being evaluated. No assurance can be given that any of the exploration areas
other than Big Gossan contains commercially exploitable mineral deposits.
Exploration expenditures in Irian Jaya were $36.0 million in 1994, compared to
$31.7 million in 1993.
During 1993 PT-FI completed, within budget and ahead of schedule, the
production facilities designed to enable it to mine and mill at least 66,000
metric tons of ore per day ("MTPD"). Average mill throughput was 72,500 MTPD
in 1994, compared to 62,300 MTPD in 1993. PT-FI is currently expanding its
overall mining and milling rate to 115,000 MTPD, which is expected to be
completed by mid-1995 and to result in annual production rates approaching 1.1
billion pounds of copper, 1.5 million ounces of gold, and 2.4 million ounces
of silver.
In March 1995, FCX, the Company, The RTZ Corporation PLC ("RTZ") and RTZ
America Inc. ("RTZA") signed letters of intent to establish a strategic
alliance. RTZ is a leading international mining corporation based in the
United Kingdom. RTZ has substantial interests in mining and metals
(principally copper, gold, iron ore, aluminum, lead, zinc, silver, coal and
uranium) and industrial and other minerals (principally borates, titanium
dioxide feedstock, diamonds and talc). These interests are located
predominantly in North America and Australasia as well as in Europe, southern
Africa and South America. RTZA, a Delaware corporation, is a wholly owned
subsidiary of RTZ. RTZA's principal subsidiaries are Kennecott Corporation
and U.S. Borax, Inc. Kennecott Corporation's major operation is Bingham
Canyon, one of the world's largest open-pit copper mines, which is located in
Utah. U.S. Borax, Inc. mines one of the largest and richest borate deposits
in the world, located in California's Mojave Desert.
Pursuant to the proposed transactions, RTZA will acquire from the Company
approximately 21.5 million shares of FCX Class A common stock (approximately
10.4% of the outstanding common stock of FCX) for $450 million. RTZA also
will receive an option to acquire from the Company prior to the Company
Restructuring up to approximately 3.5 million additional shares of FCX Class A
common stock. If this option is not exercised, the Company proposes to sell
such FCX Class A common stock to other buyers.
In connection with the Company Restructuring, the Company intends to call
its 6.55% Convertible Subordinated Notes, due 2001 (the "6.55% Notes"), for
redemption for cash. The outstanding principal amount of the 6.55% Notes is
approximately $373 million. The Company also intends to call its Zero Coupon
Convertible Subordinated Debentures, due 2006 (the "ABC Debentures"), for
redemption for cash. The outstanding principal amount of the ABC Debentures
is approximately $750 million, with a redemption cost of approximately $280
million.
If requested by the Company, RTZA will make a cash tender offer for
certain of the Company's convertible debt and convert any such debt into
Common Stock of the Company. If it acquires such convertible debt and
exercises its option, after completion of the Distribution RTZA will own up to
approximately 12% of the Common Stock of the Company expected to be
outstanding and over 18% of the outstanding Common Stock of FCX. However, as
the total number of shares of FCX will not change as a result of these
transactions, RTZA's acquisition of FCX common stock from the Company will not
result in any dilution to the current holders of FCX Class A common stock.
The transactions with RTZA are designed to enable the Company to complete the
Company Restructuring and the Distribution.
RTZ and its subsidiaries are expected to contribute substantial operating
and management expertise to FCX's business. Representatives of RTZA, in
proportion to RTZA's ownership in FCX, will be nominated to the FCX Board of
Directors. In addition, RTZ and FCX will exchange management personnel and
establish an Operating Committee, consisting of personnel of FCX and RTZ,
through which the policies established by the FCX Board of Directors will be
implemented and operations will be conducted.
In addition to RTZA's acquisition of FCX common stock, FCX, PT-FI and
Eastern Mining will enter into joint venture arrangements with subsidiaries of
RTZ pursuant to which RTZ's subsidiaries intend to invest up to $850 million
on exploration and development projects on lands controlled by PT-FI and
Eastern Mining.
Pursuant to the proposed transactions with RTZ, subsidiaries of RTZ will
acquire a 40% beneficial interest in the Eastern Mining COW and the portion of
the COW covering Block B. In addition, a subsidiary of RTZ will acquire a 40%
beneficial interest in future expansion projects in Block A.
Under joint venture arrangements, RTZ and FCX will establish an
Exploration Committee to approve exploration expenditures and subsidiaries of
RTZ will pay for all further exploration approved by the committee until RTZ
has paid an aggregate of $100 million. The parties will pay, ratably in
proportion to their ownership, additional exploration costs and the costs to
develop projects mutually agreed upon in Block B and the Eastern Mining COW
Area.
For future expansion projects in Block A, subsidiaries of RTZ will
provide up to a maximum of $750 million for 100% of defined costs to develop
such projects. RTZ will receive 100% of incremental cash flow attributed to
the expansion projects until it has received an amount equal to the funds it
had provided plus interest based on RTZ's costs of borrowing. Subsequently,
the parties will share incremental cash flow ratably in proportion to their
ownership. Future expansion projects in Block A will exclude any interest in
future production equivalent to FCX's expanded 115,000 MTPD milling
operations.
Pursuant to the proposed transactions with RTZ, a subsidiary of RTZ will
purchase a 25% interest in RTM's Huelva, Spain copper smelter, which is
currently being expanded to 270,000 metric tons of annual copper production.
RTZ will also acquire a 25% interest in RTM's Spanish mineral exploration
program.
All of the transactions with RTZ and RTZA are subject to, among other
things, the signing of definitive documentation and certain regulatory
approvals. There can be no assurance that the transactions with RTZ and RTZA
will be consummated or consummated in the manner described above.
Agricultural Minerals
The Company's agricultural minerals segment is conducted through FRP, a
Delaware limited partnership organized in 1986. FRP participates in one of
the largest and lowest cost phosphate fertilizer producers in the world
through its joint venture interest in IMC-Agrico Company, a Delaware general
partnership ("IMC-Agrico"). IMC-Agrico's business includes the mining and
sale of phosphate rock, the production, distribution and sale of phosphate
fertilizers, and the extraction of uranium oxide from phosphoric acid. FRP's
business also includes exploration for and mining, transportation and sale of
sulphur, and the production of oil reserves at Main Pass Block 299 ("Main
Pass"), offshore Louisiana in the Gulf of Mexico.
On July 1, 1993, FRP and IMC Global Inc. ("IGL"), formerly IMC
Fertilizer, Inc., contributed their respective phosphate fertilizer
businesses, including the mining and sale of phosphate rock and the
production, distribution and sale of phosphate chemicals, uranium oxide and
related products, to IMC-Agrico. As a result of the formation of IMC-Agrico,
FRP expects that it and IMC together will be able to achieve by 1996
approximately $135 million per year of savings in aggregate production costs
and selling, administrative and general expenses, including $90 million of
annual savings estimated to have been obtained by June 30, 1994. In addition,
FRP believes that the location of several of the IMC-Agrico manufacturing and
storage facilities on the Mississippi River gives IMC-Agrico a competitive
advantage over other fertilizer producers in transporting fertilizers to the
U.S. farmbelt.
FRP has completed development of the Main Pass sulphur and oil reserves
which it discovered in 1988 and in which it has a 58.3% interest. Sulphur
production at minimal levels began during the second quarter of 1992. Sulphur
production achieved full design operating rates of 5,500 long tons per day
(approximately 2 million long tons per year) on schedule in December 1993, and
averaged nearly 6,200 long tons per day in 1994. Oil production commenced in
the fourth quarter of 1991 and averaged approximately 14,400 barrels per day
during 1994. In January 1995, FRP acquired substantially all of the domestic
assets of Pennzoil Sulphur Co.
The Managing General Partners and the Special General Partners of FRP are
the Company and FMRP Inc. ("FMRP"), a wholly owned subsidiary of the Company.
The current capitalization of FRP consists of an aggregate 1% basic general
partnership interest (the "FRP Basic Interest"), units of limited partnership
interest of which a portion is deposited with Mellon Bank, N.A., as depositary
units ("FRP Depositary Units"), and additional units of general partnership
interest. FRP Depositary Units are listed and publicly traded on the NYSE.
Including the FRP Basic Interest, the Company and FMRP, as of March 10,
1995, held Partnership Units representing an approximate 51.4% interest in
FRP, with the remaining interest being publicly owned and traded on the NYSE.
The public unitholders are entitled, through the cash distribution for the
fourth quarter of 1996, to receive minimum quarterly distributions prior to
any distribution on the partnership units held by the Company and FMRP.
Prior to the completion of Main Pass, FRP pursued a policy of funding the
cash distribution to unitholders from asset sales and borrowings under its
Credit Agreement, in addition to distributable cash from operations. However,
with the completion of the Main Pass development, FRP no longer intends to
supplement distributable cash with borrowings.
In October 1994, FRP announced that it had agreed in principle to acquire
Fertiberia, S.L. ("Fertiberia"), the restructured nitrogen and phosphate
fertilizer business of Ercros, S.A., a Spanish conglomerate. Since September
1993, FRP has managed this company with the goal of establishing Fertiberia as
a financially viable concern. FRP intends to continue to work with the
Spanish authorities on improving the operations of Fertiberia and eventually
to acquire substantially all of Fertiberia's outstanding stock, in return for
agreeing to make a capital contribution of $11.5 million upon closing of the
acquisition and a further contingent payment of $10 million in January 1998.
As part of the agreement, $38.5 million of nonrecourse financing has been
arranged at Fertiberia with payment terms dependent upon its financial
performance. The acquisition of Fertiberia, one of the largest fertilizer
manufacturers in Europe, is subject to a number of conditions.
SUMMARY FINANCIAL INFORMATION
Set forth below is certain consolidated historical financial information
of the Company and its subsidiaries. The historical financial information
(other than the ratios of earnings to fixed charges) was derived from the
consolidated financial statements included in the Company's Annual Report on
Form 10-K for the year ended December 31, 1994 (the "Company's 1994 Annual
Report"). More comprehensive financial information is included in such report
and the financial information which follows is qualified in its entirety by
reference to such report and the financial statements and related notes
contained therein, copies of which may be obtained as set forth in "Available
Information". The pro forma financial data is based on the historical
financial statements of the Company, adjusted to give effect to the Company
Restructuring, the Distribution and the Exchange Offer. However, there can be
no assurance that the Company Restructuring, the Distribution and the Exchange
Offer will be consummated or consummated in the manner contemplated above. The
historical financial information of the Company and its subsidiaries will not
be representative of the Company and its subsidiaries after the Distribution,
following which the only material portion of the Company's business will be
its interest in FRP and in the sulphur and agricultural businesses conducted
by FRP.
SELECTED FINANCIAL DATA
The following table presents selected financial data for the Company
which has been derived from the Company's consolidated financial statements
and is qualified in its entirety by the financial statements and related notes
contained therein which are incorporated herein by reference.
Years Ended December 31, Pro Forma
---------------------------------------------------- ---------
1990 1991 1992 1993 1994 1994(a)
---- ---- ---- ---- ---- -------
(In Millions, Except Per Share Amounts and Ratios)
Revenues $1,580.6 $1,579.2 $1,654.9 $1,610.6 $1,982.4 $ 770.1
Operating income (loss) 731.5 223.9 251.9 (88.5) 370.8 91.9
Interest expense (100.4) (98.1) (51.8) (79.9) (91.8) (43.8)
Other income (expense), including income
taxes and preferred dividends (234.0) (17.7) 42.0 (19.5) (68.6) (4.9)
Minority interests (126.4) (68.0) (73.0) 61.7 (169.0) (100.0)
Net income (loss) from:
Continuing operations excluding FCX $ (58.0) $ 26.9 $ (63.5) $ (90.9) $ (72.9) $ (56.8)
FCX operations 71.4 63.9 97.9 22.9 54.1 --
Nonrecurring gains/(losses), net(b) 257.3 5.0 134.7 (37.5) 69.3 --
Changes in accounting principle and
early extinguishment of debt -- (55.7) -- (20.7) (9.1) --
-------- -------- -------- -------- -------- --------
Net income (loss) applicable to
common stock $ 270.7 $ 40.1 $ 169.1 $ (126.2) $ 41.4(c) $ (56.8)
======== ======== ======== ======== ======== ========
Net income (loss) per primary share from:
Continuing operations excluding FCX $ (.50) $ .19 $ (.44) $ (.64) $ (.52) $ (.33)
FCX operations .62 .46 .68 .16 .39 --
Nonrecurring gains/(losses), net(b) 2.23 .04 .93 (.26) .50 --
Changes in accounting principle and
early extinguishment of debt -- (.40) -- (.15) (.07) --
-------- -------- -------- -------- -------- --------
Net income (loss) applicable to
common stock $ 2.35 $ .29 $ 1.17 $ (.89) $ .30(c) $ (.33)
======== ======== ======== ======== ======== ========
Average common shares outstanding 115.2 139.6 144.5 141.6 139.2 171.8
Ratio of earnings to fixed charges(d) 5.6x 1.6x 2.5x -- (e) 2.0x 1.7x
Ratio of earnings to fixed charges
and preferred dividends 4.9x 1.6x 2.1x -- (e) 1.7x 1.7x
FTX parent company cash flow data(f):
Net cash provided by (used in) operations $ 168.7 $ 248.9 $ 122.2 $ 61.2 $ 55.5
FRP Distributions(g) 132.8 126.6 41.8 -- 6.2 $ 6.2
FCX Dividends 91.3 78.2 85.3 85.9 85.8 --
Capital expenditures 46.8 199.4 96.7 57.2 33.0 14.9
Preferred dividends paid 14.6 1.0 16.9 22.4 22.1 --
Operating income (loss) by source:
Metals
Indonesian copper/gold $ 204.5 $ 177.7 $ 276.4 $ 161.7(h) $ 280.2 $ --
Spanish copper smelter/gold -- -- -- (6.4) (.1) --
North American gold 316.0(i) -- -- -- -- --
Agricultural minerals 236.1(j) 72.5 16.6 (105.0)(k) 123.8 123.8
Energy
Oil and natural gas(l) (41.4) (23.9) (24.5) (41.5) (9.1) (9.1)
Uranium 13.5 17.1 -- -- -- --
Geothermal 13.2 -- -- -- -- --
Other (10.4) (19.5) (16.6) (97.3)(m) (24.0) (22.8)
-------- -------- -------- -------- -------- --------
Operating income $ 731.5 $ 223.9 $ 251.9 $ (88.5) $ 370.8 $ 91.9
======== ======== ======== ======== ======== ========
Balance sheet data (at end of period)
Property, plant and equipment, net $2,204.5 $2,253.8 $2,276.9 $2,773.7 $3,366.2 $ 964.5
Long-term debt, including current
portion and short-term borrowings 1,591.0 1,942.0 1,510.7 1,331.7 1,671.3 368.1
Minority interests 309.3 293.6 782.9 1,199.3 1,507.5 217.8
Stockholders' equity (deficit):
Preferred stock 39.7 9.7 257.5 256.3 250.0 --
Common stock 297.7 378.6 88.5 (255.7) (480.5)(c) 236.5
Common stock per share 2.31 2.60 .63 (1.83) (3.50)(c) 1.39
Total assets 3,101.3 3,565.4 3,546.7 3,714.1 4,373.6 1,336.1
(Footnotes appear on the following page)
a. The pro forma financial data is based on the historical financial
statements of the Company, adjusted to give effect to the Company
Restructuring, the Distribution and the Exchange Offer. The pro forma
statement of operations data reflects adjustments as if these
transactions had occurred on January 1, 1994. The pro forma balance
sheet data reflects adjustments as if these transactions had occurred
as of December 31, 1994. These adjustments reflect the (i) exchange
pursuant to the Exchange Offer and the retirement of all of the shares
of the Preferred Stock and the issuance upon exchange of 14.25 million
shares of Common Stock; (ii) sale of 21.5 million shares of FCX Class
A common stock for $450 million by the Company to RTZA; (iii) assumed
conversion of all of the 6.55% Notes into 49.24 shares of Common Stock
per $1,000 principal amount (equivalent to the current conversion price
of $20.31 per share) and the issuance upon conversion of 18.4 million
shares of Common Stock; (iv) redemption for cash of all of the
Company's Zero Coupon Convertible Subordinated Debentures by the
Company; and (v) repayment of the amount borrowed by the Company ($165
million as of December 31, 1994) under the Company's revolving credit
agreement.
The pro forma data is based on the best estimates of the Company's
management using information currently available. Such estimates may
be revised as additional information becomes available. Additionally,
there can be no assurance that the Company Restructuring, the
Distribution and the Exchange Offer will be consummated or consummated
in the manner contemplated above. The pro forma consolidated financial
data does not purport to reflect the actual results which might have
been achieved had the Company Restructuring, the Distribution and the
Exchange Offer occurred as of the dates referred to above or which
might be expected in subsequent periods. The pro forma consolidated
balance sheet and statement of operations data should be read in
conjunction with the historical consolidated financial statements,
including the notes thereto, and Management's Discussion and Analysis
of Financial Condition and Results of Operations.
b. In 1990, from the sale of assets; in 1991, from an insurance settlement
gain ($7.3 million or $0.05 per share), net of a loss on the valuation
of assets ($2.3 million or $0.02 per share); in 1992, from the sale and
conversion of FCX securities; in 1993, includes the loss on the
restructuring activities and the loss on valuation and sale of assets
($66.2 million or $0.46 per share), net of a gain on the conversion of
FCX securities ($28.7 million or $0.20 per share); and in 1994,
includes gains on the conversion/distribution of FCX securities ($74.6
million or $0.54 per share) and an insurance settlement ($11.9 million
or $0.09 per share), net of a minority interest charge ($17.2 million
or $0.12 per share) because the Company did not receive its
proportionate share of distributions from FRP.
c. Net income applicable to common stock and net income per primary share
would have been $63.5 million and $0.42 per share, respectively, assuming
the Exchange Offer had occurred on January 1, 1994. Stockholders' equity
applicable to common stock and common stock per share would have been
$(230.5) million and $(1.53), respectively, assuming the Exchange Offer had
occurred on December 31, 1994.
d. Earnings are income from continuing operations before income taxes,
minority interests and fixed charges. Fixed charges are interest, that
portion of rent deemed representative of interest and the preferred stock
dividend requirements of FCX.
e. In 1993 earnings were inadequate to cover fixed charges by $241.8 million
and earnings were inadequate to cover fixed charges and preferred dividends
by $276.2 million.
f. The Company is primarily a holding company and its sources of cash flow
are dividends and distributions from its ownership in FCX and FRP.
Through mid-1994, the Company borrowed funds when the cash received
from FCX, FRP and asset sales was insufficient to pay dividends and
cover the Company's other cash requirements for interest, general and
administrative expenses and oil and gas operations.
Subsequent to the Distribution of FCX, the Company's business activity
will essentially consist of its 51.4% ownership in FRP and its source
of cash flow will be distributions from FRP. Publicly owned FRP units
have cumulative rights to receive quarterly distributions of $0.60 per
unit through the distribution for the quarter ending December 31, 1996
(the Preference Period) before any distributions may be made to the
Company. On January 20, 1995, FRP declared a distribution of $0.60 per
publicly held unit ($30.2 million) and $0.26 per FTX-owned unit ($13.9
million), paid February 15, 1995, bringing the total unpaid
distribution to the Company to $353.1 million. Unpaid distributions to
the Company will be recoverable from one-half of the excess of future
quarterly FRP distributions over $0.60 per unit for all units. FRP's
future distributions will be dependent on the distributions received
from IMC-Agrico and Fertiberia and future cash flow from FRP's sulphur
and oil operations. The Company will have certain obligations relating
to its past business activities including income tax settlements, oil
and gas payments and employee benefit liabilities. It may also have
obligations relating to its guarantee of the debt of FM Properties Inc.
("FMPO").
g. Prior to the completion of Main Pass, FRP pursued a policy of funding the
cash distribution to unitholders from asset sales and borrowings under its
Credit Agreement, in addition to distributable cash from operations.
However, with the completion of the Main Pass development, FRP no longer
intends to supplement distributable cash with borrowings.
h. Includes charges totaling $37.1 million for restructuring and other
related charges.
i. Includes $311.2 million gain from the sale of Freeport-McMoRan Gold
Company.
j. Includes $183.6 million gain from the sale of assets.
k. Includes net charges totaling $73.5 million for restructuring, asset
recoverability and other related charges.
l. Includes charges totaling $84.4 million for restructuring, asset
recoverability and other related charges in 1993. Also includes $69.1
million gain in 1993, $4.3 million gain in 1991 and $14.6 million gain in
1990 from the sale of oil and gas properties.
m. Includes charges totaling $70.5 million for asset recoverability and other
related charges.
SELECTED OPERATING AND RESERVE DATA
The following table presents selected operating and reserve data for the
Company which has been derived from the Company's consolidated financial
statements and is qualified in its entirety by the financial statements and
related notes contained therein which are incorporated herein by reference.
Years Ended December 31,
------------------------------------------------
1990 1991 1992 1993 1994
---- ---- ---- ---- ----
(In Thousands, Except Average Realizations)
METALS
PT-FI
Copper (recoverable pounds)
Production 361,800 466,700 619,100 658,400 710,300
Sales 348,000 439,700 651,800 645,700 700,800
Average realized price(a) $ 1.20 $ 1.01 $ 1.03 $ .90 $ 1.02
Gold (recoverable ounces)
Production 284 421 641 787 784
Sales 273 398 679 763 795
Average realized price $ 378.30 $ 358.76 $ 340.11 $ 361.74 $ 381.13
Silver (recoverable ounces)
Production 1,749 1,568 1,643 1,541 1,305
Sales 1,664 1,621 1,804 1,481 1,335
Average realized price $ 4.61 $ 3.87 $ 3.72 $ 4.15 $ 5.08
RTM (since acquisition on March 30, 1993)
Smelter operations
Concentrate treated (metric tons) 330 485
Anode production (pounds) 229,300 347,500
Cathode production (pounds) 227,300 312,100
Gold operations
Production (recoverable ounces) 133 173
Average realized price $ 337.33 $ 363.05
AGRICULTURAL MINERALS
Phosphate fertilizers (short tons)(b)
Diammonium phosphate
Sales:
Florida 1,081
Louisiana 970
Other 217
--------
Total sales 2,568 2,841 2,760 2,303 2,268
Average realized price(c):
Florida $ 146.53
Louisiana $ 152.48
Monoammonium phosphate
Sales:
Granular 438 476 509 423 298
Powdered -- -- -- 55 162
Average realized price(c):
Granular $ 158.54
Powdered $ 129.24
Granular triple superphosphate 717 710 715 565 465
Average realized price(c) $ 114.76
Phosphate rock
Sales (short tons)(b) 1,455 2,247 3,441 3,840 4,373
Average realized price(c) $ 21.38
Sulphur sales (long tons)(d) 2,491 2,528 2,346 1,973 2,088
ENERGY
Oil (barrels)(e)
Sales 351 4,884 3,443 2,534
Average realized price $13.34 $15.91 $14.43 $ 13.74
RESERVES (at year end)
Copper -- thousands of recoverable pounds(f) 13,900 21,800 20,900 26,800 28,000
Gold -- recoverable ounces(f) 19,500 32,400 32,100 39,500(g) 39,700(g)
Silver -- recoverable ounces(f) 34,700 50,000 44,700 85,200(g) 84,000(g)
Sulphur -- long tons(h) 44,125 42,780 41,570 38,637 41,018
Phosphate rock--short tons(i) 205,752 206,183 208,655 215,156 206,661
Oil -- barrels(e) 18,785 18,496 13,861 9,962 7,279
(Footnotes appear on the following page)
a. Excludes adjustments for prior year concentrate sales or price
protection program costs. Excluding amounts recognized under PT-FI's
price protection program, the realization for 1993 and 1994 would have
been $0.82 and $1.15 per pound, respectively.
b. Certain information prior to the formation of IMC-Agrico was not
recorded on a basis consistent with that currently being presented and
therefore is not available. Reflects FRP's 46.5% share of the IMC-Agrico
assets for the year ended June 30, 1994, while FRP received 58.6% of the
cash flow generated during such period. FRP's share of the IMC-Agrico
assets for the year ended June 30, 1995 is 45.1%, while FRP will receive
55% of the cash flow.
c. Represents average realization F.O.B. plant/mine.
d. Includes 1,564,000 tons, 1,612,400 tons, 1,654,300 tons, 1,138,800 tons
and 739,900 tons for 1990-1994, respectively, which represent internal
consumption and Main Pass start-up sales that are not included in sales
for accounting purposes.
e. Reflects only Main Pass sales and reserves.
f. Recoverable content reflects an estimated recovery rate of 90% for
copper, 80% for gold, and 70% for silver less normal smelting and
refining allowances.
g. Includes .4 million ounces of gold and 8.5 million ounces of silver in
1993, and .1 million ounces of gold and 3.2 million ounces of silver for
1994 attributable to RTM.
h. Reserves include 39.1 million tons in 1990 and 1991, 39 million tons in
1992, 38.6 million tons in 1993 and 41 million tons in 1994, net to FRP
before royalties at Main Pass, subject to a 12.5% royalty based on net
mine revenues.
i. For 1993 and 1994, represents FRP's share based on its capital interest
ownership of the IMC-Agrico reserves. Contains an average of 68% bone
phosphate of lime.
CAPITALIZATION
The following table sets forth the consolidated capitalization of the
Company at December 31, 1994 and as adjusted to give effect to the Company
Restructuring, the Distribution and the Exchange Offer.
December 31, 1994
----------------------
Actual As Adjusted(1)
------ --------------
(In Millions)
Cash and short-term investments $ 41.5 $ .8
======== ========
Current portion of long-term debt and
short-term borrowings $ 24.4 $ .3
-------- --------
FTX credit agreement 425.0 205.0
FTX 6.55% Convertible Subordinated Notes 318.2 --
FTX Zero Coupon Convertible Subordinated Debentures 270.2 --
FCX 93/4% Senior Notes 120.0 --
ALatieF Joint Venture Bank Loan 54.0 --
RTM project financing debt 110.0 --
FRP 83/4% Senior Subordinated Notes 150.0 150.0
PT-FI capital lease 100.0 --
FCX equipment loan 63.0 --
Other 36.5 12.8
-------- --------
Total long-term debt 1,646.9 367.8
-------- --------
Minority interests 1,507.5 217.8
-------- --------
Stockholders' equity:
Preferred Stock, par value $1.00, authorized
50,000,000 shares:
$4.375 Convertible Exchangeable Preferred Stock,
5,000,000 shares outstanding at liquidation value 250.0 --
Common Stock, par value $1.00, authorized 300,000,000
shares, 166,365,476 actual and 198,980,510 as
adjusted issued and outstanding (2) 166.4 199.0
Capital in excess of par value -- 459.9
Retained deficit (221.9) --
Cumulative foreign translation adjustment (2.6) --
Less: 29,178,985 shares held in treasury, at cost (422.4) (422.4)
-------- --------
Total stockholders' equity (230.5) 236.5
-------- --------
Total capitalization $2,948.3 $ 822.4
======== ========
(1) The as adjusted financial data is based on the historical financial
statements of the Company, adjusted to give effect to the Company
Restructuring, the Distribution and the Exchange Offer. The adjusted data
reflects adjustments as if these transactions had occurred as of December
31, 1994. These adjustments reflect the (i) exchange pursuant to the
Exchange Offer and the retirement of all of the shares of the Preferred
Stock and the issuance upon exchange of 14.25 million shares of Common
Stock; (ii) sale of 21.5 million shares of FCX Class A common stock for
$450 million by the Company to RTZA; (iii) assumed conversion of all of
the 6.55% Notes into 49.24 shares of Common Stock per $1,000 principal
amount (equivalent to the current conversion price of $20.31 per share)
and the issuance upon conversion of 18.4 million shares of Common Stock;
(iv) redemption for cash of all of the Company's Zero Coupon Convertible
Subordinated Debentures by the Company; and (v) repayment of the amount
borrowed by the Company ($165 million as of December 31, 1994) under the
Company's revolving credit agreement.
The as adjusted data is based on the best estimates of the Company's
management using information currently available. Such estimates may be
revised as additional information becomes available. Additionally, there
can be no assurance that the Company Restructuring, the Distribution and
the Exchange Offer will be consummated or consummated in the manner
contemplated above.
(2) Does not include (i) 13.7 million shares of Common Stock authorized for
issuance under the Company's incentive and nonqualified stock option
plans, of which 7.7 million shares were issuable upon exercise of stock
options outstanding at December 31, 1994, excluding stock appreciation
rights outstanding at December 31, 1994, and (ii) 11 million shares
authorized for issuance upon conversion of the Zero Coupon Convertible
Subordinated Debentures.
PRICE RANGE OF THE COMMON STOCK
The Common Stock is listed and principally traded on the NYSE. The
following table sets forth the high and low sale prices of the Common Stock as
reported on the NYSE Composite Tape for the fiscal periods indicated:
Fiscal Quarter Common Stock
-------------- ------------
High Low
---- ---
1993:
1st Quarter $22.63 $17.00
2nd Quarter 22.25 18.13
3rd Quarter 19.38 17.50
4th Quarter 19.88 15.75
1994:
1st Quarter 21.75 18.75
2nd Quarter 19.75 16.25
3rd Quarter 20.00 16.13
4th Quarter 19.88 16.75
1995:
1st Quarter (to March 23) 18.63 17.00
The Preferred Stock and the Common Stock issuable on conversion of the
Preferred Stock or pursuant to the Exchange Offer have not been registered
under the Securities Act of 1933 (the "Securities Act"); however, because the
Preferred Stock was issued more than three years before the Expiration Date,
and because the Common Stock being offered in the Exchange Offer is being
issued pursuant to the exemption afforded by Section 3(a)(9) of the Securities
Act, stockholders will be able to sell the Common Stock received in the
Exchange Offer free of the registration requirements of the Securities Act.
See "Termination of Transfer Restrictions". The Preferred Stock has been
designated as a security eligible for trading in the Private Offerings,
Resales and Trading through Automated Linkages ("PORTAL") Market.
DIVIDENDS
In early 1992 the Company's Board of Directors fixed the amount of the
regular quarterly Common Stock cash dividend at $0.3125 per share. In May
1994, the Board of Directors announced that the Company, in lieu of paying a
$0.3125 quarterly cash dividend on the Common Stock, would plan to distribute
quarterly property dividends in the form of FCX Class A Common Stock at a
proposed rate of one FCX share for each 80 shares of the Company's Common
Stock. Fractional shares of FCX Common Stock will not be issued in connection
with such dividend distributions. Each Common Stockholder of the Company
entitled to receive a fractional share of FCX Common Stock will receive cash
in lieu of the fractional share.
Subsequent to the Distribution, the Board of Directors of the Company
will determine an appropriate new dividend policy for the Company, which will
depend upon, among other things, the Company's earnings and cash flow, its
business and prospects and applicable restrictions under Delaware law. The
Certificate of Incorporation of the Company provides that no dividend may be
made on the Common Stock unless all dividends theretofore payable on the
Preferred Stock have been declared or paid.
The Company also announced that, based on the then current outlook,
management expects FCX to maintain its current quarterly dividend of $0.15 per
share through the start-up of FCX's current expansion project in Indonesia and
that, subsequently, FCX's dividend policy can be expected to be determined in
light of its future financial performance.
PURPOSE OF THE EXCHANGE OFFER
The Company's basic reason for making the Exchange Offer relates to the
proposed Distribution. Although the Company is not making any recommendations
to the holders of the Preferred Stock as to whether or not they should accept
the Exchange Offer, the Company believes that it is desirable to afford
holders of the Preferred Stock a meaningful opportunity to participate in the
Distribution should they desire to do so. The holders of the Preferred Stock
currently have the ability to become holders of Common Stock by exercise of
their right to convert the Preferred Stock to Common Stock in accordance with
the conversion features of the Preferred Stock itself, and thus participate in
the Distribution. However, because the conversion price has been in excess of
the market price for the Common Stock, such a conversion could only be
effected on financially disadvantageous terms. The Exchange Offer ratio has
been set at a rate designed to remove this disadvantage.
If the Distribution is made, any shares of Preferred Stock remaining
outstanding will be convertible into the Common Stock of the Company as it
will exist following the Distribution, which will have no continuing interest
in the copper, gold and silver business represented by FCX, and the only
material portion of the Company's current business which will continue will be
the interest which the Company has in FRP and in the sulphur and agricultural
minerals businesses conducted by FRP. See "The Company -- Agricultural
Minerals". Because of the anti-dilution provisions of the Preferred Stock,
the number of shares of Common Stock into which each share of Preferred Stock
will be convertible following the Distribution will be significantly
increased, in an amount that will depend upon the value of the FCX Class B
common stock distributed with respect to the Common Stock of the Company and
the number of shares of Common Stock then outstanding, which in turn will be
affected by a number of factors including the degree of acceptance of the
Exchange Offer. See "The Exchange Offer -- Certain Effects of the Exchange
Offer". Each of such shares of Common Stock of the Company will have a
greatly reduced market value, however, as a result of the Distribution and,
following the Distribution, the cash flow available for the payment of
dividends on the Preferred Stock will be significantly smaller than at
present. The Company is not able to determine whether the actual value of the
shares of Common Stock receivable on conversion of a share of Preferred Stock
following the Distribution will be greater or less than the shares being
offered in the Exchange Offer. It is certain, however, that if the
Distribution is made, the nature of the businesses represented by the Common
Stock will be significantly different than that of the businesses currently
represented by the Common Stock and that holders of Preferred Stock who accept
the Exchange Offer and hold the Common Stock on the record date of the
Distribution will have the opportunity to continue to participate in the
businesses carried on by FCX.
The Company believes that the Exchange Offer is also advantageous to the
Company. After the Distribution, the remaining assets of the Company will be
substantially reduced, and, as a result, the Company needs to reduce its
ongoing fixed charges. The Company intends to accomplish this largely by
significantly reducing its debt obligations. This goal will be furthered to
the extent the Exchange Offer is successful in reducing or eliminating the
fixed charges represented by the dividends payable on the Preferred Stock.
Each share of Preferred Stock has a liquidation value of $50 and is
currently convertible into the Company's Common Stock at a conversion price of
$21.26, or the equivalent of 2.35 shares of Common Stock for each share of
Preferred Stock, as compared to the 2.85 shares of Common Stock per share of
Preferred Stock being offered by the Company. As of March 23, 1995, the day
prior to the announcement of the Exchange Offer, the closing price of the
Common Stock on the NYSE as reported on the Composite Tape was $18.25. Based
on this price, the Common Stock being offered per share of Preferred Stock
have an aggregate market value which is $2.01 higher than the liquidation
value of a share of Preferred Stock.
The Exchange Offer provides all holders of Preferred Stock with a
voluntary opportunity to exchange their Preferred Stock for Common Stock
without incurring brokerage and similar commissions. Stockholders who accept
the Exchange Offer will receive shares of Common Stock, which are more widely
held and actively traded than the Preferred Stock.
Following the Exchange Offer, and depending on the number of shares of
Preferred Stock tendered, the Company may take additional actions to reduce
further or eliminate the remaining Preferred Stock, including by making
purchases of Preferred Stock in the open market, by making subsequent tender
or exchange offers or by undertaking a recapitalization transaction. Such
transactions could be undertaken on terms which are more favorable or less
favorable than the exchange ratio in the Exchange Offer. The Company has made
no decision to take any such actions, and there is no assurance that the
Company will take any such actions.
Background to the Exchange Offer
On May 3, 1994, the Company announced that it was taking steps to effect
the tax-free Distribution to its stockholders, on a pro-rata basis, of all of
the Class B Common Shares of FCX which it owns at the time of such
Distribution.
The proposed Distribution results from significant changes in the
businesses of the Company and FCX over the past seven years. These changes
were brought about by two world-class mineral discoveries in 1988 and
management's decision to concentrate on the development and growth of these
properties. The Company has been active through subsidiaries in exploring for
copper, gold and other minerals in Indonesia since 1967. FCX was organized in
1987 to hold the Company's Indonesian property interests and first sold a
minority stock interest to the public in May 1988. At the time of the
offering, the common equity market value of FCX was less than one-quarter that
of the Company. Just seven years later, the common equity market value of FCX
has grown almost eleven-fold so that its common equity market value is now
almost double that of the Company. The Company believes that FCX is one of
only a few publicly-traded subsidiaries whose common equity market value
exceeds that of its publicly-traded parent corporation. Because of FCX's
ongoing capital needs and the potential for future conflicts between the
capital needs and priorities of FCX and the Company, the Company believes
that, absent the Distribution, its continued majority control of FCX could
increase FCX's cost of capital and could impede FCX's ability to raise
capital, to continue growth and to develop its business opportunities. The
proposed arrangements with RTZ described above are being entered into in
anticipation of the Distribution. See "The Company -- Copper and Gold".
The significant growth in the common equity market value of FCX is due in
large part to the discovery in 1988 by PT-FI of the Grasberg mineral deposit
in Irian Jaya, Indonesia. This deposit contains the world's largest proved
gold reserve and the world's third largest copper reserve. Since the
discovery, FCX has undertaken a substantial capital expenditure program to
develop the Grasberg property. To date, it has invested over two billion
dollars in its Indonesian operations.
Over the same period, the Company has evolved primarily into a holding
company with two principal interests -- the stock in FCX and a 51.4%
partnership interest in FRP. FRP made a major sulphur discovery in the Gulf
of Mexico in 1988 and invested nearly $600 million in developing the Main Pass
sulphur and related oil and gas facilities, which were completed in 1992. In
1993, FRP transferred its other principal business -- the phosphate fertilizer
business -- to IMC-Agrico, a newly formed partnership with a subsidiary of
IGL, in order to achieve substantial operating and administrative savings.
The Company has sold or otherwise disposed of its other business assets to
concentrate on the development of these two properties. In May 1992, the
Company transferred to FM Properties Operating Co., a Delaware general
partnership owned by FM Properties Inc. ("FMPO"), substantially all of the
domestic oil and gas properties of, and substantially all of the domestic real
estate then held for development by, the Company and certain of its
subsidiaries, excluding FRP, and then distributed all shares of FMPO to the
holders of the Company's Common Stock. Similarly, in 1994, the Company
transferred substantially all of its remaining oil and gas interests,
including its oil and gas exploration business, excluding those owned by FRP,
to McMoRan Oil & Gas Co., the stock of which was then distributed to the
holders of the Company's Common Stock.
FCX's development and growth are continuing at a rapid pace. PT-FI is
currently expanding its production capacity from 66,000 MTPD to 115,000 MTPD.
This expansion project should be completed by mid-1995 and annual production
is expected to be approximately 1.1 billion pounds of copper and 1.5 million
ounces of gold, as compared to the 1994 levels of 710 million pounds of copper
and 784 thousand ounces of gold, respectively.
FCX's copper, gold and silver reserves have grown substantially both
through continued delineation of the Grasberg deposit and other existing
mineral deposits and as a result of FCX's active exploration program. FCX's
exploration activities are being pursued both within Block A and within Block
B and the adjacent Eastern Mining COW Area. Preliminary exploration within
the exploration areas has indicated a number of promising targets, although no
assurance can be given that any of these targets contains commercially
exploitable mineral deposits. The COW and the Eastern Mining COW contain
provisions under which PT-FI and P.T. IRJA must progressively relinquish a
portion of their rights to their respective contract of work area. PT-FI has
relinquished its rights to approximately 1.7 million acres and is required to
relinquish an additional approximately 3.2 million acres over the next four
years. Similarly, 75% of the Eastern Mining COW exploration area must be
relinquished over the next two to seven years. In light of the relinquishment
provisions, each company has expanded its exploration program with a focus on
what it believes to be the most promising exploration opportunities in its COW
area.
Although FCX expects to require continued access to other financing
sources, including bank credit facilities and the public and private
securities markets, the arrangements with RTZ described above will provide a
significant portion of the capital expenditures which FCX anticipates will be
required to expand its milling and production capacity in line with future
reserve additions and continue its exploration activities. Estimated capital
expenditures will be determined by the result of FCX's exploration activities
and ongoing capital maintenance programs. Estimated aggregate capital
expenditures for 1995 are expected to approximate $650 million for the
expansion to 115,000 MPTD of PT-FI's production capacity, ongoing capital
maintenance expenditures and the expansion to 270,000 tons of metal per year
of a smelter in Huelva, Spain currently owned by RTM, a company which is 100%
owned by FCX. In addition, in January 1995 FCX announced proposed agreements
with Mitsubishi Materials Corporation and Fluor Daniel Wright Ltd. to form an
Indonesian foreign investment company to jointly build, own and operate a
smelter/refinery in Gresik, Indonesia to process approximately 200,000 tons of
copper per year. Pursuant to the proposed agreements, which remain subject to
execution and other conditions, FCX will own 20% of the newly formed
Indonesian company, and PT-FI will provide all of the smelter's copper
concentrate feed stock requirement, estimated to be approximately 600,000 tons
annually.
The Distribution was designed to enable FCX to meet its substantial
capital needs at a lower cost than any possible alternative. The transaction
was also intended to provide FCX with the flexibility to meet future growth
and new opportunities through the use of equity financing or by attracting a
joint venture partner for one or more projects. The proposed arrangements
with RTZ represent the type of projects that had been contemplated. See "The
Company -- Copper and Gold".
The Distribution will permit the managements of FCX and the Company to
make business decisions without being influenced by the competing financial
needs of the other business. In addition, the separation of FCX and the
Company will allow FCX to avoid the cost and administrative expense of
complying with burdensome unitary state tax laws. FCX has a limited presence
in the United States and following the Distribution should be subject to tax
only in one or two states based on its current business operations.
THE EXCHANGE OFFER
Terms of the Exchange Offer
The Company hereby offers, upon the terms and subject to the conditions
set forth herein and in the related Letter of Transmittal, to exchange 2.85
shares of its Common Stock for each outstanding share of its Preferred Stock
that is validly tendered and not withdrawn prior to the Expiration Date. On
March 23, 1995, there were 5,000,000 shares of Preferred Stock outstanding.
The Exchange Offer is being made for any and all shares of Preferred Stock and
is not conditioned upon any minimum number of shares of Preferred Stock being
tendered. The later of 5:00 p.m., New York City time, on Friday, April 21,
1995, or the latest time and date to which the Exchange Offer is extended, is
referred to herein as the "Expiration Date". Only Preferred Stock validly
tendered prior to the Expiration Date will be eligible for exchange.
No fractional shares of Common Stock will be issued in exchange for
Preferred Stock to stockholders tendering in the Exchange Offer. Instead, the
Company will deliver to the Exchange Agent on behalf of the stockholders
tendering in the Exchange Offer a stock certificate representing the aggregate
fractional share interests to which such stockholders are entitled. The
Exchange Agent will then sell the aggregate fractional share interests in the
market on behalf of the stockholders entitled to such fractional share
interests and distribute the cash proceeds to such stockholders in accordance
with their respective fractional share interests.
The Exchange Offer is subject to a number of conditions. See "The
Exchange Offer -- Certain Conditions of the Exchange Offer". The Company
reserves the right to terminate or amend the Exchange Offer at any time on or
prior to the Expiration date upon the occurrence of any of such conditions.
The Company expressly reserves the right, in its sole discretion, at any
time or from time to time, to extend the period of time during which the
Exchange Offer is open by giving oral or written notice of such extension to
the Exchange Agent. See "The Exchange Offer -- Extension of Tender Period;
Termination; Amendments". There can be no assurance, however, that the
Company will exercise its right to extend the Exchange Offer. If the Company
decides, in its sole discretion, to increase or decrease the consideration
offered in the Exchange Offer to holders of Preferred Stock and, at the time
that notice of such increase or decrease is first published, sent or given to
holders of Preferred Stock in the manner specified below, the Exchange Offer
is scheduled to expire at any time earlier than the tenth business day from
the date that such notice is first so published, sent or given, the Exchange
Offer will be extended until the expiration of such ten-business-day period.
For purposes of the Exchange Offer, a "business day" means any day other than
a Saturday, Sunday or Federal holiday and consists of the time period from
12:01 a.m. through 12:00 midnight, New York City time.
Certain Effects of the Exchange Offer
If the Distribution is made, any shares of Preferred Stock remaining
outstanding will be convertible into the Common Stock of the Company as it
will exist following the Distribution, but will not participate in the
Distribution. Following the Distribution, the Company will have no continuing
interest in the copper, gold and silver business represented by FCX, and the
only material portion of its current business which will continue will be its
interest in FRP and the sulphur and agricultural minerals business conducted
by FRP. See "The Company -- Agricultural Minerals". Because of the
anti-dilution provisions of the Preferred Stock, the number of shares of
Common Stock into which each share of Preferred Stock will be convertible
following the Distribution will be significantly increased, in an amount that
will depend upon the value of the FCX Class B common stock distributed with
respect to the Common Stock of the Company and the number of shares of Common
Stock of the Company then outstanding, which in turn will be affected by a
number of factors including the degree of acceptance of the Exchange Offer.
Each of such shares of Common Stock of the Company will have a greatly reduced
market value, however, as a result of the Distribution and, following the
Distribution, the cash flow available for the payment of dividends in the
Preferred Stock will be significantly smaller than at present.
The Company is primarily a holding company and its sources of cash flow
have been dividends and distributions from its ownership in FCX and FRP.
Distributions received in the three years ended December 31, 1994 were as
follows:
Year Ended FRP FCX
---------- --- ---
(in millions)
December 31, 1992 $41.8 $85.3
December 31, 1993 -- 85.9
December 31, 1994 6.2 85.8
Subsequent to the Distribution, FCX dividends will no longer be received by
the Company. FRP's distributions to the Company would have been inadequate to
cover dividends on the Preferred Stock in the last two years. Assuming the
Company retires substantially all of its outstanding debt as proposed under
the Company Restructuring, based on current market conditions in the phosphate
fertilizer industry, distributions from FRP would be sufficient to pay
dividends on the Preferred Stock.
Publicly owned FRP Depositary Units have cumulative rights to receive
quarterly distributions of $0.60 per unit through the distribution for the
quarter ending December 31, 1996 before any distributions may be made to the
Company. On January 20, 1995, FRP declared a distribution of $0.60 per FRP
Depositary Unit ($30.2 million) and $0.26 per Company-owned unit ($13.9
million), payable February 15, 1995, bringing the total unpaid distribution
due the Company to $353.1 million. Unpaid distributions due the Company will
be recoverable from part of the excess of future quarterly FRP distributions
over $0.60 per unit for all FRP Units.
The Company cannot determine whether the actual value of the shares of
Common Stock receivable on conversion of a share of Preferred Stock will be
greater or less than the shares being offered in the Exchange Offer. It is
certain, however, that, if the Distribution is made, the nature of the
businesses represented by the Common Stock will be significantly different
than that of the businesses currently represented by the Common Stock and that
holders of Preferred Stock who accept the Exchange Offer and hold the Common
Stock on the record date of the Distribution will have the opportunity to
continue to participate in the businesses carried on by FCX.
Procedure for Tendering Preferred Stock
The Company understands that all shares of Preferred Stock are currently
represented by a global share certificate deposited with DTC and registered in
the name of DTC's nominee, Cede & Co. Any stockholder desiring to tender all
or any portion of his Preferred Stock should request his broker, dealer,
commercial bank, trust company or nominee to effect the transaction for him.
In order for such institution to tender Preferred Stock on behalf of any such
stockholder, a properly completed and duly executed Letter of Transmittal (or
facsimile thereof), and any other documents required by the Letter of
Transmittal, must be received by the Exchange Agent at one of its addresses
set forth at the end of this Offering Circular and book-entry transfer of such
stock must be received to the account of the Exchange Agent at DTC.
All signatures on a Letter of Transmittal must be guaranteed by a firm
that is a member of a recognized Medallion Program approved by The Securities
Transfer Association Inc. (an "Eligible Institution") unless such shares of
Preferred Stock are tendered for the account of an Eligible Institution. See
Instruction 1 of the Letter of Transmittal.
If a stockholder desires to tender Preferred Stock pursuant to the
Exchange Offer and cannot deliver such Preferred Stock and all other required
documents to the Exchange Agent by the Expiration Date, such Preferred Stock
may nevertheless be tendered if all of the following conditions are met:
(i) such tender is made by or through an Eligible Institution;
(ii) a properly completed and duly executed notice of guaranteed delivery
in a form acceptable to the Exchange Agent is received by the
Exchange Agent (as provided below) by the Expiration Date; and
(iii) a confirmation of a book-entry transfer of such Preferred Stock into
the Exchange Agent's account at DTC, together with a properly
completed and duly executed Letter of Transmittal (or facsimile
thereof) and any other documents required by the Letter of
Transmittal, are received by the Exchange Agent within five NYSE
trading days after the date of execution of the notice of guaranteed
delivery.
The notice of guaranteed delivery may be delivered by hand or transmitted
by telegram, telex, facsimile transmission, other electronic means or mail to
the Exchange Agent and must include a guarantee by an Eligible Institution in
a form acceptable to the Exchange Agent.
If a definitive share certificate representing shares of Preferred Stock
is issued or acquired by any stockholder pursuant to a transfer out of the
global certificate deposited with DTC, such stockholder should contact the
Exchange Agent at the telephone numbers and addresses set forth at the end of
this Offering Circular to obtain instructions on procedures for tendering such
Preferred Stock.
All questions as to the form of documents and the validity, eligibility
(including time of receipt) and acceptance for exchange of any tender of
Preferred Stock will be determined by the Company, in its sole discretion,
which determination shall be final and binding. The Company reserves the
absolute right to reject any or all tenders of Preferred Stock determined by
it not to be in proper form, or the acceptance for exchange of Preferred Stock
that may, in the opinion of the Company's counsel, be unlawful. The Company
also reserves the absolute right to waive any defect or irregularity in any
tender of Preferred Stock. None of the Company, the Exchange Agent or any
other person will be under any duty to give notification of any defect or
irregularity in tenders or incur any liability for failure to give any such
notification.
Withdrawal Rights
Tenders of Preferred Stock made pursuant to the Exchange Offer may be
withdrawn at any time prior to the Expiration Date. Thereafter, such tenders
are irrevocable, except that they may be withdrawn after May 19, 1995 unless
theretofore accepted for exchange as provided in this Offering Circular. If
the Company extends the period of time during which the Exchange Offer is
open, is delayed in accepting for exchange Preferred Stock or issuing Common
Stock, or is unable to accept for exchange or exchange Preferred Stock for
Common Stock pursuant to the Exchange Offer for any reason, then, without
prejudice to the Company's rights under the Exchange Offer, the Exchange Agent
may, on behalf of the Company, retain all Preferred Stock tendered, and such
Preferred Stock may not be withdrawn except as otherwise provided hereunder,
subject to Rule 13e-4(f)(5) under the Exchange Act, which provides that the
issuer making the tender offer shall either pay the consideration offered, or
return the tendered securities, promptly after the termination or withdrawal
of the tender offer.
To be effective, a written, telegraphic, telex or facsimile transmission
notice of withdrawal must be timely received by the Exchange Agent at one of
its addresses set forth on the back cover of this Offering Circular and must
specify the name of the person who tendered the Preferred Stock to be
withdrawn and the number of shares of Preferred Stock to be withdrawn.
Withdrawals may not be rescinded and Preferred Stock withdrawn will thereafter
be deemed not validly tendered for purposes of the Exchange Offer. However,
withdrawn Preferred Stock may be retendered by again following one of the
procedures described in "The Exchange Offer -- Procedure for Tendering
Preferred Stock" at any time prior to the Expiration Date.
All questions as to the form and validity (including time of receipt) of
any notice of withdrawal will be determined by the Company, in its sole
discretion, which determination shall be final and binding. None of the
Company, the Exchange Agent or any other person will be under any duty to give
notification of any defect or irregularity in any notice of withdrawal or
incur any liability for failure to give any such notification.
Acceptance of Preferred Stock for Exchange
Upon the terms and subject to the conditions of the Exchange Offer, and
as promptly as practicable after the Expiration Date, the Company will accept
for exchange Preferred Stock validly tendered and not withdrawn as permitted
in "The Exchange Offer -- Withdrawal Rights". Subject to such terms and
conditions, delivery of shares of Common Stock to be issued in exchange for
properly tendered shares of the Preferred Stock (together with a check in
payment of any fractional share interest) will be made by the Exchange Agent
promptly but only after timely receipt by the Exchange Agent of the Preferred
Stock at its account at DTC, a properly completed and duly executed Letter of
Transmittal (or facsimile thereof) and any other required documents.
For purposes of the Exchange Offer, the Company will be deemed to have
accepted for exchange shares of Preferred Stock that are validly tendered and
not withdrawn if and when it gives oral or written notice to the Exchange
Agent of its acceptance for payment of such Preferred Stock. The Exchange
Agent will act as agent for tendering stockholders for the purpose of
transmitting shares of Common Stock (and payment for any fractional share
interest) to tendering stockholders. Under no circumstances will interest be
paid on amounts to be paid to tendering stockholders by the Company by reason
of any delay in making such payment.
The Company will pay all stock transfer taxes, if any, payable on the
transfer to it of Preferred Stock exchanged pursuant to the Exchange Offer,
except as set forth in Instruction 4 of the Letter of Transmittal.
Certain Conditions of the Exchange Offer
Notwithstanding any other provision of the Exchange Offer, the Company
shall not be required to accept for exchange or exchange any Preferred Stock
tendered, and may terminate or amend the Exchange Offer or may postpone
(subject to the requirements of the Exchange Act for prompt exchange or return
of Preferred Stock) the acceptance for exchange of, and exchange of, Preferred
Stock tendered, if at any time on or after March 24, 1995 and before
acceptance for exchange or exchange of any such Preferred Stock (whether or
not any Preferred Stock has theretofore been accepted for exchange or
exchanged pursuant to the Exchange Offer) any of the following shall have
occurred:
(a) there shall have been threatened, instituted or pending any action or
proceeding by any government or governmental, regulatory or
administrative agency or authority or tribunal or any other person,
domestic or foreign, or before any court, authority, agency or tribunal
which (i) challenges the making of the Exchange Offer, the acquisition
of some or all of the Preferred Stock pursuant to the Exchange Offer or
otherwise relates in any manner to the Exchange Offer; or (ii) in the
Company's sole judgment, could materially affect the business,
condition (financial or other), income, operations or prospects of the
Company and its subsidiaries, taken as a whole, or otherwise materially
impair in any way the contemplated future conduct of the business of
the Company or any of its subsidiaries or materially impair the
Exchange Offer's contemplated benefits to the Company;
(b) there shall have been any action threatened, pending or taken, or
approval withheld, or any statute, rule, regulation, judgment, order or
injunction threatened, proposed, sought, promulgated, enacted, entered,
amended, enforced or deemed to be applicable to the Exchange Offer or
the Company or any of its subsidiaries, by any court or any authority,
agency or tribunal which, in the Company's sole judgment, would or
might directly or indirectly (i) make the acceptance for exchange or
exchange of some or all of the Preferred Stock illegal or otherwise
restrict or prohibit consummation of the Exchange Offer; (ii) delay or
restrict the ability of the Company, or render the Company unable, to
accept for payment or pay for some or all of the Preferred Stock;
(iii) materially impair the contemplated benefits of the Exchange Offer
to the Company; or (iv) materially affect the business, condition
(financial or other), income, operations or prospects of the Company
and its subsidiaries, taken as a whole, or otherwise materially impair
in any way the contemplated future conduct of the business of the
Company or any of its subsidiaries;
(c) (i) any general suspension of trading in, or limitation on prices for,
securities on any national securities exchange or in the
over-the-counter market, (ii) the declaration of a banking moratorium
or any suspension of payments in respect of banks in the United States,
(iii) the commencement of a war, armed hostilities or other
international or national calamity directly or indirectly involving the
United States, (iv) any limitation (whether or not mandatory) by any
governmental, regulatory or administrative agency or authority on, or
any event which, in the Company's sole judgment, might affect, the
extension of credit by banks or other lending institutions in the
United States, (v) any significant change in the market price of the
Common Stock, the Preferred Stock or the FCX common stock, or any
change in the general political, market, economic or financial
conditions in the United States or abroad that could, in the sole
judgment of the Company, have a material adverse effect on the
Company's business, operations or prospects or the trading in the
Common Stock or the Preferred Stock, (vi) in the case of any of the
foregoing existing at the time of the commencement of the Exchange
Offer, a material acceleration or worsening thereof or (vii) any
decline in either the Dow Jones Industrial Average (4,087.83 at the
close of business on March 23, 1995) or the Standard and Poor's 500
Composite Stock Price Index (495.95 at the close of business on March
23, 1995) by an amount in excess of 10 percent measured from the close
of business on March 23, 1995;
(d) the Company shall determine that it is no longer feasible to make the
Distribution for any reason, including, without limitation, litigation
or the inability to obtain satisfactory assurance of the tax-free
nature of the Distribution, or that the arrangements with RTZ and RTZA
will not be completed in the manner presently contemplated;
(e) any tender or exchange offer with respect to some or all of the Common
Stock or the Preferred Stock (other than the Exchange Offer), or a
merger, acquisition or other business combination proposal for the
Company, shall have been proposed, announced or made by any person or
entity;
(f) any change shall occur or be threatened in the business, condition
(financial or other), income, operations, Common Stock or Preferred
Stock ownership, or prospects of the Company and its subsidiaries,
taken as a whole, which, in the sole judgment of the Company, is or may
be material to the Company;
(g) (i) any person, entity or "group" (as that term is used in Section
13(d)(3) of the Exchange Act) shall have acquired, or proposed to
acquire, beneficial ownership of shares of Common Stock and Preferred
Stock entitled to more than 5% of the aggregate votes entitled to be
cast by all shares of Common Stock and Preferred Stock then outstanding
(other than a person, entity or group which had publicly disclosed such
ownership in a Schedule 13D or 13G (or an amendment thereto) on file
with the Securities and Exchange Commission prior to March 23, 1995),
(ii) any such person, entity or group which had publicly disclosed such
ownership prior to such date shall have acquired, or proposed to
acquire, other than pursuant to the Exchange Offer, beneficial
ownership of additional shares of Common Stock or Preferred Stock
entitled to more than 5% of the aggregate votes entitled to be cast by
all shares of Common Stock and Preferred Stock then outstanding
(options for and other rights to acquire Common Stock or the Preferred
Stock which are so acquired or proposed to be acquired being deemed for
this purpose to be immediately exercisable) or (iii) any new group
shall have been formed which beneficially owns shares of Common Stock
and Preferred Stock entitled to more than 5% of the aggregate votes
entitled to be cast by all shares of Common Stock and Preferred Stock
then outstanding; or
(h) the Common Stock to be issued in connection with the Exchange Offer
shall not have been accepted for listing by the NYSE;
and, in the sole opinion of the Company, in any such case and regardless of
the circumstances (including any action or omission to act by the Company)
giving rise to such condition, such event makes it inadvisable to proceed with
the Exchange Offer or with such acceptance for payment or payment.
The foregoing conditions are for the sole benefit of the Company and may
be asserted by the Company regardless of the circumstances (including any
action or inaction by the Company) giving rise to any such condition and any
such condition may be waived by the Company, in whole or in part, at any time
and from time to time in its sole discretion. The Company's failure at any
time to exercise any of the foregoing rights shall not be deemed a waiver of
any such right; the waiver of any such right with respect to particular facts
and circumstances shall not be deemed a waiver with respect to any other facts
or circumstances; and each such right shall be deemed an ongoing right which
may be asserted at any time and from time to time. Any determination by the
Company concerning the events described above will be final and binding on all
parties.
Transactions and Agreements Concerning the Preferred Stock and the Common
Stock
During the 40 business days preceding the date hereof the Company
acquired 583,300 shares of Common Stock on the open market on the dates, in
the amounts and at the prices per share as set forth below.
Date Shares Price Per Share
---- ------ --------------
January 26, 1995 20,000 $17.55
January 27, 1995 100,000 17.55
January 30, 1995 56,000 17.14
January 31, 1995 180,000 17.08
February 2, 1995 2,000 17.18
February 7, 1995 215,400 17.06
March 2, 1995 500 17.55
March 3, 1995 9,400 17.55
Except as set forth above, during the 40 business days preceding the date
hereof neither the Company nor, to its knowledge, any of its subsidiaries,
executive officers or directors or any associate of any such officer or
director has engaged in any transaction involving the Preferred Stock or the
Common Stock.
Extension of the Exchange Offer Period; Termination; Amendments
The Company expressly reserves the right, in its sole discretion, at any
time or from time to time, to extend the period of time during which the
Exchange Offer is open by giving oral or written notice of such extension to
the Exchange Agent. During any such extension, all Preferred Stock previously
tendered and not exchanged or withdrawn will remain subject to the Exchange
Offer, except to the extent that such Preferred Stock may be withdrawn as set
forth in "The Exchange Offer -- Withdrawal Rights". The Company also
expressly reserves the right, in its sole discretion, to terminate the
Exchange Offer and not accept for exchange or exchange any Preferred Stock not
theretofore accepted for exchange or exchanged or, subject to applicable law,
to postpone the exchange of Preferred Stock for Common Stock upon the
occurrence of any of the conditions specified in "The Exchange Offer --
Certain Conditions of the Exchange Offer" hereof by giving oral or written
notice of such termination or postponement to the Exchange Agent and making a
public announcement thereof. The Company's reservation of the right to delay
exchange of Preferred Stock which it has accepted for payment is limited by
Rule 13e-4(f)(5) promulgated under the Exchange Act, which requires that the
Company must pay the consideration offered or return the Preferred Stock
tendered promptly after termination or withdrawal of a tender offer. Subject
to compliance with applicable law, the Company further reserves the right, in
its sole discretion, to amend the Exchange Offer in any respect. Amendments
to the Exchange Offer may be made at any time or from time to time effected by
public announcement thereof, such announcement, in the case of an extension,
to be issued no later than 9:00 A.M., New York City time, on the next business
day after the previously scheduled Expiration Date. Any public announcement
made pursuant to the Exchange Offer will be disseminated promptly to
stockholders in a manner reasonably designed to inform stockholders of such
change. Without limiting the manner in which the Company may choose to make a
public announcement, except as required by applicable law, the Company shall
have no obligation to publish, advertise or otherwise communicate any such
public announcement other than by making a release to the Dow Jones News
Service.
If the Company materially changes the terms of the Exchange Offer or the
information concerning the Exchange Offer, the Company will extend the
Exchange Offer to the extent required by Rules 13e-4(d)(2) and 13e-4(e)(2)
promulgated under the Exchange Act. These rules provide that the minimum
period during which an offer must remain open following material changes in
the terms of the offer or information concerning the offer (other than a
change in consideration offered or a change in percentage of securities
sought) will depend on the facts and circumstances, including the relative
materiality of such terms or information. The Securities and Exchange
Commission has stated that as a general rule, it is of the view that an offer
should remain open for a minimum of five business days from the date that
notice of such a material change is first published, sent or given. If (i)
the Company increases or decreases the consideration offered for Preferred
Stock pursuant to the Exchange Offer and (ii) the Exchange Offer is scheduled
to expire at any time earlier than the expiration of a period ending on the
tenth business day from, and including, the date that notice of such increase
or decrease is first published, sent or given, the Exchange Offer will be
extended until the expiration of such period of ten business days.
Solicitation of Tenders; Fees
The Company has not retained any dealer-manager or similar agent in
connection with the Exchange Offer and will not make any payments to brokers,
dealers or others for soliciting acceptances of the Exchange Offer.
The Company has retained Mellon Securities Trust Company as Exchange
Agent in connection with the Exchange Offer. The Exchange Agent will receive
reasonable and customary compensation for their services in connection with
the Exchange Offer, will be reimbursed for their reasonable out-of-pocket
expenses and will be indemnified against certain liabilities and expenses in
connection therewith, including liabilities under the federal securities laws.
The Company will also reimburse brokers, dealers, commercial banks and
trust companies for customary handling and mailing expenses incurred in
forwarding the Exchange Offer to their customers.
Interests of Certain Persons in the Transaction
As of March 23, 1995, none of the executive officers or directors of the
Company beneficially owned any of the Preferred Stock.
CERTAIN FEDERAL INCOME TAX CONSEQUENCES
The following discussion is a summary of certain United States federal
income tax consequences of the Exchange Offer to holders of the Preferred
Stock that exchange shares of such stock for shares of Common Stock pursuant
to the Exchange Offer ("Exchanging Holders"). This summary deals only with
shares of Preferred Stock held as capital assets within the meaning of Section
1221 of the Internal Revenue Code of 1986, as amended. It does not discuss
all of the federal income tax consequences that may be relevant to Exchanging
Holders in light of their particular circumstances or to special classes of
Exchanging Holders, such as dealers in securities or currencies, life
insurance companies, persons holding Preferred Stock as a hedge or hedged
against currency risks or as part of a straddle, or persons whose functional
currency is not the United States dollar. This summary is based on tax laws
in effect in the United States, regulations thereunder and administrative and
judicial interpretations thereof, as of the date hereof, all of which are
subject to change (possibly on a retroactive basis). All Exchanging Holders
should consult their own tax advisors as to the specific federal, state, local
and foreign tax consequences of their participation in the Exchange Offer.
The Exchange Offer will not affect the federal income tax treatment of holders
of the Preferred Stock that do not participate in the Exchange Offer.
THE TAX DISCUSSION SET FORTH BELOW IS INCLUDED FOR GENERAL INFORMATION
ONLY. HOLDERS OF PREFERRED STOCK ARE ADVISED TO CONSULT THEIR OWN TAX
ADVISORS AS TO THE UNITED STATES FEDERAL INCOME TAX CONSEQUENCES OF
PARTICIPATING IN THE EXCHANGE OFFER, ACQUIRING, HOLDING OR DISPOSING OF THE
COMMON STOCK RECEIVED PURSUANT TO THE EXCHANGE OFFER AND PARTICIPATING IN THE
DISTRIBUTION, IF EFFECTED, BY THE COMPANY OF ALL OF THE CLASS B COMMON STOCK
OF FCX WHICH THE COMPANY OWNS AT THE TIME OF SUCH DISTRIBUTION, IN LIGHT OF
THEIR PARTICULAR CIRCUMSTANCES, AS WELL AS THE EFFECT OF ANY STATE, LOCAL OR
FOREIGN TAX LAWS.
Treatment of Exchange of Shares of Preferred Stock for Shares of Common Stock
No gain or loss will be recognized by an Exchanging Holder as a result of
the exchange of shares of Preferred Stock for shares of Common Stock, except
to the extent that such holder receives cash in lieu of fractional shares of
Common Stock. See "Receipt of Cash in Lieu of Fractional Shares" below. The
tax basis of an Exchanging Holder in its shares of Common Stock will be
determined by allocating such holder's tax basis in the shares of Preferred
Stock exchanged therefor pro rata among the shares of Common Stock, including
any fractional shares of Common Stock deemed received by such holder. See
"Receipt of Cash in Lieu of Fractional Shares" below. The holding period of
an Exchanging Holder in the shares of Common Stock received or deemed received
pursuant to the Exchange Offer will include the period for which such holder
held the shares of Preferred Stock exchanged therefor.
Receipt of Cash in Lieu of Fractional Shares
If cash is received in lieu of fractional shares pursuant to the Exchange
Offer, the Exchanging Holder will be treated as if such holder had received
fractional shares of Common Stock and subsequently sold such fractional shares
for cash in a taxable transaction which gave rise to capital gain or loss.
The gain or loss recognized will be the amount of the difference between the
cash received and the tax basis in the fractional shares deemed received. The
tax basis and holding period of the fractional shares of Common Stock deemed
received by an Exchanging Holder will be determined in accordance with the
discussion in the preceding paragraph. See "Treatment of Exchange of Shares of
Preferred Stock for Shares of Common Stock" above.
Back-up Withholding
In order to avoid back-up withholding of federal income tax on cash paid
in lieu of fractional shares of Common Stock and on dividends paid with
respect to shares of Common Stock, each Exchanging Holder subject to back-up
withholding, who has not already done so, must comply with applicable
requirements for furnishing his correct taxpayer identification number.
DESCRIPTION OF THE CAPITAL STOCK
The following statements are brief summaries of the material provisions
relating to the Company's preferred stock and Common Stock and are qualified
in their entirety by the provisions of the Company's Restated Certificate of
Incorporation (the "Certificate of Incorporation"), which has been filed with
the Commission.
Preferred Stock
General. The Certificate of Incorporation authorizes the issuance of
50,000,000 shares of preferred stock, $1.00 par value, of which 5,000,000
shares were outstanding as of March 23, 1995. The Board of Directors of the
Company is authorized by the Certificate of Incorporation to provide, without
further shareholder action, for the issuance of one or more series of
preferred stock. The Board of Directors has the power to fix various terms
with respect to each series, including voting powers, designations,
preferences and relative, participating, optional or other special rights,
qualifications, limitations, restrictions, and redemption, conversion or
exchangeability provisions. Holders of preferred stock have no preemptive
rights. Mellon Securities Trust Company is the transfer agent and registrar
for the Preferred Stock.
Dividends. The holders of shares of Preferred Stock are entitled to
receive cumulative cash dividends at an annual rate equivalent to $4.375 per
share when, as and if declared by the Board of Directors of the Company,
payable quarterly on the first day of each March, June, September and
December. Dividends on the Preferred Stock accrue and are cumulative from the
date of its original issue and are payable to the holder of record on such
respective record dates as may be fixed by the Board of Directors in advance
of the payment of each dividend.
Unless full cumulative dividends for all past dividend periods on all
outstanding shares of Preferred Stock and any outstanding shares of any other
series of preferred stock ranking, as to dividends, on a parity with the
Preferred Stock have been paid, or declared and set apart for payment, the
Company may not (i) declare, pay or set apart any amounts for dividends on, or
make any other distribution in cash or other property in respect of, the
Common Stock or any other stock of the Company ranking junior to the Preferred
Stock as to dividends or distribution of assets upon liquidation, dissolution
or winding up of the affairs of the Company (the Common Stock and such other
stock being referred to herein as "Junior Stock") other than a dividend
payable solely in Junior Stock, (ii) purchase, redeem or otherwise acquire for
value any shares of Junior Stock, directly or indirectly, other than as a
result of a reclassification of Junior Stock, or the exchange or conversion of
one Junior Stock for or into another Junior Stock, or other than through the
use of proceeds of a substantially contemporaneous sale of other Junior Stock,
or (iii) make any payment on account of, or set aside money for, a sinking or
other like fund for the purchase, redemption or other acquisition for value of
any shares of Junior Stock. If the funds available for the payment of
dividends are insufficient to pay in full the dividends payable on all
outstanding shares of Preferred Stock and any other series of preferred stock
ranking as to dividends on a parity with Preferred Stock, the total available
funds to be paid in partial dividends on the Preferred Stock and such other
series shall be divided among the Preferred Stock and such other series in
proportion to the aggregate amount of dividends accrued and unpaid with
respect to the Preferred Stock and such other series. Accruals of dividends
do not bear interest. Because the Company derives its income primarily from
dividends and distributions received from its majority-owned subsidiaries (FCX
and FRP prior to the Distribution, FRP following the Distribution), the
Company's ability to pay cash dividends on the Preferred Stock is dependent on
the ability of such subsidiaries to pay cash dividends to their shareholders
in amounts which would enable the Company to cover its operating expenses and
the amount of any dividends payable on the Preferred Stock and any series of
preferred stock ranking as to dividends, on a parity with the Preferred Stock.
Voting Rights. Except for the voting rights described below and except
as otherwise provided by law, the holders of shares of Preferred Stock are not
entitled to vote on any matter or to receive notice of, or to participate in,
any meeting of stockholders of the Company. If at any time an amount equal to
or exceeding the dividends payable on the Preferred Stock for six full
quarterly dividend periods are in arrears and unpaid, the number of directors
of the Company will be increased by two and the holders of the Preferred
Stock, voting separately as a class together with the holders of shares of
each other series of preferred stock which shall have substantially similar
voting rights with respect to the election of directors upon the occurrence of
substantially similar arrearages of dividends, will be entitled to elect the
additional two directors. Such voting right will continue for the Preferred
Stock until such time as all dividends accrued on any outstanding shares of
Preferred Stock to the dividend payment date immediately preceding such time
have been paid in full, or have been declared and set apart in trust for
payment. The holders of the Preferred Stock are entitled to vote on the
creation, authorization or issuance of any class or series of stock of the
Company ranking, either as to dividends or upon liquidation, prior to
Preferred Stock and amendments to the Certificate of Incorporation, if such
amendments would materially adversely affect the holders' interests.
Liquidation Rights. In the event of any voluntary or involuntary
liquidation, dissolution or winding up of the Company, after payment or
provision for payment of the debts and other liabilities of the Company, the
holders of Preferred Stock will be entitled to receive out of the remaining
net assets of the Company $50 per share in cash plus accrued and unpaid
dividends before any distribution is made or set apart for the holders of
Junior Stock. If the amounts payable with respect to the Preferred Stock are
not paid in full, the holders of the Preferred Stock and any stock of the
Company on a parity with Preferred Stock as to distribution of assets,
liquidation or winding up of the Company will have the right to share ratably
in any distribution of the remaining assets of the Company in proportion to
the full respective preferential amounts to which they are entitled. After
payment of the full amount of the liquidating distribution to which they are
entitled, the holders of shares of Preferred Stock will not be entitled to any
further participation in any distribution of the remaining assets by the
Company. A consolidation or merger of the Company with one or more
corporations or the sale of all or substantially all of the assets of the
Company will not be deemed to be a liquidation, dissolution or winding up of
the Company.
Conversion Rights. The holders of Preferred Stock are entitled at any
time to convert the shares of Preferred Stock into Common Stock of the
Company, at a conversion price which is currently $21.26 per share of Common
Stock, except that, with respect to shares of Preferred Stock called for
redemption, conversion rights will expire at the close of business on the
redemption date (unless the Company shall default in making the payment due
upon redemption in which case such conversion rights shall continue
uninterrupted). The holders of shares of Preferred Stock at the close of
business on a record date are entitled to receive the dividend payable on such
shares on the corresponding dividend payment date notwithstanding the
conversion thereof or the Company's default in payment of the dividend due on
such dividend payment date. No payment or adjustment will be made on account
of accrued and unpaid dividends upon conversion of the Preferred Stock.
Therefore, Preferred Stock surrendered for conversion during the period from
the close of business on any record date for the Preferred Stock to the
opening of business on the corresponding dividend payment date (except shares
called for redemption on a redemption date during such period or on such
dividend payment date) must be accompanied by payment of an amount equal to
the dividend payable on such shares on such dividend payment date. A holder of
Preferred Stock on a record date who converts shares of Preferred Stock on a
dividend payment date receives the dividend payable on the Preferred Stock by
the Company on that date and need not include a payment for any such dividend
upon surrender of shares of Preferred Stock for conversion. No fractional
shares of Common Stock will be issued upon conversion and, in lieu thereof, an
adjustment in cash will be made based upon the closing price of the Common
Stock on the NYSE on the last trading day preceding the date of conversion.
The conversion price is subject to adjustment upon the occurrence of
certain events, including: the issuance of Common Stock as a dividend or
distribution on the Common Stock; subdivisions and combinations of the Common
Stock; the issuance to all holders of Common Stock of certain rights or
warrants entitling the holders thereof (for a period not exceeding 45 days) to
subscribe for Common Stock at a price less than the then current market price
per share of the Common Stock (as determined in the manner set forth in the
Certificate of Designations); and the distribution to substantially all
holders of Common Stock of debt securities, equity securities (including
equity interests in the Company's subsidiaries) other than Common Stock, or
other assets (excluding cash dividends paid from earned surplus) or
subscription rights or warrants (other than those referred to above). No
adjustment in the conversion price will be required unless such adjustment
would require an increase or decrease of at least 1% of the conversion price,
but any adjustment that would otherwise be required to be made shall be
carried forward and taken into account in any subsequent adjustment.
As a result of the Distribution, the conversion price for the Preferred
Stock will be adjusted so that it equals the price determined by multiplying
the conversion price in effect immediately prior to the date of the
Distribution by a fraction (i) of which the numerator will be the current
market price per share of the Common Stock less the then fair market value (as
determined by the Company's Board of Directors) of the number of shares of FCX
Class B common stock being distributed in the Distribution per one share of
Common Stock and (ii) of which the denominator will be such current market
price per share of the Common Stock. For the purposes of such computation,
the current market price per share of the Common Stock will be deemed to be
the average closing price of the Common Stock on the NYSE for a certain period
of time prior to the Distribution.
The precise amount of adjustment to the conversion price cannot be
determined at the present time. The number of shares of Common Stock into
which each share of Preferred Stock will be convertible following the
Distribution will depend on a number of factors, including the number of
shares of FCX Class B common stock distributed by the Company in the
Distribution, the value of such FCX Class B common stock and the market price
of the Common Stock.
Exchange Provisions. The Preferred Stock is exchangeable in whole but
not in part at the option of the Company on any dividend payment date,
commencing March 1, 1994 for the Company's 8 3/4% Convertible Subordinated
Debentures Due 2017 (the "Debentures"). The holders of outstanding shares of
the Preferred Stock are entitled to receive $50 principal amount of the
Debentures in exchange for each share of Preferred Stock held by them at the
time of the exchange. The Company may not exchange any shares of Preferred
Stock unless full cumulative dividends have been paid or declared and set
aside for payment on the Preferred Stock. The Company will mail written
notice of its intention to exchange to each holder of record of the Preferred
Stock not less than 30 nor more than 60 days prior to the date fixed for the
exchange. From and after the date fixed for the exchange, unless the Company
defaults in issuing Debentures in exchange for the Preferred Stock or in
making or providing for the payment of accrued and unpaid dividends to the
exchange date, dividends on the Preferred Stock will cease to accrue, such
Preferred Stock will be deemed to be no longer outstanding, all rights of the
holders of Preferred Stock as stockholders of the Company will cease, and the
person or persons entitled to receive the Debentures issuable upon exchange
shall be treated for all purposes as the registered holder or holders of the
Debentures.
Optional Redemption. The Preferred Stock are not redeemable prior to
March 1, 1997. Thereafter, the Preferred Stock is redeemable, in whole or in
part, at the option of the Company at the following redemption prices per
share if redeemed during the 12-month period commencing March 1 of the year
indicated:
Year Price Year Price
---- -------- ---- --------
1997 $52.1875 2000 $50.8750
1998 51.7500 2001 50.4375
1999 51.3125
and at $50 per share thereafter, plus, in each case, accrued and unpaid
dividends to and including the date fixed for redemption (subject to the right
of any holder of record on the relevant record date to receive the dividend
payable on a dividend payment date that is on or prior to the redemption
date). If less than all of the outstanding shares of Preferred Stock are to
be redeemed, the number of shares to be redeemed and the method of effecting
such redemption, whether by lot or pro rata, will be as determined by the
Company. There is no mandatory redemption or sinking fund obligation with
respect to the Preferred Stock. Notice of redemption will be mailed not less
than 30 days nor more than 60 days prior to the redemption date to each holder
of record of shares of Preferred Stock to be redeemed at the address shown on
the registry books of the Company. On and after the redemption date, unless
the Company defaults on the payment of the redemption price or dividends
accrued and unpaid to such date, dividends will cease to accrue on shares of
Preferred Stock called for redemption, such shares will be deemed to be no
longer outstanding and all rights of the holders of such shares as
stockholders of the Company will cease, except the right to receive the
redemption price.
Common Stock
The holders of Common Stock are entitled to voting rights for the
election of directors and for other purposes, subject to the voting rights of
the holders of Preferred Stock conferred by law and to the specific voting
rights granted to each series of Preferred Stock and to voting rights which
may in the future be granted to subsequently created series of preferred
stock.
Dividends may be declared on Common Stock out of funds legally available
therefor when all required dividend and redemption requirements for Preferred
Stock have been met. In the event of any liquidation of the Company, the
holders of Preferred Stock are entitled to be paid out of the net assets of
the Company, before any distribution is made to the holders of Common Stock,
the applicable liquidation value plus accrued but unpaid dividends to the date
of payment. Thereafter the holders of Common Stock are entitled to a pro
rata distribution of the remaining assets. Holders of Common Stock have no
preemptive rights.
The Certificate of Incorporation provides that, in general, an
affirmative vote of not less than 85% of the outstanding shares of Common
Stock of the Company is required to approve or authorize certain major
corporate transactions involving the Company and holders of more than 20% of
the Common Stock (including certain mergers, substantial dispositions of
assets, liquidation or dissolution, or recapitalization). The 85% vote is not
required in some such circumstances, including certain transactions which have
been approved in advance by a majority of the Board of Directors, or where
holders of Common Stock receive a price per share that satisfies the fairness
criteria set forth in the Certificate of Incorporation.
In addition, under the terms of the Certificate of Incorporation, the
Board of Directors of the Company is divided into three classes, with each
class serving three year terms. At the annual meeting of stockholders of the
Company, the term of one class of directors expires, and the successors of
that class are elected. Furthermore, any action required or permitted to be
taken by the stockholders of the Company must be effected at a duly-called
annual or special meeting, and may not be taken by written consent of the
stockholders. In general, special meetings of the stockholders of the Company
may be called only by the Chairman of the Board or the President or at the
request of a majority of the Board of Directors.
TERMINATION OF TRANSFER RESTRICTIONS
The Preferred Stock, the Debentures issuable upon exchange of the
Preferred Stock and the Common Stock issuable upon conversion of the Preferred
Stock or the Debentures (and the Common Stock which may be issued in the
Exchange Offer) have not been registered under the Securities Act; however,
because the Preferred Stock was issued more than three years before the
Expiration Date, and because the Common Stock being offered in the Exchange
Offer is being issued pursuant to the exemption afforded by Section 3(a)(9)
of the Securities Act, stockholders of the Company will be able to sell the
Common Stock received in the Exchange Offer free of the registration
requirements of the Securities Act.
The Exchange Agent for the Exchange Offer is:
Mellon Securities Trust Company
By Overnight Courier: By Mail:
c/o Mellon Securities c/o Mellon Securities
Transfer Services Transfer Services
Attention: Reorganization Department P.O. Box 396
85 Challenger Road Bowling Green Station
Ridgefield Park, New Jersey 07660 New York, New York 10274
By Hand: Facsimile Transmission:
c/o Mellon Securities Transfer Services (201) 296-4062
120 Broadway (For Eligible Institutions Only)
13th Floor
New York, New York
Telephone Inquiries:
(800) 777-3674
Any questions or requests for assistance or for additional copies of
this Offering Circular or the Letter of Transmittal may be directed to the
Exchange Agent at the telephone number and addresses set forth above. You may
also contact your broker, dealer, commercial bank or trust company for
assistance concerning the Exchange Offer. To confirm the delivery of your
Preferred Stock, you are directed to contact the Exchange Agent.
TABLE OF CONTENTS
Page
----
Available Information 3
Summary 5
The Company 8
Summary Financial Information 11
Capitalization 16
Price Range of the Common Stock 17
Dividends 17
Purpose of the Exchange Offer 17
The Exchange Offer 20
Terms of the Exchange Offer 20
Certain Effects of the Exchange Offer 21
Procedure for Tendering Preferred Stock 22
Withdrawal Rights 22
Acceptance of Preferred Stock for Exchange 23
Certain Conditions of the Exchange Offer 23
Transactions and Agreements Concerning the Preferred
Stock and the Common Stock 25
Extension of the Exchange Offer Period; Termination; Amendments 25
Solicitation of Tenders; Fees 26
Interests of Certain Persons in the Transaction 26
Certain Federal Income Tax Consequences 26
Description of the Capital Stock 27
Termination of Transfer Restrictions 30
SUMMARY
The following is a summary of certain terms of the Exchange Offer and
certain of the other information contained in this Offering Circular. It is
not intended to be complete and is qualified in its entirety by the more
detailed information contained elsewhere in this Offering Circular.
The Company
Freeport-McMoRan Inc. (the "Company") was formed in 1981 through the
combination of Freeport Minerals Company and McMoRan Oil & Gas Co. The
Company is a leading and diversified natural resource company currently
engaged in the exploration for and mining, production and/or processing of
copper, gold, silver, sulphur, phosphate rock, phosphate-based fertilizers,
uranium, oil and gas and other natural resources. The Company engages in such
activities primarily through the following entities: Freeport-McMoRan Copper
& Gold Inc. ("FCX"), a Delaware corporation in which the Company owned an
approximate 68.9% interest at March 10, 1995, and Freeport-McMoRan Resource
Partners, Limited Partnership ("FRP"), a Delaware limited partnership in which
the Company owned an approximate 51.4% interest at March 10, 1995.
In May 1994, the Company announced its intention to distribute to its
Common Stockholders, on a tax-free and pro-rata basis, all of the Class B
common stock of FCX that it owns at the time of such distribution (the
"Distribution"). As a result of the Distribution, which will require a series
of steps to implement, the Company would no longer have a continuing interest
in FCX. The Distribution, which is expected to take place prior to June 30,
1995, is contingent on a number of factors including (1) assurance that the
Distribution will be tax-free, (2) completion of a restructuring (the "Company
Restructuring") of the liabilities of the Company including its long-term
debt, which may include the use of a portion of the FCX shares currently owned
by the Company, which is in the process of being completed, and (3) changing
the voting rights of the FCX common stock and preferred stock so that the
Class B stockholders of FCX elect 80% of the FCX directors and the Class A
stockholders and preferred stockholders of FCX elect the balance, which change
has been approved by the FCX stockholders. However, there can be no assurance
that the Distribution will take place.
In March 1995, the Company and FCX signed letters of intent with The RTZ
Corporation PLC ("RTZ") and its subsidiary RTZ America Inc. ("RTZA")
providing for, among other things, an investment by RTZA of up to $875 million
in the capital stock of FCX and an investment by RTZ of up to $850 million in
exploration and development projects on lands controlled by FCX's Indonesian
subsidiaries. See "The Company -- Copper and Gold".
Purpose of the Exchange Offer
The Company's basic reason for making the Exchange Offer relates to the
proposed Distribution. Although the Company is not making any recommendation
to the holders of the Preferred Stock as to whether or not they should accept
the Exchange Offer, the Company believes that it is desirable to afford
holders of the Preferred Stock a meaningful opportunity to participate in the
Distribution should they desire to do so. The holders of the Preferred Stock
currently have the ability to become holders of Common Stock by exercise of
their right to convert the Preferred Stock to Common Stock in accordance with
the conversion features of the Preferred Stock itself, and thus participate in
the Distribution. However, because the conversion price has been in excess of
the market price for the Common Stock, such a conversion could only be
effected on financially disadvantageous terms. The Exchange Offer ratio has
been set at a rate designed to remove this disadvantage.
The Company believes that the Exchange Offer also is advantageous to the
Company. After the Distribution, the remaining assets of the Company will be
substantially reduced, and, as a result, the Company needs to reduce its
ongoing fixed charges. The Company intends to accomplish this largely by
significantly reducing its debt obligations. This goal will be furthered to
the extent the Exchange Offer is successful in reducing or eliminating the
fixed charges represented by the dividends payable on the Preferred Stock. See
"Summary Financial Information".
The Exchange Offer
Exchange Ratio
2.85 shares of Common Stock for each share
of Preferred Stock.
Expiration Date
5:00 p.m., New York City time, on April 21,
1995, unless extended.
Number of Shares
Subject to the terms and conditions of the
Exchange Offer, any and all shares of the
Preferred Stock will be accepted if duly
tendered and not withdrawn prior to the
Expiration Date. The Exchange Offer is not
conditioned upon any minimum number of
shares being tendered.
Conditions of Exchange Offer
The Company's obligation to consummate the
Exchange Offer is subject to certain
conditions. See "The Exchange Offer --
Certain Conditions of the Exchange Offer".
Withdrawal Rights
Tenders may be withdrawn (i) at any time
before the Expiration Date and (ii) if not
yet accepted for exchange, at any time after
May 19, 1995. See "The Exchange Offer --
Withdrawal Rights".
How to Tender
Tenders of Preferred Stock will only be
accepted by book-entry transfer of such
stock to the account of the Exchange Agent
at DTC. Any stockholder desiring to tender
all or any portion of his Preferred Stock
should request his broker, dealer,
commercial bank, trust company or nominee to
effect the transaction for him. If a
definitive share certificate representing
shares of Preferred Stock is issued or
acquired by any stockholder, instructions
must be obtained from the Exchange Agent in
order to tender such Preferred Stock.
Questions regarding how to tender and
requests for information should be directed
to the Exchange Agent. See "The Exchange
Offer -- Procedures for Tendering Preferred
Stock".
Acceptance of Tenders and
Issuance of Common Stock
Subject to the terms and conditions of the
Exchange Offer, shares of Preferred Stock
validly tendered will be accepted on or
promptly after the Expiration Date. Subject
to such terms and conditions, shares of
Common Stock to be issued in exchange for
properly tendered shares of Preferred Stock
will be delivered by the Exchange Agent as
soon as practicable after acceptance of the
tendered shares. See "The Exchange Offer --
Acceptance of Preferred Stock for Exchange".
Preferred Stock
There were 5,000,000 shares of Preferred
Stock outstanding as of March 23, 1995.
Common Stock
There were 136,519,277 shares of Common
Stock outstanding as of March 23, 1995.
Trading and Market Price
The Common Stock (Symbol: FTX) is presently
traded on the NYSE. On March 23, 1995, the
last trading day prior to the announcement
of the Exchange Offer, the closing price for
the Common Stock reported on the NYSE
Composite Tape was $18.25. See "Price Range
of the Common Stock". The Preferred Stock
has been designated as a security eligible
for trading in the Private Offerings,
Resales and Trading through Automated
Linkages ("PORTAL") Market.
Termination of Transfer Restrictions
Stockholders of the Company will be able to
sell the Common Stock being offered in this
Exchange Offer free of the registration
requirements of the Securities Act.
Federal Income Tax Considerations
Generally, no gain or loss will be
recognized for federal income tax purposes
by the holders of shares of Preferred Stock
upon the exchange of such shares for shares
of Common Stock pursuant to the Exchange
Offer. For a discussion of certain federal
income tax consequences of the Exchange
Offer, see "Certain Federal Income Tax
Consequences".
Fractional Shares
No fractional shares of Common Stock will be
issued. Instead, holders will receive cash
equal to any interest in a fractional share
from the Exchange Agent, which will sell the
aggregate fractional share interests on
behalf of the holders. See "The Exchange
Offer -- Terms of the Exchange Offer".
Exchange Agent
Mellon Securities Trust Company.
THE COMPANY
The Company was formed in 1981 through the combination of Freeport
Minerals Company and McMoRan Oil & Gas Co. The Company is a leading and
diversified natural resource company currently engaged in the exploration for
and mining, production and/or processing of copper, gold, silver, sulphur,
phosphate rock, phosphate-based fertilizers, uranium, oil and gas and other
natural resources. The Company engages in such activities primarily through
FCX and FRP. The Company maintains its principal executive offices at 1615
Poydras Street, New Orleans, Louisiana 70112. Its telephone number is (504)
582-4000.
Copper and Gold
FCX's principal operating subsidiary is P.T. Freeport Indonesia Company
("PT-FI"), a limited liability company organized under the laws of the
Republic of Indonesia and domesticated in Delaware. PT-FI engages in the
exploration for and development, mining, and processing of copper, gold and
silver in Indonesia and in the marketing of concentrates containing such
metals worldwide. The Company believes that PT-FI has one of the lowest cost
copper producing operations in the world, taking into account customary
credits for related gold and silver production. At March 10, 1995, FCX owned
81.28% of the outstanding common stock of PT-FI. Of the remaining 18.72% of
the outstanding PT-FI common stock, 9.36% is owned by the Government of the
Republic of Indonesia (the "Government") and 9.36% is owned by an Indonesian
limited liability company, P.T. Indocopper Investama Corporation, in which
FCX owns a 49% interest. In 1993 FCX acquired the Spanish company Rio Tinto
Minera, S.A. ("RTM") which is principally engaged in the smelting and
refining of copper concentrates in Spain through wholly owned subsidiaries.
RTM provides an additional market for a portion of PT-FI's copper
concentrates. FCX also owns Eastern Mining Company, Inc. ("Eastern Mining"),
a separate wholly owned Indonesian subsidiary.
PT-FI's Grasberg deposit in Irian Jaya, Indonesia contains the largest
single gold reserve of any mine in the world and one of the three largest open
pit copper reserves. PT-FI's proved and probable ore reserves at December 31,
1994 were approximately 1,125.6 million tons of ore representing 28.0 billion
recoverable pounds of copper, 39.6 million recoverable ounces of gold and 80.8
million recoverable ounces of silver, compared with approximately 8.3 billion
recoverable pounds of copper, 8.1 million recoverable ounces of gold and 27.2
million recoverable ounces of silver at December 31, 1989. Primarily as a
result of the drilling operations at the Grasberg mine, PT-FI's proved and
probable copper and gold reserves as of December 31, 1994 have increased, net
of production, since December 31, 1989 by approximately 237% and 389%,
respectively. See "Selected Operating and Reserve Data". This increase in
proved and probable reserves is largely the result of a drilling program that
includes data obtained from the surface down to approximately the 3,060 meter
elevation at the Grasberg ore body. PT-FI's proved and probable reserves at
Grasberg do not include any reserves below the 3,060 meter level, where
additional exploration drilling will be required. PT-FI has begun driving an
additional horizontal access adit from the mill site to a point below the
currently delineated Grasberg ore body at the 2,900 meter level. This new
adit, expected to be completed in 1996, will facilitate further deep
exploration to delineate the extent of the Grasberg deposit below the 3,060
meter level. Preliminary drilling from the existing 3,700 meter level adit
indicates significant additional mineralization below the existing proved and
probable reserves. There can be no assurance, however, that PT-FI exploration
programs will result in the delineation of additional reserves in commercial
quantities.
A contract of work signed by PT-FI and the Government on December 30,
1991 (the "COW") covers both PT-FI's original 24,700 acre mining area ("Block
A") and an additional 4.875 million acre exploration area ("Block B", and,
together with Block A, the "COW Area"). In August 1994, a subsidiary of
Eastern Mining, P.T. Irja Eastern Minerals Corporation ("P.T. Irja"),
entered into a separate contract of work (the "Eastern Mining COW") with the
Government relating to 2.5 million acres adjacent to the COW Area (the
"Eastern Mining COW Area"). In addition to continued delineation of the
Grasberg deposit and the other existing deposits, PT-FI is continuing its
ongoing exploration program for copper, gold and silver mineralization within
Block A. As a result of this exploration effort, the 1994 year-end reserves
include additional reserves at Big Gossan. Big Gossan and the Wanagon
anomaly, another zone being currently investigated, are located west of the
Ertsberg open pit and southwest of the Grasberg copper/gold/silver ore body.
The third prospect within Block A, Lembah Tembaga, is located approximately
one kilometer southwest of the Grasberg deposit. Preliminary exploration of
the COW Area has indicated many promising targets. Extensive stream sediment
sampling within the new acreage has generated analytical results which are
being evaluated. No assurance can be given that any of the exploration areas
other than Big Gossan contains commercially exploitable mineral deposits.
Exploration expenditures in Irian Jaya were $36.0 million in 1994, compared to
$31.7 million in 1993.
During 1993 PT-FI completed, within budget and ahead of schedule, the
production facilities designed to enable it to mine and mill at least 66,000
metric tons of ore per day ("MTPD"). Average mill throughput was 72,500 MTPD
in 1994, compared to 62,300 MTPD in 1993. PT-FI is currently expanding its
overall mining and milling rate to 115,000 MTPD, which is expected to be
completed by mid-1995 and to result in annual production rates approaching 1.1
billion pounds of copper, 1.5 million ounces of gold, and 2.4 million ounces
of silver.
In March 1995, FCX, the Company, The RTZ Corporation PLC ("RTZ") and RTZ
America Inc. ("RTZA") signed letters of intent to establish a strategic
alliance. RTZ is a leading international mining corporation based in the
United Kingdom. RTZ has substantial interests in mining and metals
(principally copper, gold, iron ore, aluminum, lead, zinc, silver, coal and
uranium) and industrial and other minerals (principally borates, titanium
dioxide feedstock, diamonds and talc). These interests are located
predominantly in North America and Australasia as well as in Europe, southern
Africa and South America. RTZA, a Delaware corporation, is a wholly owned
subsidiary of RTZ. RTZA's principal subsidiaries are Kennecott Corporation
and U.S. Borax, Inc. Kennecott Corporation's major operation is Bingham
Canyon, one of the world's largest open-pit copper mines, which is located in
Utah. U.S. Borax, Inc. mines one of the largest and richest borate deposits
in the world, located in California's Mojave Desert.
Pursuant to the proposed transactions, RTZA will acquire from the Company
approximately 21.5 million shares of FCX Class A common stock (approximately
10.4% of the outstanding common stock of FCX) for $450 million. RTZA also
will receive an option to acquire from the Company prior to the Company
Restructuring up to approximately 3.5 million additional shares of FCX Class A
common stock. If this option is not exercised, the Company proposes to sell
such FCX Class A common stock to other buyers.
In connection with the Company Restructuring, the Company intends to call
its 6.55% Convertible Subordinated Notes, due 2001 (the "6.55% Notes"), for
redemption for cash. The outstanding principal amount of the 6.55% Notes is
approximately $373 million. The Company also intends to call its Zero Coupon
Convertible Subordinated Debentures, due 2006 (the "ABC Debentures"), for
redemption for cash. The outstanding principal amount of the ABC Debentures
is approximately $750 million, with a redemption cost of approximately $280
million.
If requested by the Company, RTZA will make a cash tender offer for
certain of the Company's convertible debt and convert any such debt into
Common Stock of the Company. If it acquires such convertible debt and
exercises its option, after completion of the Distribution RTZA will own up to
approximately 12% of the Common Stock of the Company expected to be
outstanding and over 18% of the outstanding Common Stock of FCX. However, as
the total number of shares of FCX will not change as a result of these
transactions, RTZA's acquisition of FCX common stock from the Company will not
result in any dilution to the current holders of FCX Class A common stock.
The transactions with RTZA are designed to enable the Company to complete the
Company Restructuring and the Distribution.
RTZ and its subsidiaries are expected to contribute substantial operating
and management expertise to FCX's business. Representatives of RTZA, in
proportion to RTZA's ownership in FCX, will be nominated to the FCX Board of
Directors. In addition, RTZ and FCX will exchange management personnel and
establish an Operating Committee, consisting of personnel of FCX and RTZ,
through which the policies established by the FCX Board of Directors will be
implemented and operations will be conducted.
In addition to RTZA's acquisition of FCX common stock, FCX, PT-FI and
Eastern Mining will enter into joint venture arrangements with subsidiaries of
RTZ pursuant to which RTZ's subsidiaries intend to invest up to $850 million
on exploration and development projects on lands controlled by PT-FI and
Eastern Mining.
Pursuant to the proposed transactions with RTZ, subsidiaries of RTZ will
acquire a 40% beneficial interest in the Eastern Mining COW and the portion of
the COW covering Block B. In addition, a subsidiary of RTZ will acquire a 40%
beneficial interest in future expansion projects in Block A.
Under joint venture arrangements, RTZ and FCX will establish an
Exploration Committee to approve exploration expenditures and subsidiaries of
RTZ will pay for all further exploration approved by the committee until RTZ
has paid an aggregate of $100 million. The parties will pay, ratably in
proportion to their ownership, additional exploration costs and the costs to
develop projects mutually agreed upon in Block B and the Eastern Mining COW
Area.
For future expansion projects in Block A, subsidiaries of RTZ will
provide up to a maximum of $750 million for 100% of defined costs to develop
such projects. RTZ will receive 100% of incremental cash flow attributed to
the expansion projects until it has received an amount equal to the funds it
had provided plus interest based on RTZ's costs of borrowing. Subsequently,
the parties will share incremental cash flow ratably in proportion to their
ownership. Future expansion projects in Block A will exclude any interest in
future production equivalent to FCX's expanded 115,000 MTPD milling
operations.
Pursuant to the proposed transactions with RTZ, a subsidiary of RTZ will
purchase a 25% interest in RTM's Huelva, Spain copper smelter, which is
currently being expanded to 270,000 metric tons of annual copper production.
RTZ will also acquire a 25% interest in RTM's Spanish mineral exploration
program.
All of the transactions with RTZ and RTZA are subject to, among other
things, the signing of definitive documentation and certain regulatory
approvals. There can be no assurance that the transactions with RTZ and RTZA
will be consummated or consummated in the manner described above.
Agricultural Minerals
The Company's agricultural minerals segment is conducted through FRP, a
Delaware limited partnership organized in 1986. FRP participates in one of
the largest and lowest cost phosphate fertilizer producers in the world
through its joint venture interest in IMC-Agrico Company, a Delaware general
partnership ("IMC-Agrico"). IMC-Agrico's business includes the mining and
sale of phosphate rock, the production, distribution and sale of phosphate
fertilizers, and the extraction of uranium oxide from phosphoric acid. FRP's
business also includes exploration for and mining, transportation and sale of
sulphur, and the production of oil reserves at Main Pass Block 299 ("Main
Pass"), offshore Louisiana in the Gulf of Mexico.
On July 1, 1993, FRP and IMC Global Inc. ("IGL"), formerly IMC
Fertilizer, Inc., contributed their respective phosphate fertilizer
businesses, including the mining and sale of phosphate rock and the
production, distribution and sale of phosphate chemicals, uranium oxide and
related products, to IMC-Agrico. As a result of the formation of IMC-Agrico,
FRP expects that it and IMC together will be able to achieve by 1996
approximately $135 million per year of savings in aggregate production costs
and selling, administrative and general expenses, including $90 million of
annual savings estimated to have been obtained by June 30, 1994. In addition,
FRP believes that the location of several of the IMC-Agrico manufacturing and
storage facilities on the Mississippi River gives IMC-Agrico a competitive
advantage over other fertilizer producers in transporting fertilizers to the
U.S. farmbelt.
FRP has completed development of the Main Pass sulphur and oil reserves
which it discovered in 1988 and in which it has a 58.3% interest. Sulphur
production at minimal levels began during the second quarter of 1992. Sulphur
production achieved full design operating rates of 5,500 long tons per day
(approximately 2 million long tons per year) on schedule in December 1993, and
averaged nearly 6,200 long tons per day in 1994. Oil production commenced in
the fourth quarter of 1991 and averaged approximately 14,400 barrels per day
during 1994. In January 1995, FRP acquired substantially all of the domestic
assets of Pennzoil Sulphur Co.
The Managing General Partners and the Special General Partners of FRP are
the Company and FMRP Inc. ("FMRP"), a wholly owned subsidiary of the Company.
The current capitalization of FRP consists of an aggregate 1% basic general
partnership interest (the "FRP Basic Interest"), units of limited partnership
interest of which a portion is deposited with Mellon Bank, N.A., as depositary
units ("FRP Depositary Units"), and additional units of general partnership
interest. FRP Depositary Units are listed and publicly traded on the NYSE.
Including the FRP Basic Interest, the Company and FMRP, as of March 10,
1995, held Partnership Units representing an approximate 51.4% interest in
FRP, with the remaining interest being publicly owned and traded on the NYSE.
The public unitholders are entitled, through the cash distribution for the
fourth quarter of 1996, to receive minimum quarterly distributions prior to
any distribution on the partnership units held by the Company and FMRP.
Prior to the completion of Main Pass, FRP pursued a policy of funding the
cash distribution to unitholders from asset sales and borrowings under its
Credit Agreement, in addition to distributable cash from operations. However,
with the completion of the Main Pass development, FRP no longer intends to
supplement distributable cash with borrowings.
In October 1994, FRP announced that it had agreed in principle to acquire
Fertiberia, S.L. ("Fertiberia"), the restructured nitrogen and phosphate
fertilizer business of Ercros, S.A., a Spanish conglomerate. Since September
1993, FRP has managed this company with the goal of establishing Fertiberia as
a financially viable concern. FRP intends to continue to work with the
Spanish authorities on improving the operations of Fertiberia and eventually
to acquire substantially all of Fertiberia's outstanding stock, in return for
agreeing to make a capital contribution of $11.5 million upon closing of the
acquisition and a further contingent payment of $10 million in January 1998.
As part of the agreement, $38.5 million of nonrecourse financing has been
arranged at Fertiberia with payment terms dependent upon its financial
performance. The acquisition of Fertiberia, one of the largest fertilizer
manufacturers in Europe, is subject to a number of conditions.
SUMMARY FINANCIAL INFORMATION
Set forth below is certain consolidated historical financial information
of the Company and its subsidiaries. The historical financial information
(other than the ratios of earnings to fixed charges) was derived from the
consolidated financial statements included in the Company's Annual Report on
Form 10-K for the year ended December 31, 1994 (the "Company's 1994 Annual
Report"). More comprehensive financial information is included in such report
and the financial information which follows is qualified in its entirety by
reference to such report and the financial statements and related notes
contained therein, copies of which may be obtained as set forth in "Available
Information". The pro forma financial data is based on the historical
financial statements of the Company, adjusted to give effect to the Company
Restructuring, the Distribution and the Exchange Offer. However, there can be
no assurance that the Company Restructuring, the Distribution and the Exchange
Offer will be consummated or consummated in the manner contemplated above. The
historical financial information of the Company and its subsidiaries will not
be representative of the Company and its subsidiaries after the Distribution,
following which the only material portion of the Company's business will be
its interest in FRP and in the sulphur and agricultural businesses conducted
by FRP.
SELECTED FINANCIAL DATA
The following table presents selected financial data for the Company
which has been derived from the Company's consolidated financial statements
and is qualified in its entirety by the financial statements and related notes
contained therein which are incorporated herein by reference.
Years Ended December 31, Pro Forma
------------------------------------------------------- ---------
1990 1991 1992 1993 1994 1994(a)
-------- -------- -------- -------- -------- ---------
(In Millions, Except Per Share Amounts and Ratios)
Revenues $1,580.6 $1,579.2 $1,654.9 $1,610.6 $1,982.4 $ 770.1
Operating income (loss) 731.5 223.9 251.9 (88.5) 370.8 91.9
Interest expense (100.4) (98.1) (51.8) (79.9) (91.8) (43.8)
Other income (expense),
including income taxes
and preferred dividends (234.0) (17.7) 42.0 (19.5) (68.6) (4.9)
Minority interests (126.4) (68.0) (73.0) 61.7 (169.0) (100.0)
Net income (loss) from:
Continuing operations
excluding FCX $ (58.0) $ 26.9 $ (63.5) $ (90.9) $ (72.9) $ (56.8)
FCX operations 71.4 63.9 97.9 22.9 54.1 --
Nonrecurring gains/(losses),
net(b) 257.3 5.0 134.7 (37.5) 69.3 --
Changes in accounting
principle and early
extinguishment of debt -- (55.7) -- (20.7) (9.1) --
-------- -------- -------- -------- -------- --------
Net income (loss) applicable
to common stock $ 270.7 $ 40.1 $ 169.1 $ (126.2) $ 41.4(c) $ (56.8)
======== ======== ======== ======== ======== ========
Net income (loss) per primary
share from:
Continuing operations
excluding FCX $ (.50) $ .19 $ (.44) $ (.64) $ (.52) $ (.33)
FCX operations .62 .46 .68 .16 .39 --
Nonrecurring gains/(losses),
net(b) 2.23 .04 .93 (.26) .50 --
Changes in accounting
principle and early
extinguishment of debt -- (.40) -- (.15) (.07) --
-------- -------- -------- -------- -------- --------
Net income (loss) applicable
to common stock $ 2.35 $ .29 $ 1.17 $ (.89) $ .30(c) $ (.33)
======== ======== ======== ======== ======== ========
Average common shares
outstanding 115.2 139.6 144.5 141.6 139.2 171.8
Ratio of earnings to fixed
charges(d) 5.6x 1.6x 2.5x --(e) 2.0x 1.7x
Ratio of earnings to fixed
charges and preferred
dividends 4.9x 1.6x 2.1x --(e) 1.7x 1.7x
FTX parent company cash flow
data(f):
Net cash provided by (used
======== ======== ======== ======== ======== ========
in) operations $ 168.7 $ 248.9 $ 122.2 $ 61.2 $ 55.5
FRP Distributions(g) 132.8 126.6 41.8 -- 6.2 $ 6.2
FCX Dividends 91.3 78.2 85.3 85.9 85.8 --
Capital expenditures 46.8 199.4 96.7 57.2 33.0 14.9
Preferred dividends paid 14.6 1.0 16.9 22.4 22.1 --
Operating income (loss) by
source:
Metals
Indonesian copper/gold $ 204.5 $ 177.7 $ 276.4 $ 161.7(h) $ 280.2 $ --
Spanish copper smelter/gold -- -- -- (6.4) (.1) --
North American gold 316.0(i) -- -- -- -- --
Agricultural minerals 236.1(j) 72.5 16.6 (105.0)(k) 123.8 123.8
Energy
Oil and natural gas(l) (41.4) (23.9) (24.5) (41.5) (9.1) (9.1)
Uranium 13.5 17.1 -- -- -- --
Geothermal 13.2 -- -- -- -- --
Other (10.4) (19.5) (16.6) (97.3)(m) (24.0) (22.8)
-------- -------- -------- -------- -------- --------
Operating income $ 731.5 $ 223.9 $ 251.9 $ (88.5) $ 370.8 $ 91.9
======== ======== ======== ======== ======== ========
Balance sheet data (at end
of period) Property, plant
and equipment, net $2,204.5 $2,253.8 $2,276.9 $2,773.7 $3,366.2 $ 964.5
Long-term debt, including
current portion and
short-term borrowings 1,591.0 1,942.0 1,510.7 1,331.7 1,671.3 368.1
Minority interests 309.3 293.6 782.9 1,199.3 1,507.5 217.8
Stockholders' equity
(deficit):
Preferred stock 39.7 9.7 257.5 256.3 250.0 --
Common stock 297.7 378.6 88.5 (255.7) (480.5)(c) 236.5
Common stock per share 2.31 2.60 .63 (1.83) (3.50)(c) 1.39
Total assets 3,101.3 3,565.4 3,546.7 3,714.1 4,373.6 1,336.1
(Footnotes appear on the following page)
a. The pro forma financial data is based on the historical financial
statements of the Company, adjusted to give effect to the Company
Restructuring, the Distribution and the Exchange Offer. The pro forma
statement of operations data reflects adjustments as if these transactions
had occurred on January 1, 1994. The pro forma balance sheet data reflects
adjustments as if these transactions had occurred as of December 31, 1994.
These adjustments reflect the (i) exchange pursuant to the Exchange Offer
and the retirement of all of the shares of the Preferred Stock and the
issuance upon exchange of 14.25 million shares of Common Stock; (ii) sale
of 21.5 million shares of FCX Class A common stock for $450 million by the
Company to RTZA; (iii) assumed conversion of all of the 6.55% Notes into
49.24 shares of Common Stock per $1,000 principal amount (equivalent to the
current conversion price of $20.31 per share) and the issuance upon
conversion of 18.4 million shares of Common Stock; (iv) redemption for cash
of all of the Company's Zero Coupon Convertible Subordinated Debentures by
the Company; and (v) repayment of the amount borrowed by the Company ($165
million as of December 31, 1994) under the Company's revolving credit
agreement.
The pro forma data is based on the best estimates of the Company's
management using information currently available. Such estimates may be
revised as additional information becomes available. Additionally, there
can be no assurance that the Company Restructuring, the Distribution and
the Exchange Offer will be consummated or consummated in the manner
contemplated above. The pro forma consolidated financial data does not
purport to reflect the actual results which might have been achieved had
the Company Restructuring, the Distribution and the Exchange Offer occurred
as of the dates referred to above or which might be expected in subsequent
periods. The pro forma consolidated balance sheet and statement of
operations data should be read in conjunction with the historical
consolidated financial statements, including the notes thereto, and
Management's Discussion and Analysis of Financial Condition and Results of
Operations.
b. In 1990, from the sale of assets; in 1991, from an insurance settlement
gain ($7.3 million or $0.05 per share), net of a loss on the valuation of
assets ($2.3 million or $0.02 per share); in 1992, from the sale and
conversion of FCX securities; in 1993, includes the loss on the
restructuring activities and the loss on valuation and sale of assets
($66.2 million or $0.46 per share), net of a gain on the conversion of FCX
securities ($28.7 million or $0.20 per share); and in 1994, includes gains
on the conversion/distribution of FCX securities ($74.6 million or $0.54
per share) and an insurance settlement ($11.9 million or $0.09 per share),
net of a minority interest charge ($17.2 million or $0.12 per share)
because the Company did not receive its proportionate share of
distributions from FRP.
c. Net income applicable to common stock and net income per primary share
would have been $63.5 million and $0.42 per share, respectively, assuming
the Exchange Offer had occurred on January 1, 1994. Stockholders' equity
applicable to common stock and common stock per share would have been
$(230.5) million and $(1.53), respectively, assuming the Exchange Offer had
occurred on December 31, 1994.
d. Earnings are income from continuing operations before income taxes,
minority interests and fixed charges. Fixed charges are interest, that
portion of rent deemed representative of interest and the preferred stock
dividend requirements of FCX.
e. In 1993 earnings were inadequate to cover fixed charges by $241.8 million
and earnings were inadequate to cover fixed charges and preferred dividends
by $276.2 million.
f. The Company is primarily a holding company and its sources of cash flow
are dividends and distributions from its ownership in FCX and FRP. Through
mid-1994, the Company borrowed funds when the cash received from FCX, FRP
and asset sales was insufficient to pay dividends and cover the Company's
other cash requirements for interest, general and administrative expenses
and oil and gas operations.
Subsequent to the Distribution of FCX, the Company's business activity will
essentially consist of its 51.4% ownership in FRP and its source of cash
flow will be distributions from FRP. Publicly owned FRP units have
cumulative rights to receive quarterly distributions of $0.60 per unit
through the distribution for the quarter ending December 31, 1996 (the
Preference Period) before any distributions may be made to the Company. On
January 20, 1995, FRP declared a distribution of $0.60 per publicly held
unit ($30.2 million) and $0.26 per FTX-owned unit ($13.9 million), paid
February 15, 1995, bringing the total unpaid distribution to the Company to
$353.1 million. Unpaid distributions to the Company will be recoverable
from one-half of the excess of future quarterly FRP distributions over
$0.60 per unit for all units. FRP's future distributions will be dependent
on the distributions received from IMC-Agrico and Fertiberia and future
cash flow from FRP's sulphur and oil operations. The Company will have
certain obligations relating to its past business activities including
income tax settlements, oil and gas payments and employee benefit
liabilities. It may also have obligations relating to its guarantee of the
debt of FM Properties Inc. ("FMPO").
g. Prior to the completion of Main Pass, FRP pursued a policy of funding the
cash distribution to unitholders from asset sales and borrowings under its
Credit Agreement, in addition to distributable cash from operations.
However, with the completion of the Main Pass development, FRP no longer
intends to supplement distributable cash with borrowings.
h. Includes charges totaling $37.1 million for restructuring and other
related charges.
i. Includes $311.2 million gain from the sale of Freeport-McMoRan Gold
Company.
j. Includes $183.6 million gain from the sale of assets.
k. Includes net charges totaling $73.5 million for restructuring, asset
recoverability and other related charges.
l. Includes charges totaling $84.4 million for restructuring, asset
recoverability and other related charges in 1993. Also includes $69.1
million gain in 1993, $4.3 million gain in 1991 and $14.6 million gain in
1990 from the sale of oil and gas properties.
m. Includes charges totaling $70.5 million for asset recoverability and other
related charges.
SELECTED OPERATING AND RESERVE DATA
The following table presents selected operating and reserve data for the
Company which has been derived from the Company's consolidated financial
statements and is qualified in its entirety by the financial statements and
related notes contained therein which are incorporated herein by reference.
Years Ended December 31,
-------------------------------------------------------
1990 1991 1992 1993 1994
------- ------- ------- ------- -------
(In Thousands, Except Average Realizations)
METALS
PT-FI
Copper (recoverable pounds)
Production 361,800 466,700 619,100 658,400 710,300
Sales 348,000 439,700 651,800 645,700 700,800
Average realized price(a) $ 1.20 $ 1.01 $ 1.03 $ .90 $ 1.02
Gold (recoverable ounces)
Production 284 421 641 787 784
Sales 273 398 679 763 795
Average realized price $378.30 $358.76 $340.11 $361.74 $381.13
Silver (recoverable ounces)
Production 1,749 1,568 1,643 1,541 1,305
Sales 1,664 1,621 1,804 1,481 1,335
Average realized price $ 4.61 $ 3.87 $ 3.72 $ 4.15 $ 5.08
RTM (since acquisition on
March 30, 1993)
Smelter operations
Concentrate treated (metric tons) 330 485
Anode production (pounds) 229,300 347,500
Cathode production (pounds) 227,300 312,100
Gold operations
Production (recoverable ounces) 133 173
Average realized price $337.33 $363.05
AGRICULTURAL MINERALS
Phosphate fertilizers (short tons)(b)
Diammonium phosphate
Sales:
Florida 1,081
Louisiana 970
Other 217
------
Total sales 2,568 2,841 2,760 2,303 2,268
Average realized price(c):
Florida $146.53
Louisiana $152.48
Monoammonium phosphate
Sales:
Granular 438 476 509 423 298
Powdered -- -- -- 55 162
Average realized price(c):
Granular $158.54
Powdered $129.24
Granular triple superphosphate 717 710 715 565 465
Average realized price(c) $114.76
Phosphate rock
Sales (short tons)(b) 1,455 2,247 3,441 3,840 4,373
Average realized price(c) $ 21.38
Sulphur sales (long tons)(d) 2,491 2,528 2,346 1,973 2,088
ENERGY
Oil (barrels)(e)
Sales 351 4,884 3,443 2,534
Average realized price $13.34 $15.91 $14.43 $ 13.74
RESERVES (at year end)
Copper -- thousands of recoverable
pounds(f) 13,900 21,800 20,900 26,800 28,000
Gold -- recoverable ounces(f) 19,500 32,400 32,100 39,500(g) 39,700(g)
Silver -- recoverable ounces(f) 34,700 50,000 44,700 85,200(g) 84,000(g)
Sulphur -- long tons(h) 44,125 42,780 41,570 38,637 41,018
Phosphate rock--short tons(i) 205,752 206,183 208,655 215,156 206,661
Oil -- barrels(e) 18,785 18,496 13,861 9,962 7,279
(Footnotes appear on the following page)
Excludes adjustments for prior year concentrate sales or price
protection program costs. Excluding amounts recognized under PT-FI's
price protection program, the realization for 1993 and 1994 would have
been $0.82 and $1.15 per pound, respectively.
Certain information prior to the formation of IMC-Agrico was not
recorded on a basis consistent with that currently being presented and
therefore is not available. Reflects FRP's 46.5% share of the IMC-Agrico
assets for the year ended June 30, 1994, while FRP received 58.6% of the
cash flow generated during such period. FRP's share of the IMC-Agrico
assets for the year ended June 30, 1995 is 45.1%, while FRP will receive
55% of the cash flow.
Represents average realization F.O.B. plant/mine.
Includes 1,564,000 tons, 1,612,400 tons, 1,654,300 tons, 1,138,800 tons
and 739,900 tons for 1990-1994, respectively, which represent internal
consumption and Main Pass start-up sales that are not included in sales
for accounting purposes.
Reflects only Main Pass sales and reserves.
Recoverable content reflects an estimated recovery rate of 90% for
copper, 80% for gold, and 70% for silver less normal smelting and
refining allowances.
Includes .4 million ounces of gold and 8.5 million ounces of silver in
1993, and .1 million ounces of gold and 3.2 million ounces of silver for
1994 attributable to RTM.
Reserves include 39.1 million tons in 1990 and 1991, 39 million tons in
1992, 38.6 million tons in 1993 and 41 million tons in 1994, net to FRP
before royalties at Main Pass, subject to a 12.5% royalty based on net
mine revenues.
For 1993 and 1994, represents FRP's share based on its capital interest
ownership of the IMC-Agrico reserves. Contains an average of 68% bone
phosphate of lime.
CAPITALIZATION
The following table sets forth the consolidated capitalization of the
Company at December 31, 1994 and as adjusted to give effect to the Company
Restructuring, the Distribution and the Exchange Offer.
December 31, 1994
Actual As Adjusted(1)
---------------------
(In Millions)
Cash and short-term investments $ 41.5 $ .8
======== ========
Current portion of long-term debt and
short-term borrowings $ 24.4 $ .3
-------- --------
FTX credit agreement 425.0 205.0
FTX 6.55% Convertible Subordinated Notes 318.2 --
FTX Zero Coupon Convertible Subordinated
Debentures 270.2 --
FCX 93/4% Senior Notes 120.0 --
ALatieF Joint Venture Bank Loan 54.0 --
RTM project financing debt 110.0 --
FRP 83/4% Senior Subordinated Notes 150.0 150.0
PT-FI capital lease 100.0 --
FCX equipment loan 63.0 --
Other 36.5 12.8
-------- --------
Total long-term debt 1,646.9 367.8
-------- --------
Minority interests 1,507.5 217.8
-------- --------
Stockholders' equity:
Preferred Stock, par value $1.00,
authorized 50,000,000 shares:
$4.375 Convertible Exchangeable
Preferred Stock, 5,000,000 shares
outstanding at liquidation value 250.0 --
Common Stock, par value $1.00, authorized
300,000,000 shares, 166,365,476 actual
and 198,980,510 as adjusted issued and
outstanding (2) 166.4 199.0
Capital in excess of par value -- 459.9
Retained deficit (221.9) --
Cumulative foreign translation adjustment (2.6) --
Less: 29,178,985 shares held in treasury, at cost (422.4) (422.4)
-------- --------
Total stockholders' equity (230.5) 236.5
-------- --------
Total capitalization $2,948.3 $ 822.4
======== ========
(1) The as adjusted financial data is based on the historical financial
statements of the Company, adjusted to give effect to the Company
Restructuring, the Distribution and the Exchange Offer. The adjusted data
reflects adjustments as if these transactions had occurred as of December
31, 1994. These adjustments reflect the (i) exchange pursuant to the
Exchange Offer and the retirement of all of the shares of the Preferred
Stock and the issuance upon exchange of 14.25 million shares of Common
Stock; (ii) sale of 21.5 million shares of FCX Class A common stock for
$450 million by the Company to RTZA; (iii) assumed conversion of all of
the 6.55% Notes into 49.24 shares of Common Stock per $1,000 principal
amount (equivalent to the current conversion price of $20.31 per share)
and the issuance upon conversion of 18.4 million shares of Common Stock;
(iv) redemption for cash of all of the Company's Zero Coupon Convertible
Subordinated Debentures by the Company; and (v) repayment of the amount
borrowed by the Company ($165 million as of December 31, 1994) under the
Company's revolving credit agreement.
The as adjusted data is based on the best estimates of the Company's
management using information currently available. Such estimates may be
revised as additional information becomes available. Additionally, there
can be no assurance that the Company Restructuring, the Distribution and
the Exchange Offer will be consummated or consummated in the manner
contemplated above.
(2) Does not include (i) 13.7 million shares of Common Stock authorized for
issuance under the Company's incentive and nonqualified stock option
plans, of which 7.7 million shares were issuable upon exercise of stock
options outstanding at December 31, 1994, excluding stock appreciation
rights outstanding at December 31, 1994, and (ii) 11 million shares
authorized for issuance upon conversion of the Zero Coupon Convertible
Subordinated Debentures.
PRICE RANGE OF THE COMMON STOCK
The Common Stock is listed and principally traded on the NYSE. The
following table sets forth the high and low sale prices of the Common Stock as
reported on the NYSE Composite Tape for the fiscal periods indicated:
Fiscal Quarter Common Stock
-------------- ------------------
High Low
---- ---
1993:
1st Quarter $22.63 $17.00
2nd Quarter 22.25 18.13
3rd Quarter 19.38 17.50
4th Quarter 19.88 15.75
1994:
1st Quarter 21.75 18.75
2nd Quarter 19.75 16.25
3rd Quarter 20.00 16.13
4th Quarter 19.88 16.75
1995:
1st Quarter (to March 23) 18.63 17.00
The Preferred Stock and the Common Stock issuable on conversion of the
Preferred Stock or pursuant to the Exchange Offer have not been registered
under the Securities Act of 1933 (the "Securities Act"); however, because the
Preferred Stock was issued more than three years before the Expiration Date,
and because the Common Stock being offered in the Exchange Offer is being
issued pursuant to the exemption afforded by Section 3(a)(9) of the Securities
Act, stockholders will be able to sell the Common Stock received in the
Exchange Offer free of the registration requirements of the Securities Act.
See "Termination of Transfer Restrictions". The Preferred Stock has been
designated as a security eligible for trading in the Private Offerings,
Resales and Trading through Automated Linkages ("PORTAL") Market.
DIVIDENDS
In early 1992 the Company's Board of Directors fixed the amount of the
regular quarterly Common Stock cash dividend at $0.3125 per share. In May
1994, the Board of Directors announced that the Company, in lieu of paying a
$0.3125 quarterly cash dividend on the Common Stock, would plan to distribute
quarterly property dividends in the form of FCX Class A Common Stock at a
proposed rate of one FCX share for each 80 shares of the Company's Common
Stock. Fractional shares of FCX Common Stock will not be issued in connection
with such dividend distributions. Each Common Stockholder of the Company
entitled to receive a fractional share of FCX Common Stock will receive cash
in lieu of the fractional share.
Subsequent to the Distribution, the Board of Directors of the Company
will determine an appropriate new dividend policy for the Company, which will
depend upon, among other things, the Company's earnings and cash flow, its
business and prospects and applicable restrictions under Delaware law. The
Certificate of Incorporation of the Company provides that no dividend may be
made on the Common Stock unless all dividends theretofore payable on the
Preferred Stock have been declared or paid.
The Company also announced that, based on the then current outlook,
management expects FCX to maintain its current quarterly dividend of $0.15 per
share through the start-up of FCX's current expansion project in Indonesia and
that, subsequently, FCX's dividend policy can be expected to be determined in
light of its future financial performance.
PURPOSE OF THE EXCHANGE OFFER
The Company's basic reason for making the Exchange Offer relates to the
proposed Distribution. Although the Company is not making any recommendations
to the holders of the Preferred Stock as to whether or not they should accept
the Exchange Offer, the Company believes that it is desirable to afford
holders of the Preferred Stock a meaningful opportunity to participate in the
Distribution should they desire to do so. The holders of the Preferred Stock
currently have the ability to become holders of Common Stock by exercise of
their right to convert the Preferred Stock to Common Stock in accordance with
the conversion features of the Preferred Stock itself, and thus participate in
the Distribution. However, because the conversion price has been in excess of
the market price for the Common Stock, such a conversion could only be
effected on financially disadvantageous terms. The Exchange Offer ratio has
been set at a rate designed to remove this disadvantage.
If the Distribution is made, any shares of Preferred Stock remaining
outstanding will be convertible into the Common Stock of the Company as it
will exist following the Distribution, which will have no continuing interest
in the copper, gold and silver business represented by FCX, and the only
material portion of the Company's current business which will continue will be
the interest which the Company has in FRP and in the sulphur and agricultural
minerals businesses conducted by FRP. See "The Company -- Agricultural
Minerals". Because of the anti-dilution provisions of the Preferred Stock,
the number of shares of Common Stock into which each share of Preferred Stock
will be convertible following the Distribution will be significantly
increased, in an amount that will depend upon the value of the FCX Class B
common stock distributed with respect to the Common Stock of the Company and
the number of shares of Common Stock then outstanding, which in turn will be
affected by a number of factors including the degree of acceptance of the
Exchange Offer. See "The Exchange Offer -- Certain Effects of the Exchange
Offer". Each of such shares of Common Stock of the Company will have a
greatly reduced market value, however, as a result of the Distribution and,
following the Distribution, the cash flow available for the payment of
dividends on the Preferred Stock will be significantly smaller than at
present. The Company is not able to determine whether the actual value of the
shares of Common Stock receivable on conversion of a share of Preferred Stock
following the Distribution will be greater or less than the shares being
offered in the Exchange Offer. It is certain, however, that if the
Distribution is made, the nature of the businesses represented by the Common
Stock will be significantly different than that of the businesses currently
represented by the Common Stock and that holders of Preferred Stock who accept
the Exchange Offer and hold the Common Stock on the record date of the
Distribution will have the opportunity to continue to participate in the
businesses carried on by FCX.
The Company believes that the Exchange Offer is also advantageous to the
Company. After the Distribution, the remaining assets of the Company will be
substantially reduced, and, as a result, the Company needs to reduce its
ongoing fixed charges. The Company intends to accomplish this largely by
significantly reducing its debt obligations. This goal will be furthered to
the extent the Exchange Offer is successful in reducing or eliminating the
fixed charges represented by the dividends payable on the Preferred Stock.
Each share of Preferred Stock has a liquidation value of $50 and is
currently convertible into the Company's Common Stock at a conversion price of
$21.26, or the equivalent of 2.35 shares of Common Stock for each share of
Preferred Stock, as compared to the 2.85 shares of Common Stock per share of
Preferred Stock being offered by the Company. As of March 23, 1995, the day
prior to the announcement of the Exchange Offer, the closing price of the
Common Stock on the NYSE as reported on the Composite Tape was $18.25. Based
on this price, the Common Stock being offered per share of Preferred Stock
have an aggregate market value which is $2.01 higher than the liquidation
value of a share of Preferred Stock.
The Exchange Offer provides all holders of Preferred Stock with a
voluntary opportunity to exchange their Preferred Stock for Common Stock
without incurring brokerage and similar commissions. Stockholders who accept
the Exchange Offer will receive shares of Common Stock, which are more widely
held and actively traded than the Preferred Stock.
Following the Exchange Offer, and depending on the number of shares of
Preferred Stock tendered, the Company may take additional actions to reduce
further or eliminate the remaining Preferred Stock, including by making
purchases of Preferred Stock in the open market, by making subsequent tender
or exchange offers or by undertaking a recapitalization transaction. Such
transactions could be undertaken on terms which are more favorable or less
favorable than the exchange ratio in the Exchange Offer. The Company has made
no decision to take any such actions, and there is no assurance that the
Company will take any such actions.
Background to the Exchange Offer
On May 3, 1994, the Company announced that it was taking steps to effect
the tax-free Distribution to its stockholders, on a pro-rata basis, of all of
the Class B Common Shares of FCX which it owns at the time of such
Distribution.
The proposed Distribution results from significant changes in the
businesses of the Company and FCX over the past seven years. These changes
were brought about by two world-class mineral discoveries in 1988 and
management's decision to concentrate on the development and growth of these
properties. The Company has been active through subsidiaries in exploring for
copper, gold and other minerals in Indonesia since 1967. FCX was organized in
1987 to hold the Company's Indonesian property interests and first sold a
minority stock interest to the public in May 1988. At the time of the
offering, the common equity market value of FCX was less than one-quarter that
of the Company. Just seven years later, the common equity market value of FCX
has grown almost eleven-fold so that its common equity market value is now
almost double that of the Company. The Company believes that FCX is one of
only a few publicly-traded subsidiaries whose common equity market value
exceeds that of its publicly-traded parent corporation. Because of FCX's
ongoing capital needs and the potential for future conflicts between the
capital needs and priorities of FCX and the Company, the Company believes
that, absent the Distribution, its continued majority control of FCX could
increase FCX's cost of capital and could impede FCX's ability to raise
capital, to continue growth and to develop its business opportunities. The
proposed arrangements with RTZ described above are being entered into in
anticipation of the Distribution. See "The Company -- Copper and Gold".
The significant growth in the common equity market value of FCX is due in
large part to the discovery in 1988 by PT-FI of the Grasberg mineral deposit
in Irian Jaya, Indonesia. This deposit contains the world's largest proved
gold reserve and the world's third largest copper reserve. Since the
discovery, FCX has undertaken a substantial capital expenditure program to
develop the Grasberg property. To date, it has invested over two billion
dollars in its Indonesian operations.
Over the same period, the Company has evolved primarily into a holding
company with two principal interests -- the stock in FCX and a 51.4%
partnership interest in FRP. FRP made a major sulphur discovery in the Gulf
of Mexico in 1988 and invested nearly $600 million in developing the Main Pass
sulphur and related oil and gas facilities, which were completed in 1992. In
1993, FRP transferred its other principal business -- the phosphate fertilizer
business -- to IMC-Agrico, a newly formed partnership with a subsidiary of
IGL, in order to achieve substantial operating and administrative savings.
The Company has sold or otherwise disposed of its other business assets to
concentrate on the development of these two properties. In May 1992, the
Company transferred to FM Properties Operating Co., a Delaware general
partnership owned by FM Properties Inc. ("FMPO"), substantially all of the
domestic oil and gas properties of, and substantially all of the domestic real
estate then held for development by, the Company and certain of its
subsidiaries, excluding FRP, and then distributed all shares of FMPO to the
holders of the Company's Common Stock. Similarly, in 1994, the Company
transferred substantially all of its remaining oil and gas interests,
including its oil and gas exploration business, excluding those owned by FRP,
to McMoRan Oil & Gas Co., the stock of which was then distributed to the
holders of the Company's Common Stock.
FCX's development and growth are continuing at a rapid pace. PT-FI is
currently expanding its production capacity from 66,000 MTPD to 115,000 MTPD.
This expansion project should be completed by mid-1995 and annual production
is expected to be approximately 1.1 billion pounds of copper and 1.5 million
ounces of gold, as compared to the 1994 levels of 710 million pounds of copper
and 784 thousand ounces of gold, respectively.
FCX's copper, gold and silver reserves have grown substantially both
through continued delineation of the Grasberg deposit and other existing
mineral deposits and as a result of FCX's active exploration program. FCX's
exploration activities are being pursued both within Block A and within Block
B and the adjacent Eastern Mining COW Area. Preliminary exploration within
the exploration areas has indicated a number of promising targets, although no
assurance can be given that any of these targets contains commercially
exploitable mineral deposits. The COW and the Eastern Mining COW contain
provisions under which PT-FI and P.T. IRJA must progressively relinquish a
portion of their rights to their respective contract of work area. PT-FI has
relinquished its rights to approximately 1.7 million acres and is required to
relinquish an additional approximately 3.2 million acres over the next four
years. Similarly, 75% of the Eastern Mining COW exploration area must be
relinquished over the next two to seven years. In light of the relinquishment
provisions, each company has expanded its exploration program with a focus on
what it believes to be the most promising exploration opportunities in its COW
area.
Although FCX expects to require continued access to other financing
sources, including bank credit facilities and the public and private
securities markets, the arrangements with RTZ described above will provide a
significant portion of the capital expenditures which FCX anticipates will be
required to expand its milling and production capacity in line with future
reserve additions and continue its exploration activities. Estimated capital
expenditures will be determined by the result of FCX's exploration activities
and ongoing capital maintenance programs. Estimated aggregate capital
expenditures for 1995 are expected to approximate $650 million for the
expansion to 115,000 MPTD of PT-FI's production capacity, ongoing capital
maintenance expenditures and the expansion to 270,000 tons of metal per year
of a smelter in Huelva, Spain currently owned by RTM, a company which is 100%
owned by FCX. In addition, in January 1995 FCX announced proposed agreements
with Mitsubishi Materials Corporation and Fluor Daniel Wright Ltd. to form an
Indonesian foreign investment company to jointly build, own and operate a
smelter/refinery in Gresik, Indonesia to process approximately 200,000 tons of
copper per year. Pursuant to the proposed agreements, which remain subject to
execution and other conditions, FCX will own 20% of the newly formed
Indonesian company, and PT-FI will provide all of the smelter's copper
concentrate feed stock requirement, estimated to be approximately 600,000 tons
annually.
The Distribution was designed to enable FCX to meet its substantial
capital needs at a lower cost than any possible alternative. The transaction
was also intended to provide FCX with the flexibility to meet future growth
and new opportunities through the use of equity financing or by attracting a
joint venture partner for one or more projects. The proposed arrangements
with RTZ represent the type of projects that had been contemplated. See "The
Company -- Copper and Gold".
The Distribution will permit the managements of FCX and the Company to
make business decisions without being influenced by the competing financial
needs of the other business. In addition, the separation of FCX and the
Company will allow FCX to avoid the cost and administrative expense of
complying with burdensome unitary state tax laws. FCX has a limited presence
in the United States and following the Distribution should be subject to tax
only in one or two states based on its current business operations.
THE EXCHANGE OFFER
Terms of the Exchange Offer
The Company hereby offers, upon the terms and subject to the conditions
set forth herein and in the related Letter of Transmittal, to exchange 2.85
shares of its Common Stock for each outstanding share of its Preferred Stock
that is validly tendered and not withdrawn prior to the Expiration Date. On
March 23, 1995, there were 5,000,000 shares of Preferred Stock outstanding.
The Exchange Offer is being made for any and all shares of Preferred Stock and
is not conditioned upon any minimum number of shares of Preferred Stock being
tendered. The later of 5:00 p.m., New York City time, on Friday, April 21,
1995, or the latest time and date to which the Exchange Offer is extended, is
referred to herein as the "Expiration Date". Only Preferred Stock validly
tendered prior to the Expiration Date will be eligible for exchange.
No fractional shares of Common Stock will be issued in exchange for
Preferred Stock to stockholders tendering in the Exchange Offer. Instead, the
Company will deliver to the Exchange Agent on behalf of the stockholders
tendering in the Exchange Offer a stock certificate representing the aggregate
fractional share interests to which such stockholders are entitled. The
Exchange Agent will then sell the aggregate fractional share interests in the
market on behalf of the stockholders entitled to such fractional share
interests and distribute the cash proceeds to such stockholders in accordance
with their respective fractional share interests.
The Exchange Offer is subject to a number of conditions. See "The
Exchange Offer -- Certain Conditions of the Exchange Offer". The Company
reserves the right to terminate or amend the Exchange Offer at any time on or
prior to the Expiration date upon the occurrence of any of such conditions.
The Company expressly reserves the right, in its sole discretion, at any
time or from time to time, to extend the period of time during which the
Exchange Offer is open by giving oral or written notice of such extension to
the Exchange Agent. See "The Exchange Offer -- Extension of Tender Period;
Termination; Amendments". There can be no assurance, however, that the
Company will exercise its right to extend the Exchange Offer. If the Company
decides, in its sole discretion, to increase or decrease the consideration
offered in the Exchange Offer to holders of Preferred Stock and, at the time
that notice of such increase or decrease is first published, sent or given to
holders of Preferred Stock in the manner specified below, the Exchange Offer
is scheduled to expire at any time earlier than the tenth business day from
the date that such notice is first so published, sent or given, the Exchange
Offer will be extended until the expiration of such ten-business-day period.
For purposes of the Exchange Offer, a "business day" means any day other than
a Saturday, Sunday or Federal holiday and consists of the time period from
12:01 a.m. through 12:00 midnight, New York City time.
Certain Effects of the Exchange Offer
If the Distribution is made, any shares of Preferred Stock remaining
outstanding will be convertible into the Common Stock of the Company as it
will exist following the Distribution, but will not participate in the
Distribution. Following the Distribution, the Company will have no continuing
interest in the copper, gold and silver business represented by FCX, and the
only material portion of its current business which will continue will be its
interest in FRP and the sulphur and agricultural minerals business conducted
by FRP. See "The Company -- Agricultural Minerals". Because of the
anti-dilution provisions of the Preferred Stock, the number of shares of
Common Stock into which each share of Preferred Stock will be convertible
following the Distribution will be significantly increased, in an amount that
will depend upon the value of the FCX Class B common stock distributed with
respect to the Common Stock of the Company and the number of shares of Common
Stock of the Company then outstanding, which in turn will be affected by a
number of factors including the degree of acceptance of the Exchange Offer.
Each of such shares of Common Stock of the Company will have a greatly reduced
market value, however, as a result of the Distribution and, following the
Distribution, the cash flow available for the payment of dividends in the
Preferred Stock will be significantly smaller than at present.
The Company is primarily a holding company and its sources of cash flow
have been dividends and distributions from its ownership in FCX and FRP.
Distributions received in the three years ended December 31, 1994 were as
follows:
Year Ended FRP FCX
---------- --- ---
(in millions)
December 31, 1992 $41.8 $85.3
December 31, 1993 -- 85.9
December 31, 1994 6.2 85.8
Subsequent to the Distribution, FCX dividends will no longer be received by
the Company. FRP's distributions to the Company would have been inadequate to
cover dividends on the Preferred Stock in the last two years. Assuming the
Company retires substantially all of its outstanding debt as proposed under
the Company Restructuring, based on current market conditions in the phosphate
fertilizer industry, distributions from FRP would be sufficient to pay
dividends on the Preferred Stock.
Publicly owned FRP Depositary Units have cumulative rights to receive
quarterly distributions of $0.60 per unit through the distribution for the
quarter ending December 31, 1996 before any distributions may be made to the
Company. On January 20, 1995, FRP declared a distribution of $0.60 per FRP
Depositary Unit ($30.2 million) and $0.26 per Company-owned unit ($13.9
million), payable February 15, 1995, bringing the total unpaid distribution
due the Company to $353.1 million. Unpaid distributions due the Company will
be recoverable from part of the excess of future quarterly FRP distributions
over $0.60 per unit for all FRP Units.
The Company cannot determine whether the actual value of the shares of
Common Stock receivable on conversion of a share of Preferred Stock will be
greater or less than the shares being offered in the Exchange Offer. It is
certain, however, that, if the Distribution is made, the nature of the
businesses represented by the Common Stock will be significantly different
than that of the businesses currently represented by the Common Stock and that
holders of Preferred Stock who accept the Exchange Offer and hold the Common
Stock on the record date of the Distribution will have the opportunity to
continue to participate in the businesses carried on by FCX.
Procedure for Tendering Preferred Stock
The Company understands that all shares of Preferred Stock are currently
represented by a global share certificate deposited with DTC and registered in
the name of DTC's nominee, Cede & Co. Any stockholder desiring to tender all
or any portion of his Preferred Stock should request his broker, dealer,
commercial bank, trust company or nominee to effect the transaction for him.
In order for such institution to tender Preferred Stock on behalf of any such
stockholder, a properly completed and duly executed Letter of Transmittal (or
facsimile thereof), and any other documents required by the Letter of
Transmittal, must be received by the Exchange Agent at one of its addresses
set forth at the end of this Offering Circular and book-entry transfer of such
stock must be received to the account of the Exchange Agent at DTC.
All signatures on a Letter of Transmittal must be guaranteed by a firm
that is a member of a recognized Medallion Program approved by The Securities
Transfer Association Inc. (an "Eligible Institution") unless such shares of
Preferred Stock are tendered for the account of an Eligible Institution. See
Instruction 1 of the Letter of Transmittal.
If a stockholder desires to tender Preferred Stock pursuant to the
Exchange Offer and cannot deliver such Preferred Stock and all other required
documents to the Exchange Agent by the Expiration Date, such Preferred Stock
may nevertheless be tendered if all of the following conditions are met:
(i) such tender is made by or through an Eligible Institution;
(ii) a properly completed and duly executed notice of guaranteed delivery
in a form acceptable to the Exchange Agent is received by the
Exchange Agent (as provided below) by the Expiration Date; and
(iii) a confirmation of a book-entry transfer of such Preferred Stock into
the Exchange Agent's account at DTC, together with a properly
completed and duly executed Letter of Transmittal (or facsimile
thereof) and any other documents required by the Letter of
Transmittal, are received by the Exchange Agent within five NYSE
trading days after the date of execution of the notice of guaranteed
delivery.
The notice of guaranteed delivery may be delivered by hand or transmitted
by telegram, telex, facsimile transmission, other electronic means or mail to
the Exchange Agent and must include a guarantee by an Eligible Institution in
a form acceptable to the Exchange Agent.
If a definitive share certificate representing shares of Preferred Stock
is issued or acquired by any stockholder pursuant to a transfer out of the
global certificate deposited with DTC, such stockholder should contact the
Exchange Agent at the telephone numbers and addresses set forth at the end of
this Offering Circular to obtain instructions on procedures for tendering such
Preferred Stock.
All questions as to the form of documents and the validity, eligibility
(including time of receipt) and acceptance for exchange of any tender of
Preferred Stock will be determined by the Company, in its sole discretion,
which determination shall be final and binding. The Company reserves the
absolute right to reject any or all tenders of Preferred Stock determined by
it not to be in proper form, or the acceptance for exchange of Preferred Stock
that may, in the opinion of the Company's counsel, be unlawful. The Company
also reserves the absolute right to waive any defect or irregularity in any
tender of Preferred Stock. None of the Company, the Exchange Agent or any
other person will be under any duty to give notification of any defect or
irregularity in tenders or incur any liability for failure to give any such
notification.
Withdrawal Rights
Tenders of Preferred Stock made pursuant to the Exchange Offer may be
withdrawn at any time prior to the Expiration Date. Thereafter, such tenders
are irrevocable, except that they may be withdrawn after May 19, 1995 unless
theretofore accepted for exchange as provided in this Offering Circular. If
the Company extends the period of time during which the Exchange Offer is
open, is delayed in accepting for exchange Preferred Stock or issuing Common
Stock, or is unable to accept for exchange or exchange Preferred Stock for
Common Stock pursuant to the Exchange Offer for any reason, then, without
prejudice to the Company's rights under the Exchange Offer, the Exchange Agent
may, on behalf of the Company, retain all Preferred Stock tendered, and such
Preferred Stock may not be withdrawn except as otherwise provided hereunder,
subject to Rule 13e-4(f)(5) under the Exchange Act, which provides that the
issuer making the tender offer shall either pay the consideration offered, or
return the tendered securities, promptly after the termination or withdrawal
of the tender offer.
To be effective, a written, telegraphic, telex or facsimile transmission
notice of withdrawal must be timely received by the Exchange Agent at one of
its addresses set forth on the back cover of this Offering Circular and must
specify the name of the person who tendered the Preferred Stock to be
withdrawn and the number of shares of Preferred Stock to be withdrawn.
Withdrawals may not be rescinded and Preferred Stock withdrawn will thereafter
be deemed not validly tendered for purposes of the Exchange Offer. However,
withdrawn Preferred Stock may be retendered by again following one of the
procedures described in "The Exchange Offer -- Procedure for Tendering
Preferred Stock" at any time prior to the Expiration Date.
All questions as to the form and validity (including time of receipt) of
any notice of withdrawal will be determined by the Company, in its sole
discretion, which determination shall be final and binding. None of the
Company, the Exchange Agent or any other person will be under any duty to give
notification of any defect or irregularity in any notice of withdrawal or
incur any liability for failure to give any such notification.
Acceptance of Preferred Stock for Exchange
Upon the terms and subject to the conditions of the Exchange Offer, and
as promptly as practicable after the Expiration Date, the Company will accept
for exchange Preferred Stock validly tendered and not withdrawn as permitted
in "The Exchange Offer -- Withdrawal Rights". Subject to such terms and
conditions, delivery of shares of Common Stock to be issued in exchange for
properly tendered shares of the Preferred Stock (together with a check in
payment of any fractional share interest) will be made by the Exchange Agent
promptly but only after timely receipt by the Exchange Agent of the Preferred
Stock at its account at DTC, a properly completed and duly executed Letter of
Transmittal (or facsimile thereof) and any other required documents.
For purposes of the Exchange Offer, the Company will be deemed to have
accepted for exchange shares of Preferred Stock that are validly tendered and
not withdrawn if and when it gives oral or written notice to the Exchange
Agent of its acceptance for payment of such Preferred Stock. The Exchange
Agent will act as agent for tendering stockholders for the purpose of
transmitting shares of Common Stock (and payment for any fractional share
interest) to tendering stockholders. Under no circumstances will interest be
paid on amounts to be paid to tendering stockholders by the Company by reason
of any delay in making such payment.
The Company will pay all stock transfer taxes, if any, payable on the
transfer to it of Preferred Stock exchanged pursuant to the Exchange Offer,
except as set forth in Instruction 4 of the Letter of Transmittal.
Certain Conditions of the Exchange Offer
Notwithstanding any other provision of the Exchange Offer, the Company
shall not be required to accept for exchange or exchange any Preferred Stock
tendered, and may terminate or amend the Exchange Offer or may postpone
(subject to the requirements of the Exchange Act for prompt exchange or return
of Preferred Stock) the acceptance for exchange of, and exchange of, Preferred
Stock tendered, if at any time on or after March 24, 1995 and before
acceptance for exchange or exchange of any such Preferred Stock (whether or
not any Preferred Stock has theretofore been accepted for exchange or
exchanged pursuant to the Exchange Offer) any of the following shall have
occurred:
(a) there shall have been threatened, instituted or pending any action or
proceeding by any government or governmental, regulatory or
administrative agency or authority or tribunal or any other person,
domestic or foreign, or before any court, authority, agency or tribunal
which (i) challenges the making of the Exchange Offer, the acquisition
of some or all of the Preferred Stock pursuant to the Exchange Offer or
otherwise relates in any manner to the Exchange Offer; or (ii) in the
Company's sole judgment, could materially affect the business,
condition (financial or other), income, operations or prospects of the
Company and its subsidiaries, taken as a whole, or otherwise materially
impair in any way the contemplated future conduct of the business of
the Company or any of its subsidiaries or materially impair the
Exchange Offer's contemplated benefits to the Company;
(b) there shall have been any action threatened, pending or taken, or
approval withheld, or any statute, rule, regulation, judgment, order or
injunction threatened, proposed, sought, promulgated, enacted, entered,
amended, enforced or deemed to be applicable to the Exchange Offer or
the Company or any of its subsidiaries, by any court or any authority,
agency or tribunal which, in the Company's sole judgment, would or
might directly or indirectly (i) make the acceptance for exchange or
exchange of some or all of the Preferred Stock illegal or otherwise
restrict or prohibit consummation of the Exchange Offer; (ii) delay or
restrict the ability of the Company, or render the Company unable, to
accept for payment or pay for some or all of the Preferred Stock;
(iii) materially impair the contemplated benefits of the Exchange Offer
to the Company; or (iv) materially affect the business, condition
(financial or other), income, operations or prospects of the Company
and its subsidiaries, taken as a whole, or otherwise materially impair
in any way the contemplated future conduct of the business of the
Company or any of its subsidiaries;
(c) (i) any general suspension of trading in, or limitation on prices for,
securities on any national securities exchange or in the
over-the-counter market, (ii) the declaration of a banking moratorium
or any suspension of payments in respect of banks in the United States,
(iii) the commencement of a war, armed hostilities or other
international or national calamity directly or indirectly involving the
United States, (iv) any limitation (whether or not mandatory) by any
governmental, regulatory or administrative agency or authority on, or
any event which, in the Company's sole judgment, might affect, the
extension of credit by banks or other lending institutions in the
United States, (v) any significant change in the market price of the
Common Stock, the Preferred Stock or the FCX common stock, or any
change in the general political, market, economic or financial
conditions in the United States or abroad that could, in the sole
judgment of the Company, have a material adverse effect on the
Company's business, operations or prospects or the trading in the
Common Stock or the Preferred Stock, (vi) in the case of any of the
foregoing existing at the time of the commencement of the Exchange
Offer, a material acceleration or worsening thereof or (vii) any
decline in either the Dow Jones Industrial Average (4,087.83 at the
close of business on March 23, 1995) or the Standard and Poor's 500
Composite Stock Price Index (495.95 at the close of business on March
23, 1995) by an amount in excess of 10 percent measured from the close
of business on March 23, 1995;
(d) the Company shall determine that it is no longer feasible to make the
Distribution for any reason, including, without limitation, litigation
or the inability to obtain satisfactory assurance of the tax-free
nature of the Distribution, or that the arrangements with RTZ and RTZA
will not be completed in the manner presently contemplated;
(e) any tender or exchange offer with respect to some or all of the Common
Stock or the Preferred Stock (other than the Exchange Offer), or a
merger, acquisition or other business combination proposal for the
Company, shall have been proposed, announced or made by any person or
entity;
(f) any change shall occur or be threatened in the business, condition
(financial or other), income, operations, Common Stock or Preferred
Stock ownership, or prospects of the Company and its subsidiaries,
taken as a whole, which, in the sole judgment of the Company, is or may
be material to the Company;
(g) (i) any person, entity or "group" (as that term is used in Section
13(d)(3) of the Exchange Act) shall have acquired, or proposed to
acquire, beneficial ownership of shares of Common Stock and Preferred
Stock entitled to more than 5% of the aggregate votes entitled to be
cast by all shares of Common Stock and Preferred Stock then outstanding
(other than a person, entity or group which had publicly disclosed such
ownership in a Schedule 13D or 13G (or an amendment thereto) on file
with the Securities and Exchange Commission prior to March 23, 1995),
(ii) any such person, entity or group which had publicly disclosed such
ownership prior to such date shall have acquired, or proposed to
acquire, other than pursuant to the Exchange Offer, beneficial
ownership of additional shares of Common Stock or Preferred Stock
entitled to more than 5% of the aggregate votes entitled to be cast by
all shares of Common Stock and Preferred Stock then outstanding
(options for and other rights to acquire Common Stock or the Preferred
Stock which are so acquired or proposed to be acquired being deemed for
this purpose to be immediately exercisable) or (iii) any new group
shall have been formed which beneficially owns shares of Common Stock
and Preferred Stock entitled to more than 5% of the aggregate votes
entitled to be cast by all shares of Common Stock and Preferred Stock
then outstanding; or
(h) the Common Stock to be issued in connection with the Exchange Offer
shall not have been accepted for listing by the NYSE;
and, in the sole opinion of the Company, in any such case and regardless of
the circumstances (including any action or omission to act by the Company)
giving rise to such condition, such event makes it inadvisable to proceed with
the Exchange Offer or with such acceptance for payment or payment.
The foregoing conditions are for the sole benefit of the Company and may
be asserted by the Company regardless of the circumstances (including any
action or inaction by the Company) giving rise to any such condition and any
such condition may be waived by the Company, in whole or in part, at any time
and from time to time in its sole discretion. The Company's failure at any
time to exercise any of the foregoing rights shall not be deemed a waiver of
any such right; the waiver of any such right with respect to particular facts
and circumstances shall not be deemed a waiver with respect to any other facts
or circumstances; and each such right shall be deemed an ongoing right which
may be asserted at any time and from time to time. Any determination by the
Company concerning the events described above will be final and binding on all
parties.
Transactions and Agreements Concerning the Preferred Stock and the Common
Stock
During the 40 business days preceding the date hereof the Company
acquired 583,300 shares of Common Stock on the open market on the dates, in
the amounts and at the prices per share as set forth below.
Date Shares Price Per Share
---- ------ --------------
January 26, 1995 20,000 $17.55
January 27, 1995 100,000 17.55
January 30, 1995 56,000 17.14
January 31, 1995 180,000 17.08
February 2, 1995 2,000 17.18
February 7, 1995 215,400 17.06
March 2, 1995 500 17.55
March 3, 1995 9,400 17.55
Except as set forth above, during the 40 business days preceding the date
hereof neither the Company nor, to its knowledge, any of its subsidiaries,
executive officers or directors or any associate of any such officer or
director has engaged in any transaction involving the Preferred Stock or the
Common Stock.
Extension of the Exchange Offer Period; Termination; Amendments
The Company expressly reserves the right, in its sole discretion, at any
time or from time to time, to extend the period of time during which the
Exchange Offer is open by giving oral or written notice of such extension to
the Exchange Agent. During any such extension, all Preferred Stock previously
tendered and not exchanged or withdrawn will remain subject to the Exchange
Offer, except to the extent that such Preferred Stock may be withdrawn as set
forth in "The Exchange Offer -- Withdrawal Rights". The Company also
expressly reserves the right, in its sole discretion, to terminate the
Exchange Offer and not accept for exchange or exchange any Preferred Stock not
theretofore accepted for exchange or exchanged or, subject to applicable law,
to postpone the exchange of Preferred Stock for Common Stock upon the
occurrence of any of the conditions specified in "The Exchange Offer --
Certain Conditions of the Exchange Offer" hereof by giving oral or written
notice of such termination or postponement to the Exchange Agent and making a
public announcement thereof. The Company's reservation of the right to delay
exchange of Preferred Stock which it has accepted for payment is limited by
Rule 13e-4(f)(5) promulgated under the Exchange Act, which requires that the
Company must pay the consideration offered or return the Preferred Stock
tendered promptly after termination or withdrawal of a tender offer. Subject
to compliance with applicable law, the Company further reserves the right, in
its sole discretion, to amend the Exchange Offer in any respect. Amendments
to the Exchange Offer may be made at any time or from time to time effected by
public announcement thereof, such announcement, in the case of an extension,
to be issued no later than 9:00 A.M., New York City time, on the next business
day after the previously scheduled Expiration Date. Any public announcement
made pursuant to the Exchange Offer will be disseminated promptly to
stockholders in a manner reasonably designed to inform stockholders of such
change. Without limiting the manner in which the Company may choose to make a
public announcement, except as required by applicable law, the Company shall
have no obligation to publish, advertise or otherwise communicate any such
public announcement other than by making a release to the Dow Jones News
Service.
If the Company materially changes the terms of the Exchange Offer or the
information concerning the Exchange Offer, the Company will extend the
Exchange Offer to the extent required by Rules 13e-4(d)(2) and 13e-4(e)(2)
promulgated under the Exchange Act. These rules provide that the minimum
period during which an offer must remain open following material changes in
the terms of the offer or information concerning the offer (other than a
change in consideration offered or a change in percentage of securities
sought) will depend on the facts and circumstances, including the relative
materiality of such terms or information. The Securities and Exchange
Commission has stated that as a general rule, it is of the view that an offer
should remain open for a minimum of five business days from the date that
notice of such a material change is first published, sent or given. If (i)
the Company increases or decreases the consideration offered for Preferred
Stock pursuant to the Exchange Offer and (ii) the Exchange Offer is scheduled
to expire at any time earlier than the expiration of a period ending on the
tenth business day from, and including, the date that notice of such increase
or decrease is first published, sent or given, the Exchange Offer will be
extended until the expiration of such period of ten business days.
Solicitation of Tenders; Fees
The Company has not retained any dealer-manager or similar agent in
connection with the Exchange Offer and will not make any payments to brokers,
dealers or others for soliciting acceptances of the Exchange Offer.
The Company has retained Mellon Securities Trust Company as Exchange
Agent in connection with the Exchange Offer. The Exchange Agent will receive
reasonable and customary compensation for their services in connection with
the Exchange Offer, will be reimbursed for their reasonable out-of-pocket
expenses and will be indemnified against certain liabilities and expenses in
connection therewith, including liabilities under the federal securities laws.
The Company will also reimburse brokers, dealers, commercial banks and
trust companies for customary handling and mailing expenses incurred in
forwarding the Exchange Offer to their customers.
Interests of Certain Persons in the Transaction
As of March 23, 1995, none of the executive officers or directors of the
Company beneficially owned any of the Preferred Stock.
CERTAIN FEDERAL INCOME TAX CONSEQUENCES
The following discussion is a summary of certain United States federal
income tax consequences of the Exchange Offer to holders of the Preferred
Stock that exchange shares of such stock for shares of Common Stock pursuant
to the Exchange Offer ("Exchanging Holders"). This summary deals only with
shares of Preferred Stock held as capital assets within the meaning of Section
1221 of the Internal Revenue Code of 1986, as amended. It does not discuss
all of the federal income tax consequences that may be relevant to Exchanging
Holders in light of their particular circumstances or to special classes of
Exchanging Holders, such as dealers in securities or currencies, life
insurance companies, persons holding Preferred Stock as a hedge or hedged
against currency risks or as part of a straddle, or persons whose functional
currency is not the United States dollar. This summary is based on tax laws
in effect in the United States, regulations thereunder and administrative and
judicial interpretations thereof, as of the date hereof, all of which are
subject to change (possibly on a retroactive basis). All Exchanging Holders
should consult their own tax advisors as to the specific federal, state, local
and foreign tax consequences of their participation in the Exchange Offer.
The Exchange Offer will not affect the federal income tax treatment of holders
of the Preferred Stock that do not participate in the Exchange Offer.
THE TAX DISCUSSION SET FORTH BELOW IS INCLUDED FOR GENERAL INFORMATION
ONLY. HOLDERS OF PREFERRED STOCK ARE ADVISED TO CONSULT THEIR OWN TAX
ADVISORS AS TO THE UNITED STATES FEDERAL INCOME TAX CONSEQUENCES OF
PARTICIPATING IN THE EXCHANGE OFFER, ACQUIRING, HOLDING OR DISPOSING OF THE
COMMON STOCK RECEIVED PURSUANT TO THE EXCHANGE OFFER AND PARTICIPATING IN THE
DISTRIBUTION, IF EFFECTED, BY THE COMPANY OF ALL OF THE CLASS B COMMON STOCK
OF FCX WHICH THE COMPANY OWNS AT THE TIME OF SUCH DISTRIBUTION, IN LIGHT OF
THEIR PARTICULAR CIRCUMSTANCES, AS WELL AS THE EFFECT OF ANY STATE, LOCAL OR
FOREIGN TAX LAWS.
Treatment of Exchange of Shares of Preferred Stock for Shares of Common Stock
No gain or loss will be recognized by an Exchanging Holder as a result of
the exchange of shares of Preferred Stock for shares of Common Stock, except
to the extent that such holder receives cash in lieu of fractional shares of
Common Stock. See "Receipt of Cash in Lieu of Fractional Shares" below. The
tax basis of an Exchanging Holder in its shares of Common Stock will be
determined by allocating such holder's tax basis in the shares of Preferred
Stock exchanged therefor pro rata among the shares of Common Stock, including
any fractional shares of Common Stock deemed received by such holder. See
"Receipt of Cash in Lieu of Fractional Shares" below. The holding period of
an Exchanging Holder in the shares of Common Stock received or deemed received
pursuant to the Exchange Offer will include the period for which such holder
held the shares of Preferred Stock exchanged therefor.
Receipt of Cash in Lieu of Fractional Shares
If cash is received in lieu of fractional shares pursuant to the Exchange
Offer, the Exchanging Holder will be treated as if such holder had received
fractional shares of Common Stock and subsequently sold such fractional shares
for cash in a taxable transaction which gave rise to capital gain or loss.
The gain or loss recognized will be the amount of the difference between the
cash received and the tax basis in the fractional shares deemed received. The
tax basis and holding period of the fractional shares of Common Stock deemed
received by an Exchanging Holder will be determined in accordance with the
discussion in the preceding paragraph. See "Treatment of Exchange of Shares of
Preferred Stock for Shares of Common Stock" above.
Back-up Withholding
In order to avoid back-up withholding of federal income tax on cash paid
in lieu of fractional shares of Common Stock and on dividends paid with
respect to shares of Common Stock, each Exchanging Holder subject to back-up
withholding, who has not already done so, must comply with applicable
requirements for furnishing his correct taxpayer identification number.
DESCRIPTION OF THE CAPITAL STOCK
The following statements are brief summaries of the material provisions
relating to the Company's preferred stock and Common Stock and are qualified
in their entirety by the provisions of the Company's Restated Certificate of
Incorporation (the "Certificate of Incorporation"), which has been filed with
the Commission.
Preferred Stock
General. The Certificate of Incorporation authorizes the issuance of
50,000,000 shares of preferred stock, $1.00 par value, of which 5,000,000
shares were outstanding as of March 23, 1995. The Board of Directors of the
Company is authorized by the Certificate of Incorporation to provide, without
further shareholder action, for the issuance of one or more series of
preferred stock. The Board of Directors has the power to fix various terms
with respect to each series, including voting powers, designations,
preferences and relative, participating, optional or other special rights,
qualifications, limitations, restrictions, and redemption, conversion or
exchangeability provisions. Holders of preferred stock have no preemptive
rights. Mellon Securities Trust Company is the transfer agent and registrar
for the Preferred Stock.
Dividends. The holders of shares of Preferred Stock are entitled to
receive cumulative cash dividends at an annual rate equivalent to $4.375 per
share when, as and if declared by the Board of Directors of the Company,
payable quarterly on the first day of each March, June, September and
December. Dividends on the Preferred Stock accrue and are cumulative from the
date of its original issue and are payable to the holder of record on such
respective record dates as may be fixed by the Board of Directors in advance
of the payment of each dividend.
Unless full cumulative dividends for all past dividend periods on all
outstanding shares of Preferred Stock and any outstanding shares of any other
series of preferred stock ranking, as to dividends, on a parity with the
Preferred Stock have been paid, or declared and set apart for payment, the
Company may not (i) declare, pay or set apart any amounts for dividends on, or
make any other distribution in cash or other property in respect of, the
Common Stock or any other stock of the Company ranking junior to the Preferred
Stock as to dividends or distribution of assets upon liquidation, dissolution
or winding up of the affairs of the Company (the Common Stock and such other
stock being referred to herein as "Junior Stock") other than a dividend
payable solely in Junior Stock, (ii) purchase, redeem or otherwise acquire for
value any shares of Junior Stock, directly or indirectly, other than as a
result of a reclassification of Junior Stock, or the exchange or conversion of
one Junior Stock for or into another Junior Stock, or other than through the
use of proceeds of a substantially contemporaneous sale of other Junior Stock,
or (iii) make any payment on account of, or set aside money for, a sinking or
other like fund for the purchase, redemption or other acquisition for value of
any shares of Junior Stock. If the funds available for the payment of
dividends are insufficient to pay in full the dividends payable on all
outstanding shares of Preferred Stock and any other series of preferred stock
ranking as to dividends on a parity with Preferred Stock, the total available
funds to be paid in partial dividends on the Preferred Stock and such other
series shall be divided among the Preferred Stock and such other series in
proportion to the aggregate amount of dividends accrued and unpaid with
respect to the Preferred Stock and such other series. Accruals of dividends
do not bear interest. Because the Company derives its income primarily from
dividends and distributions received from its majority-owned subsidiaries (FCX
and FRP prior to the Distribution, FRP following the Distribution), the
Company's ability to pay cash dividends on the Preferred Stock is dependent on
the ability of such subsidiaries to pay cash dividends to their shareholders
in amounts which would enable the Company to cover its operating expenses and
the amount of any dividends payable on the Preferred Stock and any series of
preferred stock ranking as to dividends, on a parity with the Preferred Stock.
Voting Rights. Except for the voting rights described below and except
as otherwise provided by law, the holders of shares of Preferred Stock are not
entitled to vote on any matter or to receive notice of, or to participate in,
any meeting of stockholders of the Company. If at any time an amount equal to
or exceeding the dividends payable on the Preferred Stock for six full
quarterly dividend periods are in arrears and unpaid, the number of directors
of the Company will be increased by two and the holders of the Preferred
Stock, voting separately as a class together with the holders of shares of
each other series of preferred stock which shall have substantially similar
voting rights with respect to the election of directors upon the occurrence of
substantially similar arrearages of dividends, will be entitled to elect the
additional two directors. Such voting right will continue for the Preferred
Stock until such time as all dividends accrued on any outstanding shares of
Preferred Stock to the dividend payment date immediately preceding such time
have been paid in full, or have been declared and set apart in trust for
payment. The holders of the Preferred Stock are entitled to vote on the
creation, authorization or issuance of any class or series of stock of the
Company ranking, either as to dividends or upon liquidation, prior to
Preferred Stock and amendments to the Certificate of Incorporation, if such
amendments would materially adversely affect the holders' interests.
Liquidation Rights. In the event of any voluntary or involuntary
liquidation, dissolution or winding up of the Company, after payment or
provision for payment of the debts and other liabilities of the Company, the
holders of Preferred Stock will be entitled to receive out of the remaining
net assets of the Company $50 per share in cash plus accrued and unpaid
dividends before any distribution is made or set apart for the holders of
Junior Stock. If the amounts payable with respect to the Preferred Stock are
not paid in full, the holders of the Preferred Stock and any stock of the
Company on a parity with Preferred Stock as to distribution of assets,
liquidation or winding up of the Company will have the right to share ratably
in any distribution of the remaining assets of the Company in proportion to
the full respective preferential amounts to which they are entitled. After
payment of the full amount of the liquidating distribution to which they are
entitled, the holders of shares of Preferred Stock will not be entitled to any
further participation in any distribution of the remaining assets by the
Company. A consolidation or merger of the Company with one or more
corporations or the sale of all or substantially all of the assets of the
Company will not be deemed to be a liquidation, dissolution or winding up of
the Company.
Conversion Rights. The holders of Preferred Stock are entitled at any
time to convert the shares of Preferred Stock into Common Stock of the
Company, at a conversion price which is currently $21.26 per share of Common
Stock, except that, with respect to shares of Preferred Stock called for
redemption, conversion rights will expire at the close of business on the
redemption date (unless the Company shall default in making the payment due
upon redemption in which case such conversion rights shall continue
uninterrupted). The holders of shares of Preferred Stock at the close of
business on a record date are entitled to receive the dividend payable on such
shares on the corresponding dividend payment date notwithstanding the
conversion thereof or the Company's default in payment of the dividend due on
such dividend payment date. No payment or adjustment will be made on account
of accrued and unpaid dividends upon conversion of the Preferred Stock.
Therefore, Preferred Stock surrendered for conversion during the period from
the close of business on any record date for the Preferred Stock to the
opening of business on the corresponding dividend payment date (except shares
called for redemption on a redemption date during such period or on such
dividend payment date) must be accompanied by payment of an amount equal to
the dividend payable on such shares on such dividend payment date. A holder of
Preferred Stock on a record date who converts shares of Preferred Stock on a
dividend payment date receives the dividend payable on the Preferred Stock by
the Company on that date and need not include a payment for any such dividend
upon surrender of shares of Preferred Stock for conversion. No fractional
shares of Common Stock will be issued upon conversion and, in lieu thereof, an
adjustment in cash will be made based upon the closing price of the Common
Stock on the NYSE on the last trading day preceding the date of conversion.
The conversion price is subject to adjustment upon the occurrence of
certain events, including: the issuance of Common Stock as a dividend or
distribution on the Common Stock; subdivisions and combinations of the Common
Stock; the issuance to all holders of Common Stock of certain rights or
warrants entitling the holders thereof (for a period not exceeding 45 days) to
subscribe for Common Stock at a price less than the then current market price
per share of the Common Stock (as determined in the manner set forth in the
Certificate of Designations); and the distribution to substantially all
holders of Common Stock of debt securities, equity securities (including
equity interests in the Company's subsidiaries) other than Common Stock, or
other assets (excluding cash dividends paid from earned surplus) or
subscription rights or warrants (other than those referred to above). No
adjustment in the conversion price will be required unless such adjustment
would require an increase or decrease of at least 1% of the conversion price,
but any adjustment that would otherwise be required to be made shall be
carried forward and taken into account in any subsequent adjustment.
As a result of the Distribution, the conversion price for the Preferred
Stock will be adjusted so that it equals the price determined by multiplying
the conversion price in effect immediately prior to the date of the
Distribution by a fraction (i) of which the numerator will be the current
market price per share of the Common Stock less the then fair market value (as
determined by the Company's Board of Directors) of the number of shares of FCX
Class B common stock being distributed in the Distribution per one share of
Common Stock and (ii) of which the denominator will be such current market
price per share of the Common Stock. For the purposes of such computation,
the current market price per share of the Common Stock will be deemed to be
the average closing price of the Common Stock on the NYSE for a certain period
of time prior to the Distribution.
The precise amount of adjustment to the conversion price cannot be
determined at the present time. The number of shares of Common Stock into
which each share of Preferred Stock will be convertible following the
Distribution will depend on a number of factors, including the number of
shares of FCX Class B common stock distributed by the Company in the
Distribution, the value of such FCX Class B common stock and the market price
of the Common Stock.
Exchange Provisions. The Preferred Stock is exchangeable in whole but
not in part at the option of the Company on any dividend payment date,
commencing March 1, 1994 for the Company's 83/4% Convertible Subordinated
Debentures Due 2017 (the "Debentures"). The holders of outstanding shares of
the Preferred Stock are entitled to receive $50 principal amount of the
Debentures in exchange for each share of Preferred Stock held by them at the
time of the exchange. The Company may not exchange any shares of Preferred
Stock unless full cumulative dividends have been paid or declared and set
aside for payment on the Preferred Stock. The Company will mail written
notice of its intention to exchange to each holder of record of the Preferred
Stock not less than 30 nor more than 60 days prior to the date fixed for the
exchange. From and after the date fixed for the exchange, unless the Company
defaults in issuing Debentures in exchange for the Preferred Stock or in
making or providing for the payment of accrued and unpaid dividends to the
exchange date, dividends on the Preferred Stock will cease to accrue, such
Preferred Stock will be deemed to be no longer outstanding, all rights of the
holders of Preferred Stock as stockholders of the Company will cease, and the
person or persons entitled to receive the Debentures issuable upon exchange
shall be treated for all purposes as the registered holder or holders of the
Debentures.
Optional Redemption. The Preferred Stock are not redeemable prior to
March 1, 1997. Thereafter, the Preferred Stock is redeemable, in whole or in
part, at the option of the Company at the following redemption prices per
share if redeemed during the 12-month period commencing March 1 of the year
indicated:
Year Price Year Price
---- -------- ---- --------
1997 $52.1875 2000 $50.8750
1998 51.7500 2001 50.4375
1999 51.3125
and at $50 per share thereafter, plus, in each case, accrued and unpaid
dividends to and including the date fixed for redemption (subject to the right
of any holder of record on the relevant record date to receive the dividend
payable on a dividend payment date that is on or prior to the redemption
date). If less than all of the outstanding shares of Preferred Stock are to
be redeemed, the number of shares to be redeemed and the method of effecting
such redemption, whether by lot or pro rata, will be as determined by the
Company. There is no mandatory redemption or sinking fund obligation with
respect to the Preferred Stock. Notice of redemption will be mailed not less
than 30 days nor more than 60 days prior to the redemption date to each holder
of record of shares of Preferred Stock to be redeemed at the address shown on
the registry books of the Company. On and after the redemption date, unless
the Company defaults on the payment of the redemption price or dividends
accrued and unpaid to such date, dividends will cease to accrue on shares of
Preferred Stock called for redemption, such shares will be deemed to be no
longer outstanding and all rights of the holders of such shares as
stockholders of the Company will cease, except the right to receive the
redemption price.
Common Stock
The holders of Common Stock are entitled to voting rights for the
election of directors and for other purposes, subject to the voting rights of
the holders of Preferred Stock conferred by law and to the specific voting
rights granted to each series of Preferred Stock and to voting rights which
may in the future be granted to subsequently created series of preferred
stock.
Dividends may be declared on Common Stock out of funds legally available
therefor when all required dividend and redemption requirements for Preferred
Stock have been met. In the event of any liquidation of the Company, the
holders of Preferred Stock are entitled to be paid out of the net assets of
the Company, before any distribution is made to the holders of Common Stock,
the applicable liquidation value plus accrued but unpaid dividends to the date
of payment. Thereafter the holders of Common Stock are entitled to a pro
rata distribution of the remaining assets. Holders of Common Stock have no
preemptive rights.
The Certificate of Incorporation provides that, in general, an
affirmative vote of not less than 85% of the outstanding shares of Common
Stock of the Company is required to approve or authorize certain major
corporate transactions involving the Company and holders of more than 20% of
the Common Stock (including certain mergers, substantial dispositions of
assets, liquidation or dissolution, or recapitalization). The 85% vote is not
required in some such circumstances, including certain transactions which have
been approved in advance by a majority of the Board of Directors, or where
holders of Common Stock receive a price per share that satisfies the fairness
criteria set forth in the Certificate of Incorporation.
In addition, under the terms of the Certificate of Incorporation, the
Board of Directors of the Company is divided into three classes, with each
class serving three year terms. At the annual meeting of stockholders of the
Company, the term of one class of directors expires, and the successors of
that class are elected. Furthermore, any action required or permitted to be
taken by the stockholders of the Company must be effected at a duly-called
annual or special meeting, and may not be taken by written consent of the
stockholders. In general, special meetings of the stockholders of the Company
may be called only by the Chairman of the Board or the President or at the
request of a majority of the Board of Directors.
TERMINATION OF TRANSFER RESTRICTIONS
The Preferred Stock, the Debentures issuable upon exchange of the
Preferred Stock and the Common Stock issuable upon conversion of the Preferred
Stock or the Debentures (and the Common Stock which may be issued in the
Exchange Offer) have not been registered under the Securities Act; however,
because the Preferred Stock was issued more than three years before the
Expiration Date, and because the Common Stock being offered in the Exchange
Offer is being issued pursuant to the exemption afforded by Section 3(a)(9)
of the Securities Act, stockholders of the Company will be able to sell the
Common Stock received in the Exchange Offer free of the registration
requirements of the Securities Act.
The Exchange Agent for the Exchange Offer is:
Mellon Securities Trust Company
By Overnight Courier: By Mail:
c/o Mellon Securities c/o Mellon Securities
Transfer Services Transfer Services
Attention: Reorganization Department P.O. Box 396
85 Challenger Road Bowling Green Station
Ridgefield Park, New Jersey 07660 New York, New York 10274
By Hand: Facsimile Transmission:
c/o Mellon Securities Transfer Services (201) 296-4062
120 Broadway (For Eligible Institutions Only)
13th Floor
New York, New York
Telephone Inquiries:
(800) 777-3674
Any questions or requests for assistance or for additional copies of
this Offering Circular or the Letter of Transmittal may be directed to the
Exchange Agent at the telephone number and addresses set forth above. You may
also contact your broker, dealer, commercial bank or trust company for
assistance concerning the Exchange Offer. To confirm the delivery of your
Preferred Stock, you are directed to contact the Exchange Agent.
EX-99.(A)(2)
3
LETTER OF TRANSMITTAL
To Exchange Shares of
$4.375 Convertible Exchangeable Preferred Stock
of
FREEPORT-McMoRan INC.
Pursuant to its Offering Circular
Dated March 24, 1995
THE EXCHANGE OFFER AND WITHDRAWAL RIGHTS EXPIRE AT 5:00 P.M., NEW YORK CITY
TIME, ON FRIDAY, APRIL 21, 1995, UNLESS THE EXCHANGE OFFER IS EXTENDED.
To: Mellon Securities Trust Company, as Exchange Agent
By Overnight Courier:
c/o Mellon Securities Transfer Services
Attention: Reorganization Department
85 Challenger Road
Ridgefield Park, New Jersey 07660
By Mail:
c/o Mellon Securities Transfer Services
P.O. Box 396
Bowling Green Station
New York, New York 10274
By Hand: Facsimile Transmission:
c/o Mellon Securities Transfer Services (201) 296-4062
120 Broadway (For Eligible Institutions Only)
13th Floor
New York, New York
Telephone Inquiries:
(800) 777-3674
Delivery of this instrument to an address other than as set forth
above or transmission of instructions to a facsimile or telex number other
than the ones listed above will not constitute a valid delivery.
This Letter of Transmittal is to be used if delivery of shares of
Preferred Stock (as defined below) is to be made by book-entry transfer to
the Exchange Agent's account at The Depository Trust Company ("DTC")
pursuant to the procedures set forth under the caption "The Exchange
Offer--Procedure for Tendering Preferred Shares" in the Offering Circular.
Stockholders who cannot deliver their Preferred Stock and all other
documents required hereby to the Exchange Agent by the Expiration Date (as
defined in the Offering Circular) must tender their Preferred Stock
pursuant to the guaranteed delivery procedures set forth under the caption
"The Exchange Offer--Procedure for Tendering Preferred Shares" in the
Offering Circular. See Instruction 2.
DESCRIPTION OF SHARES OF PREFERRED STOCK TENDERED
Name(s) and Addresses of
Registered Holders Number of Shares of
(Please fill in, if blank) Preferred Stock Tendered
-------------------------- ------------------------
( ) CHECK HERE IF TENDERED SHARES ARE BEING DELIVERED BY BOOK-ENTRY
TRANSFER TO THE EXCHANGE AGENT'S ACCOUNT AT DTC.
( ) CHECK HERE IF TENDERED SHARES ARE BEING DELIVERED PURSUANT TO A NOTICE
OF GUARANTEED DELIVERY PREVIOUSLY SENT TO THE EXCHANGE AGENT.
COMPLETE THE FOLLOWING
Name of Tendering Institution.............................................
DTC Account No............................................................
Transaction Code No.......................................................
____________________
NOTE: SIGNATURES MUST BE PROVIDED BELOW
PLEASE READ THE ACCOMPANYING INSTRUCTIONS CAREFULLY
Gentlemen:
The undersigned hereby tenders to Freeport-McMoRan Inc., a Delaware
corporation (the "Company"), the above-described shares of $4.375
Convertible Exchangeable Preferred Stock, $1.00 par value (such shares
together with all other outstanding shares of $4.375 Convertible
Exchangeable Preferred Stock of the Company are herein referred to as the
"Preferred Stock"), pursuant to the Company's offer to exchange 2.85 shares
of its Common Stock, $1.00 par value (the "Common Stock"), for each
outstanding share of its Preferred Stock upon the terms and subject to the
conditions set forth in the Offer to Exchange dated March 24, 1995 (the
"Offering Circular"), receipt of which is hereby acknowledged, and this
Letter of Transmittal (which together constitute the "Exchange Offer").
The Company reserves the right to transfer or assign, in whole or from time
to time in part, to one or more of its affiliates the right to purchase
shares of Preferred Stock tendered pursuant to the Exchange Offer.
Upon the terms and subject to the conditions of the Exchange Offer
and effective upon acceptance for exchange of, and delivery of shares of
Common Stock to be issued (together with a check in lieu of any fractional
share interest) in exchange for, the Preferred Stock tendered herewith, the
undersigned hereby exchanges, assigns and transfers to or upon the order of
the Company all right, title and interest in and to all the Preferred Stock
that is being tendered hereby (and any and all other Preferred Stock or
other securities issued or issuable in respect thereof on or after March
24, 1995) and appoints the Exchange Agent the true and lawful agent and
attorney-in-fact of the undersigned with respect to such Preferred Stock
(and all such other Preferred Stock or securities), with full power of
substitution (such power of attorney being deemed to be an irrevocable
power coupled with an interest), to (a) transfer ownership of such
Preferred Stock (and all such other Preferred Stock or securities) on the
account books maintained by DTC, together, in any such case, with all
accompanying evidences of transfer and authenticity, to or upon the order
of the Company, (b) present such Preferred Stock (and all such other
Preferred Stock or securities) for transfer on the books of the Company and
(c) receive all benefits and otherwise exercise all rights of beneficial
ownership of such Preferred Stock (and all such other Preferred Stock or
securities), all in accordance with the terms of the Exchange Offer.
The undersigned hereby represents and warrants that the undersigned
has full power and authority to tender, sell, assign and transfer the
Preferred Stock tendered hereby (and any and all other Preferred Stock or
other securities issued or issuable in respect thereof on or after March
24, 1995) and that when the same are accepted for exchange by the Company,
the Company will acquire good and unencumbered title thereto, free and
clear of all liens, restrictions, charges and encumbrances and not subject
to any adverse claims. The undersigned will, upon request, execute and
deliver any additional documents deemed by the Exchange Agent or the
Company to be necessary or desirable to complete the exchange, assignment
and transfer of the Preferred Stock tendered hereby (and all such other
Preferred Stock or securities).
All authority herein conferred or agreed to be conferred shall
survive the death or incapacity of the undersigned and any obligation of
the undersigned hereunder shall be binding upon the heirs, personal
representatives, successors and assigns of the undersigned. Except as
stated in the Exchange Offer, this tender is irrevocable.
The undersigned understands that tenders of Preferred Stock pursuant
to the procedures described in the Offering Circular and in the
instructions hereto will constitute an agreement between the undersigned
and the Company upon the terms and subject to the conditions of the
Exchange Offer.
In exchange for the shares of Preferred Stock tendered hereby, please
issue shares of Common Stock in the name(s) of the undersigned by book-
entry transfer, by credit to the account at DTC designated above. Please
issue a check in lieu of any fractional share interest in such Common Stock
(less the amount of any federal income and/or backup withholding tax to be
withheld) in the name(s) of the undersigned, and mail such check to the
address shown below the undersigned's signature.
SIGN HERE
..............................................................
..............................................................
Signature(s) of Owner(s)
Name(s).......................................................
(Please Print)
..............................................................
Capacity (full title).........................................
Address:......................................................
..............................................................
..............................................................
(Include Zip Code)
Area Code and Telephone Number................................
Dated..................................................., 1995
(Must be signed by registered holder(s) exactly as name(s)
appear(s) on a security position listing. If signature is by
a trustee, executor, administrator, guardian, attorney-in-
fact, agent, officer of a corporation or other person acting
in a fiduciary or representative capacity, please set forth
full title and see Instruction 3.)
Guarantee of Signature(s)
(If required; see Instructions 1 and 3)
Name of Firm..................................................
Authorized Signature..........................................
Dated..................................................., 1995
INSTRUCTIONS
Forming Part of the Terms and Conditions of the Exchange Offer
1. Guarantee of Signatures. Signatures on this Letter of
Transmittal need not be guaranteed if (a) this Letter of Transmittal is
signed by the registered holder(s) of the Preferred Stock (which term, for
purposes of this document, shall include any participant in DTC whose name
appears on a security position listing as the owner of Preferred Stock)
tendered herewith or (b) such Preferred Stock is tendered for the account
of a firm that is a member of a recognized Medallion Program approved by
The Securities Transfer Association Inc. (an "Eligible Institution").
Except as otherwise provided above, all signatures on this Letter of
Transmittal must be guaranteed by an Eligible Institution. See Instruction
3.
2. Delivery of Letter of Transmittal and Preferred Stock. This
Letter of Transmittal is to be used only if delivery of Preferred Stock is
to be made by book-entry transfer pursuant to the procedures set forth in
the Offering Circular, under the caption "The Exchange Offer--Procedure for
Tendering Preferred Shares". Confirmation of a book-entry transfer of all
shares of Preferred Stock delivered electronically into the Exchange
Agent's account at DTC, as well as a properly completed and duly executed
Letter of Transmittal (or facsimile thereof) and any other documents
required by this Letter of Transmittal, must be received by the Exchange
Agent at one of its addresses set forth on the front page of this Letter of
Transmittal by the expiration of the Exchange Offer.
Stockholders who cannot deliver their Preferred Stock and all other
required documents to the Exchange Agent by the Expiration Date must tender
their Preferred Stock pursuant to the guaranteed delivery procedure set
forth in the Offering Circular, under the caption "The Exchange Offer--
Procedure for Tendering Preferred Shares".
Tenders of Preferred Stock will only be accepted by book-entry
transfer of such stock to the account of the Exchange Agent. If a
definitive share certificate representing shares of Preferred Stock is
issued or acquired by any stockholder pursuant to a transfer out of the
global certificate deposited with DTC, such stockholder should contact the
Exchange Agent at its address or telephone number set forth above to obtain
instructions on procedures for tendering such Preferred Stock.
No alternative, conditional or contingent tenders will be accepted,
and no fractional shares of Preferred Stock will be exchanged. By
executing this Letter of Transmittal (or facsimile thereof), the tendering
stockholder waives any right to receive any notice of the acceptance for
exchange of the Preferred Stock.
3. Signatures on Letter of Transmittal. This Letter of Transmittal
must be signed by registered holder(s) exactly as name(s) appear(s) on a
security position listing for the Preferred Stock tendered hereby.
If any of the shares of Preferred Stock tendered hereby are held of
record by two or more persons, all such persons must sign this Letter of
Transmittal.
If this Letter of Transmittal or any certificate or stock power is
signed by a trustee, executor, administrator, guardian, attorney-in-fact,
officer of a corporation or other person acting in a fiduciary or
representative capacity, such person should so indicate when signing, and
proper evidence satisfactory to the Company of the authority of such person
so to act must be submitted.
4. Stock Transfer Taxes. The Company will pay any stock transfer
taxes applicable to the exchange of shares of Preferred Stock tendered and
accepted pursuant to the Exchange Offer. If, however, issuance of Common
Stock is to be made, this Letter of Transmittal is signed, shares of
Preferred Stock not exchanged are to be returned, or a check in lieu of any
fractional share interest is to be issued, in the name of any person other
than the registered holder(s), the amount of any stock transfer taxes
(whether imposed on the registered holder(s), such other person or
otherwise) payable on account of the transfer must be paid to the Company
or the Exchange Agent (or the transferee must establish to the satisfaction
of the Company that such taxes have been paid or need not be paid) before
the Common Stock will be issued.
5. Requests for Assistance or Additional Copies. Requests for
assistance may be directed to the Exchange Agent at its address or
telephone number set forth above. Additional copies of the Offering
Circular and this Letter of Transmittal may be obtained from the Exchange
Agent.
EX-99.(A)(3)
4
FREEPORT-McMoRan INC.
OFFER TO EXCHANGE
2.85 SHARES OF ITS COMMON STOCK FOR
EACH SHARE OF ITS
$4.375 CONVERTIBLE PREFERRED STOCK
March 24, 1995
To Brokers, Dealers, Commercial Banks,
Trust Companies and Other Nominees:
Freeport-McMoRan Inc., a Delaware corporation (the "Company"), is
offering to exchange 2.85 shares of its Common Stock, $1.00 par value (the
"Common Stock"), for each share of its $4.375 Convertible Exchangeable
Preferred Stock, $1.00 par value (the "Preferred Stock"), upon the terms and
subject to the conditions set forth in the Company's Offer to Exchange dated
March 24, 1995 (the "Offering Circular") and the related Letter of Transmittal
(which together constitute the "Exchange Offer"). The Company will exchange
all Preferred Stock validly tendered and not withdrawn, upon the terms and
subject to the conditions of the Exchange Offer.
For your information and for forwarding to your clients for whom you hold
Preferred Stock registered in your name or in the name of your nominee, we are
enclosing the following documents:
1. Offering Circular dated March 24, 1995;
2. Letter of Transmittal for your use and for the information of your
clients; and
3. A form of letter that may be sent to your clients for whose accounts
you hold Preferred Stock registered in your name or in the name of your
nominee, with space provided for obtaining such clients' instructions
with regard to the Exchange Offer.
WE URGE YOU TO CONTACT YOUR CLIENTS AS PROMPTLY AS POSSIBLE.
THE EXCHANGE OFFER AND WITHDRAWAL RIGHTS EXPIRE AT 5:00 P.M., NEW YORK
CITY TIME, ON FRIDAY, APRIL 21, 1995, UNLESS THE EXCHANGE OFFER IS EXTENDED.
The Company will not pay any fees or commissions to any broker or dealer
or other person for soliciting tenders of Preferred Stock pursuant to the
Exchange Offer. The Company will, however, upon request, reimburse brokers,
dealers, commercial banks and trust companies for reasonable and necessary
costs and expenses incurred by them in forwarding materials to their
customers. The Company will pay all stock transfer taxes applicable to its
exchange of Preferred Stock pursuant to the Exchange Offer, subject to
Instruction 4 of the Letter of Transmittal.
Any inquiries you may have with respect to the Exchange Offer should be
addressed to the Exchange Agent at the addresses and telephone numbers set
forth at the end of the Offering Circular. Additional copies of the enclosed
materials may be obtained from the Exchange Agent.
Very truly yours,
FREEPORT-McMoRan INC.
NOTHING CONTAINED HEREIN OR IN THE ENCLOSED DOCUMENTS SHALL CONSTITUTE YOU
THE AGENT OF THE COMPANY OR THE EXCHANGE AGENT, OR AUTHORIZE YOU OR ANY OTHER
PERSON TO USE ANY DOCUMENT OR MAKE ANY STATEMENT ON BEHALF OF ANY OF THEM IN
CONNECTION WITH THE EXCHANGE OFFER OTHER THAN THE DOCUMENTS ENCLOSED HEREWITH
AND THE STATEMENTS CONTAINED THEREIN.
EX-99.(A)(4)
5
FREEPORT-McMoRan INC.
OFFER TO EXCHANGE
2.85 SHARES OF ITS COMMON STOCK FOR
EACH SHARE OF ITS
$4.375 CONVERTIBLE PREFERRED STOCK
March 24, 1995
To Our Clients:
Enclosed for your consideration are the Offer to Exchange dated March 24,
1995 and the related Letter of Transmittal (which together constitute the
"Exchange Offer") relating to the offer by Freeport-McMoRan Inc., a Delaware
corporation (the "Company"), to exchange 2.85 shares of its Common Stock,
$1.00 par value (the "Common Stock"), for each share of its $4.375 Convertible
Exchangeable Preferred Stock, $1.00 par value (the "Preferred Stock"), upon
the terms and subject to the conditions of the Exchange Offer. The Company
will exchange all shares of Preferred Stock validly tendered and not
withdrawn, upon the terms and subject to the conditions of the Exchange Offer.
We are the holder of record of shares of Preferred Stock held for your
account. A tender of such Preferred Stock can be made only by us as the
holder of record and pursuant to your instructions. The Letter of Transmittal
is furnished to you for your information only and cannot be used by you to
tender Preferred Stock held by us for your account.
We request instructions as to whether you wish us to tender any or all of
the Preferred Stock held by us for your account, upon the terms and subject to
the conditions set forth in the Offering Circular and the Letter of
Transmittal.
Your attention is invited to the following:
1. You may tender shares of Preferred Stock in exchange for 2.85 shares
of Common Stock per share of Preferred Stock, as indicated in the
attached instruction form.
2. The Exchange Offer and withdrawal rights expire at 5:00 p.m., New York
City time, on Friday, April 21, 1995 (the "Expiration Date"),
unless the Exchange Offer is extended.
3. The Exchange Offer is being made for any and all outstanding Preferred
Stock of the Company.
4. The Exchange Offer is not conditioned upon any minimum number of
shares being tendered.
5. Tendering stockholders will not pay brokerage fees or commissions,
solicitation fees or, subject to Instruction 4 of the Letter of
Transmittal, transfer taxes on an exchange of Preferred Stock for
Common Stock.
If you wish to have us tender any or all of your Preferred Stock, please
so instruct us by completing, executing and returning to us the instruction
form on the reverse hereof. An envelope to return your instructions to us is
enclosed. If you authorize tender of your Preferred Stock, all such shares
will be tendered unless otherwise specified on the reverse hereof. Your
instructions should be forwarded to us in ample time to permit us to submit a
tender on your behalf by the expiration of the Exchange Offer.
The Exchange Offer is not being made to, nor will tenders be accepted
from or on behalf of, holders of Preferred Stock in any jurisdiction in which
the making of the Exchange Offer or acceptance thereof would not be in
compliance with the laws of such jurisdiction.
Instructions with Respect to
FREEPORT-McMoRan INC.
OFFER TO EXCHANGE
2.85 SHARES OF ITS COMMON STOCK FOR
EACH SHARE OF ITS
$4.375 CONVERTIBLE PREFERRED STOCK
The undersigned acknowledge(s) receipt of your letter and the
enclosed Offer to Exchange dated March 24, 1995 and the related Letter of
Transmittal (which together constitute the "Exchange Offer") relating to
the offer by Freeport-McMoRan Inc. to exchange 2.85 shares of its Common
Stock, $1.00 par value, for each share of its $4.375 Convertible
Exchangeable Preferred Stock, $1.00 par value (the "Preferred Stock"), upon
the terms and subject to the conditions of the Exchange Offer.
This will instruct you to tender the number of shares of Preferred Stock
indicated below held by you for the account of the undersigned, upon the terms
and subject to the conditions set forth in the Exchange Offer.
( ) By checking this box, all Preferred Stock held by us for your account
will be tendered. If fewer than all shares are to be tendered, please
check the box and indicate below the aggregate number of shares to be
tendered by us.
___________________________________Shares*
_______
* Unless otherwise indicated, it will be assumed that all shares of Preferred
Stock held by us for your account are to be tendered.
SIGN HERE
-------------------------------- --------------------------------
-------------------------------- --------------------------------
Signature(s)
--------------------------------
Please print name(s) and
address(es) here
Dated____________________________
EX-99.(A)(5)
6
FREEPORT-McMoRan INC. OFFERING TO EXCHANGE
SHARES OF ITS COMMON STOCK FOR
ALL OUTSTANDING SHARES OF ITS PREFERRED STOCK
NEW ORLEANS, LA., March 24, 1995 -- Freeport-McMoRan Inc. (NYSE:FTX)
announced today that it has commenced an offer to exchange 2.85 shares of
its common stock for each of the 5,000,000 shares of its $4.375 Convertible
Exchangeable Preferred Stock (the "Preferred Stock"). The offer to
exchange is being made pursuant to an Offering Circular dated March 24,
1995 and a related Letter of Transmittal (which together constitute the
"Exchange Offer").
Subject to the terms and conditions of the Exchange Offer, FTX will
accept for exchange any and all shares of Preferred Stock duly tendered and
not withdrawn prior to 5:00 p.m., New York City time, on April 21, 1995,
unless extended by FTX.
Each of the shares of Preferred Stock has a liquidation value of $50
and, under the terms of the original $4.375 Convertible Exchangeable Preferred
Stock Offering Memorandum dated February 26, 1992, is convertible into FTX
common stock at a conversion price of $21.26 per share or the equivalent of
2.35 shares of FTX common stock for each share of Preferred Stock. This
compares with the 2.85 shares of FTX common stock being offered for each share
of Preferred Stock under the Exchange Offer.
The Exchange Offer is being made as part of the previously announced
restructuring of FTX and subsequent tax-free distribution of Class B common
stock of Freeport-McMoRan Copper & Gold Inc. (NYSE:FCX) owned by FTX to
holders of FTX common stock, which is subject to certain conditions and is
expected to occur by June 30, 1995.
By accepting the Exchange Offer, holders of Preferred Stock will
become holders of FTX common stock and will be able to participate fully in
FTX's distribution of FCX Class B common stock.
FTX is a leader in the exploration, mining, development, production,
processing, and marketing of natural resources. FTX's products include
copper, gold, silver, phosphate fertilizers, phosphate rock, sulphur, oil, and
other natural resources.
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