As filed with the Securities and Exchange Commission on May 31, 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)
6.55% Convertible Subordinated Notes due January 15, 2001
(Title of Class of Securities)
356714 AE 5
(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
____________________________________________________________________________
$339,314,430 $67,863
____________________________________________________________________________
[ ] 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
____________________________________________________________________________
____________________________________________________________________________
*Calculated in accordance with Rule 0-11 of the Securities Exchange Act of
1934, as amended, based on the 6.55% Convertible Subordinated Notes due
January 15, 2001 of Freeport-McMoRan Inc. (the "Notes") to be exchanged, as
follows: the product of $372,873,000 (the aggregate outstanding principal
amount of the Notes) and 91% (the average of the high and low prices of the
Notes, expressed as a decimal, as reported by the New York Stock Exchange on
May 26, 1995).
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
1615 Poydras Street, New Orleans, Louisiana 70112 (telephone number (504)
582-4000).
(b) This schedule relates to the Company's call for redemption on June
30, 1995 of all of its 6.55% Convertible Subordinated Notes due January 15,
2001 (the "Notes") outstanding on that date pursuant to a Notice of Redemption
dated May 31, 1995 (the "Notice of Redemption"), and related Letter of
Transmittal, copies of which are attached hereto as Exhibits (a)(1) and
(a)(2), respectively. The information set forth under "Alternatives Available
to Holders of the Notes", "Purpose of the Conversion Enhancement" and
"Interests of Certain Persons in the Transaction" in the Notice of Redemption
is incorporated herein by reference.
(c) The Notes and the Common Stock are listed for trading on the New
York Stock Exchange. The information set forth under "Price Range of the
Notes" and "Price Range of the Common Stock" in the Notice of Redemption is
incorporated herein by reference.
(d) Not applicable.
Item 2.Source and Amount of Funds or Other Consideration.
(a) The information set forth under "Alternatives Available to Holders
of the Notes" and "Purpose of the Conversion Enhancement" in the Notice of
Redemption is incorporated herein by reference.
(b) Not applicable.
Item 3.Purpose of the Tender Offer and Plans or Proposals of the Issuer or
Affiliate.
(a)-(g) The information set forth under "The Company", "Sources of
Financing for the Redemption", "Purpose of the Conversion Enhancement",
"Background to the Distribution", "Strategic Alliance", "Dividends",
"Description of the Common Stock", "Transactions and Agreements Concerning the
Notes and the Common Stock" and "Capitalization" in the Notice of Redemption
is incorporated herein by reference.
(h) Following redemption of the Notes as described in the Notice of
Redemption, the Notes will be delisted from the New York Stock Exchange.
(i) Upon redemption of the Notes as described in the Notice of
Redemption, the Notes will be eligible for termination of registration
pursuant to Section 12(g)(4) of the Securities Exchange Act of 1934, as
amended.
(j) Not applicable.
Item 4. Interest in Securities of the Issuer.
The information set forth under "Transactions and Agreements Concerning
the Notes and the Common Stock" in the Notice of Redemption is incorporated
herein by reference.
Item 5. Contracts, Arrangements, Understandings or Relationships With Respect
to the Issuer's Securities.
The information set forth under "Sources of Financing for the
Redemption", "Purpose of the Conversion Enhancement", "Background to the
Distribution", "Strategic Alliance", "Description of the Common Stock",
"Interests of Certain Persons in the Transaction" and "Transactions and
Agreements Concerning the Notes and the Common Stock" in the Notice of
Redemption is incorporated herein by reference.
Item 6. Persons Retained, Employed or to be Compensated.
The information set forth under "Solicitation of Conversions; Fees" in
the Notice of Redemption is incorporated herein by reference.
Item 7.Financial Information.
(a) The financial information set forth under "Summary Financial
Information" in the Notice of Redemption and the financial statements of the
Company and its consolidated subsidiaries (and the notes thereto) included in
the Company's 1994 Annual Report to stockholders and in the Company's
Quarterly Report on Form 10-Q for the calendar quarter ended March 31, 1995
are incorporated herein by reference.
(b) The financial information set forth under "Summary Financial
Information" in the Notice of Redemption is incorporated herein by reference.
Item 8.Additional Information.
(a)-(d) Not applicable.
(e) Additional information is contained in the Notice of Redemption 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) Notice of Redemption dated May 31, 1995.
(a)(2) Form of Letter of Transmittal dated May 31, 1995.
(a)(3) Letter from Freeport-McMoRan Inc. to holders of the 6.55%
Convertible Subordinated Notes due January 15, 2001 dated May
31, 1995.
(a)(4) Press Release dated May 31, 1995.
(b) Not applicable.
(c)(1) Agreement dated as of May 2, 1995 by and between the Company and
Freeport-McMoRan Copper & Gold Inc., on the one hand, and The RTZ Corporation
PLC, RTZ Indonesia Limited and RTZ America, Inc., on the other hand.
Incorporated by reference to Exhibit 2.1 to the Current Report of the Company
on Form 8-K filed with the Securities and Exchange Commission (the
"Commission") on May 26, 1995.
(d) Not applicable.
(e)(1) Prospectus Supplement dated as of January 29, 1991 to the
Prospectus dated as of January 8, 1991 relating to $373,000,000 of the
Company's 6.55% Convertible Subordinated Notes due January 15, 2001.
Incorporated by reference to the Company's Registration Statement on Form S-3,
File No. 33-37716, filed with the Commission on November 9, 1990.
(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: May 31, 1995 FREEPORT-McMoRan INC.
/s/ Charles W. Goodyear
___________________________
By: Charles W. Goodyear
Senior Vice President and
EXHIBIT INDEX
Sequentially
Exhibit Numbered
Number Description Page
______ ___________ ___________
7(a)(1) Financial statements of the Company and its consolidated
subsidiaries (and the notes thereto) set forth on pages 27-48,
inclusive, of the Company's 1994 Annual Report to stockholders.
Incorporated by reference to the Company's Annual Report on Form
10-K for the year ended December 31,
1994........................................................... ---
7(a)(2) Financial statements of the Company and its consolidated
subsidiaries (and the notes thereto) set forth in the Company's
Quarterly Report on Form 10-Q for the calendar quarter ended March
31, 1995 (the "1995 First Quarter Form 10-Q"). Incorporated by
reference to the 1995 First Quarter Form
10-Q........................................................... ---
9(a)(1) Notice of Redemption dated May 31, 1995........................
9(a)(2)Form of Letter of Transmittal dated May 31, 1995................
9(a)(3) Letter from Freeport-McMoRan Inc. to holders of the 6.55%
Convertible Subordinated Notes due January 15, 2001 dated May 31,
1995............................................................ ---
9(a)(4) Press Release dated May 31, 1995................................. ---
9(c)(1) Agreement dated as of May 2, 1995 by and between the Company and
Freeport-McMoRan Copper & Gold Inc., on the one hand, and The RTZ
Corporation PLC, RTZ Indonesia Limited and RTZ America, Inc., on the
other hand. Incorporated by reference to Exhibit 2.1 to the Current
Report of the Company on Form 8-K filed with the Securities and
Exchange Commission (the "Commission") on May 26, 1995............ ---
9(e)(1) Prospectus Supplement dated as of January 29, 1991 to the
Prospectus dated as of January 8, 1991 relating to $373,000,000 of
the Company's 6.55% Convertible Subordinated Notes due January 15,
2001. Incorporated by reference to the Company's Registration
Statement on Form S-3, File No. 33-37716, filed with the Commission
on November 9,
1990.............................................................. ---
Exhibit 9(a)(1)
NOTICE OF REDEMPTION
of
6.55% Convertible Subordinated Notes due January 15, 2001
of
FREEPORT-McMoRan INC.
CUSIP No. 356714 AE 5
Notice is hereby given that Freeport-McMoRan Inc. (the "Company") has
called for redemption on June 30, 1995 (the "Redemption Date") all of its
6.55% Convertible Subordinated Notes due January 15, 2001 (the "Notes")
outstanding on that date at a redemption price, including accrued and unpaid
interest to and including the Redemption Date, of $942.16 for each $1,000
principal amount of Notes (the "Redemption Price").
Payment of the Redemption Price, upon presentation and surrender to the
Paying Agent, Chemical Bank (the "Paying Agent"), of certificates evidencing
the Notes, will be made during usual business hours at the following address:
Delivery Address of Paying Agent:
By Mail: By Courier: By Hand:
Chemical Bank Chemical Bank Chemical Bank
Debt Operations Department IDS Mail Services Room 234 -- North Building
Church Street Station 450 West 33rd Street Corporate Trust Securities
P.O. Box 1385 Bay 13 Window
New York, NY 10008-1385 New York, NY 10001 55 Water Street
New York, NY 10041
As an alternative to redemption, the Notes may be converted, until 5:00
p.m. (New York City time) on the Redemption Date and at the option of the
holder, into shares of Common Stock, $1.00 par value, of the Company (the
"Common Stock") at a conversion rate equal to 55.95 shares of Common Stock per
each $1,000 principal amount of Notes.
From and after the Redemption Date interest on the Notes shall cease to
accrue and holders of the Notes shall have no right in respect thereof except
the right to receive the Redemption Price thereof upon surrender of
certificates representing the Notes, unless the Company shall not pay the
Redemption Price on the Redemption Date.
ALTERNATIVES AVAILABLE TO HOLDERS OF THE NOTES
Holders of the Notes have the following alternatives:
1. Conversion of the Notes into Common Stock by 5:00 p.m. (New York City
time) on June 30, 1995. The Notes may be converted at the option of the
holder thereof at any time up to, but not later than, 5:00 p.m. (New York City
time) on the Redemption Date into fully paid and nonassessable shares of
Common Stock at a conversion rate equal to 55.95 shares of Common Stock per
each $1,000 principal amount of Notes (the "Conversion Rate"). The Conversion
Rate reflects an enhancement made by the Company to the rate otherwise
applicable to the Notes to make conversion more financially attractive to the
holders thereof, as more fully described below. See "Purpose of the
Conversion Enhancement". Any Notes remaining outstanding at 5:00 p.m. (New
York City time) on the Redemption Date will automatically be redeemed as set
forth above. Notes may be surrendered for conversion during usual business
hours to the Paying Agent at the address set forth above, together with a
written notice of election to convert such Notes. Completion, execution and
return of the enclosed Letter of Transmittal, marked clearly to indicate a
preference for Alternative 1 listed thereon, and the Conversion Notice on the
reverse of the certificate for the Notes surrendered for conversion, will
constitute compliance with such notice requirements. Since it is the time of
receipt, not the time of mailing, that determines whether the Notes have been
properly tendered for conversion, sufficient time should be allowed for
delivery.
No adjustment in respect of dividends on the Common Stock will be made upon
conversion of the Notes. No fractional shares or scrip representing
fractional shares of Common Stock are issuable upon conversion. In lieu of
any fractional shares, the Company will pay holders of Notes surrendered
for conversion an equivalent amount of cash, determined as provided in the
Subordinated Indenture dated as of November 9, 1990 between the Company and
Chemical Bank, as Trustee (the "Subordinated Indenture").
Although no assurance can be given as to the future market value of the
Common Stock, so long as the market price of the Common Stock is more than
$16.84 per share, holders of the Notes will receive upon conversion thereof
shares of Common Stock, and cash in lieu of fractional shares, having a
greater current market value than the amount of cash that they would otherwise
receive upon redemption. On May 30, 1995 the closing price of the Common
Stock as reported by the New York Stock Exchange ("NYSE") was $17.75 per
share. Holders of the Notes are urged to obtain current market prices prior
to converting their Notes or surrendering their Notes for redemption.
2. Redemption of the Notes at $942.16 per each $1,000 Principal Amount
of Notes. Payment of the Redemption Price will be made by the Paying Agent on
and after the Redemption Date upon receipt of the certificates for the Notes
so redeemed. From and after the Redemption Date, unless the Company has not
paid the Redemption Price on the Redemption Date, interest on the Notes shall
cease to accrue and holders of the Notes shall have no right in respect
thereof except the right to receive the Redemption Price thereof upon
surrender of their certificates representing the Notes. Notes surrendered for
redemption must be delivered to the Paying Agent at the address set forth
above, together with the enclosed Letter of Transmittal, marked clearly to
indicate a preference for Alternative 2 listed thereon.
3. Conversion of a Portion of Notes into Common Stock by 5:00 p.m. (New
York City time) on June 30, 1995 and Redemption of a Portion of Notes at
$942.16 per each $1,000 Principal Amount of Notes. Holders of Notes may
convert a portion of the principal amount of their Notes if such portion is
$1,000 or an integral multiple of $1,000 at any time up to, but not later
than, 5:00 p.m. (New York City time) on the Redemption Date into fully paid
and nonassessable shares of Common Stock of the Company at the Conversion Rate
(as defined in Alternative 1 described above). From and after the Redemption
Date, unless the Company has not paid the Redemption Price on the Redemption
Date, interest on the portion of the Notes not converted shall cease to accrue
and holders thereof shall have no right in respect thereof except the right
to receive the Redemption Price thereof upon surrender of their certificates
representing such portion of the Notes. Notes may be surrendered for
conversion or redemption during usual business hours to the Paying Agent at
the address set forth above. Notes surrendered for conversion must be
accompanied by a written notice of election to convert such portion of Notes.
Completion, execution and return of the enclosed Letter of Transmittal, marked
clearly to indicate a preference for Alternative 3 listed thereon, and the
Conversion Notice on the reverse of the certificate for the Notes surrendered
for conversion, will constitute compliance with such notice requirements.
Since it is the time of receipt, not the time of mailing, that determines
whether the Notes have been properly tendered for conversion, sufficient time
should be allowed for delivery. Please note that "Box D -- Allocation of
Principal Amount" in the Letter of Transmittal must also be completed.
No adjustment in respect of dividends on the Common Stock will be made upon
conversion of the Notes. No fractional shares or scrip representing
fractional shares of Common Stock are issuable upon conversion. In lieu of
any fractional shares, the Company will pay holders of Notes surrendered
for conversion an equivalent amount of cash, determined as provided in the
Subordinated Indenture.
4. Sale of Notes Through Brokerage Transactions. Notes may be sold
through a broker on the NYSE or otherwise in the open market. Any such sale
should be made sufficiently in advance of 5:00 p.m. (New York City time) on
the Redemption Date to permit the buyer of such Notes to exercise the
conversion privilege. After 5:00 p.m. (New York City time) on the Redemption
Date, holders of the Notes will not be entitled to convert their Notes into
Common Stock, and after that date the market value of the Notes will reflect
only the right to receive the Redemption Price and will not reflect the market
value of the Common Stock.
ADDITIONAL INFORMATION TO CONSIDER
The Company
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 other natural resources. The Company engages in such
activities primarily through Freeport-McMoRan Copper & Gold Inc. ("FCX") and
Freeport-McMoRan Resource Partners, Limited Partnership ("FRP"). 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. 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. Eastern Mining
Company, Inc. ("Eastern Mining") is a wholly owned subsidiary of FCX. FRP, a
Delaware limited partnership, 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.
Source of Financing for the Redemption
The amount of funds required for the redemption of the Notes will depend
upon the number of Notes which are surrendered for conversion prior to the
Redemption Date. If no Notes are so surrendered, the Company will finance
redemption of the Notes primarily through the sale, pursuant to the Purchase
Agreement described below under "Strategic Alliance" (the "Purchase
Agreement"), to RTZ Indonesia Limited ("RTZI"), an indirect wholly owned
subsidiary of The RTZ Corporation PLC ("RTZ"), of shares of FCX Class A Common
Stock at a purchase price of $20.90 per share, up to a maximum of 16.8 million
shares. The remainder of such redemption price, if any, would be obtained
from borrowing under the Company's existing Credit Agreements. It was to
avoid such financing that the Conversion Rate was enhanced as described under
"Purpose of the Conversion Enhancement".
The Purchase Agreement provided that if requested to do so by the Company,
RTZ America, Inc. ("RTZA"), a Delaware corporation and an indirect wholly
owned subsidiary of RTZ, would make a tender offer for the Notes. For various
reasons, including primarily the expectation that the use of a tender offer
would delay the Distribution (as defined below), the Company has elected not
to make such a request. Although not obligated to do so, RTZA may, from time
to time prior to the Redemption Date, purchase Notes in the market.
Purpose of the Conversion Enhancement
As of May 30, 1995 the aggregate principal amount of Notes outstanding was
$372,873,000. The Notes were issued under the Subordinated Indenture.
Pursuant to a Supplemental Indenture dated as of May 31, 1995 to the
Subordinated Indenture, the Company increased the conversion rate to 55.95
shares of Common Stock per each $1,000 principal amount of Notes (the
"Conversion Rate"), equivalent to a decrease in the conversion price from
$20.31 to $17.87 in principal amount of each Note per share of Common Stock
(the "Conversion Enhancement"). Although no assurance can be given as to
the future market value of the Common Stock, so long as the market price of
the Common Stock is more than $16.84 per share, holders of the Notes will
receive upon conversion thereof shares of Common Stock, and cash in lieu of
fractional shares, having a greater current market value than the amount of
cash that they would otherwise receive upon redemption. Although under the
Subordinated Indenture no payment or adjustment is required for interest
accrued on any Note converted, the Conversion Rate as modified reflects,
among other things, an adjustment for the interest accrued up to and
including the Redemption Date.
The Company's basic reason for making the Conversion Enhancement 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 FCX which the Company owns at the time of the
distribution (the "Distribution"). See "Background to the Distribution"
below. By converting the Notes into Common Stock prior to the Redemption
Date, the holders thereof will be able to participate fully in the
Distribution. Although the Company is not making any recommendations to the
holders of the Notes as to whether or not they should convert their Notes
prior to the Redemption Date, the Company believes that it is desirable to
afford holders of the Notes a meaningful opportunity to participate in the
Distribution should they desire to do so. The holders of the Notes currently
have the ability to become holders of Common Stock by exercise of their right
to convert the Notes into Common Stock in accordance with the conversion
features of the Notes, and thus participate in the Distribution. The Company
has made the Conversion Enhancement to encourage such conversions.
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
FRP and in the sulphur and agricultural minerals businesses conducted by FRP.
However, holders of Notes who convert such Notes into Common Stock prior to
the Redemption Date 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 as well as by the Company.
The Company believes that the Conversion Enhancement is also advantageous
to the Company. After the Distribution, the remaining assets of the Company
will be significantly reduced, and, as a result, the Company needs to reduce
its ongoing fixed charges. This goal will be furthered to the extent the
Conversion Enhancement promotes conversions of Notes into Common Stock so that
the amount of cash necessary to effect the redemption of the Notes is reduced.
Background to the Distribution
In May 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 Stock of FCX which it owns at the time of such Distribution.
The Distribution, which is expected to take place by midyear, is contingent on
a number of factors including (1) assurance that the Distribution will be
tax-free, (2) completion of the restructuring (the "Company Restructuring") of
the liabilities of the Company including its long-term debt, 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. The redemption or conversion of all of the Notes is a
necessary part of the Company Restructuring.
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
arrangements with RTZ described below have been entered into in anticipation
of the Distribution.
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 IMC
Global Inc., 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. A contract of
work signed by PT-FI and the Government of the Republic of Indonesia (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"). PT-FI has recently
completed expanding its production capacity from 66,000 metric tons of ore per
day ("MTPD") to 115,000 MTPD. With this expansion project 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 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 respective
contract of work 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 below 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. See "Strategic
Alliance". 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 MTPD 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. 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
various conditions, FCX will own 20% of the newly formed Indonesian company,
and PT-FI will provide all of the smelter's copper concentrate feedstock
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.
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.
Strategic Alliance
In May 1995, the Company, FCX, RTZ, RTZA and RTZI entered into agreements
to establish a strategic alliance between FCX and RTZ. RTZ is one of the
world's leading international mining companies based in the United Kingdom.
RTZ's substantial interests in mining include: copper, gold, iron ore,
aluminum, zinc and silver in metals, coal and uranium in energy, and borates,
titanium dioxide feedstock, talc, diamonds and zircon in other minerals.
These interests are located predominantly in North America and Australasia as
well as in Europe, southern Africa and South America. RTZA's three major
wholly owned subsidiaries are Kennecott Corporation, the RTZ Borax group and
QIT-Fer et Titane. Kennecott Corporation's major operation is Bingham Canyon,
one of the world's largest open-pit copper mines, which is located in Utah.
The RTZ Borax group, through U.S. Borax, Inc., owns and operates one of the
world's largest mines, located in California's Mojave Desert.
Pursuant to the proposed transactions, the Company and FCX, on the one
hand, and RTZ, RTZA and RTZI, on the other hand, entered into a Purchase
Agreement dated as of May 2, 1995 pursuant to which RTZI purchased
21,531,100 shares of FCX Class A Common Stock from the Company for $450
million. The statements contained herein with respect to the Purchase
Agreement are brief summaries of the material provisions of such agreement
and are qualified in their entirety by the complete text of such agreement,
which was filed on May 26, 1995 with the Securities and Exchange Commission
as an exhibit to the Company's Current Report on Form 8-K. RTZI also
received an option to acquire from the Company prior to the Distribution up
to 3,588,517 shares of FCX Class A Common Stock at a purchase price of
$20.90 per share. If RTZI does not exercise such option, the Company may
sell some or all of such FCX Class A Common Stock to other buyers. In
addition, if the Company redeems any Notes, the Company may request RTZI to
purchase up to 16.8 million additional shares of FCX Class A Common Stock
from the Company at a purchase price of $20.90 per share. Pursuant to the
Purchase Agreement, FCX has entered into a registration rights agreement
with RTZ, RTZA and RTZI pursuant to which RTZ has the right to request that
FCX effect a registered public offering of, and RTZ has the right to
participate in a registered public offering by FCX or by another
stockholder by selling in such offering, certain shares of FCX Common
Stock. In addition, pursuant to the Purchase Agreement, the Company has
entered into a registration rights agreement with RTZ and RTZA pursuant to
which RTZ has the right to request that the Company effect a registered
public offering of, and RTZ has the right to participate in a registered
public offering by the Company or by another stockholder by selling in such
offering, certain shares of the Company's Common Stock.
RTZ and its subsidiaries are expected to contribute substantial operating
and management expertise to FCX's business. Representatives of RTZI, in
proportion to RTZI'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.
FCX and RTZ have entered into an Implementation Agreement, dated as of May
2, 1995 (the "Implementation Agreement") pursuant to which FCX and RTZ agreed
to the steps their respective affiliates will take to implement certain
transactions relating to joint venture arrangements in Indonesia and the sale
of a portion of FCX's Spanish operations to RTZ.
Under the proposed joint venture arrangements PT-FI will enter into a
participation agreement with an affiliate of RTZ to be organized under the
laws of Indonesia ("PT-RTZ") (the "Participation Agreement"). Under the
Participation Agreement, PT-FI and PT-RTZ will establish exploration and
development joint ventures in the COW Area. PT-FI will establish an
Exploration Committee on which representatives of PT-RTZ will serve to approve
exploration expenditures in the COW Area and PT-RTZ will pay for all
exploration costs approved by the committee until RTZ has paid an aggregate
of $100 million in respect of exploration expenses related to the COW Area or
the Eastern Mining COW Area. PT-RTZ will acquire a 40% undivided interest in
the COW, excluding any interest in PT-FI's current mining and milling
operations.
For expansion projects in Block A, affiliates of RTZ will provide up to a
maximum of $750 million for 100% of defined costs to develop such projects.
Affiliates of RTZ will receive 100% of incremental cash flow attributed to the
expansion projects until they have received an amount equal to the funds they
have provided for approved expansion projects plus interest based on RTZ's
cost of borrowing. Subsequently, the parties will share ratably in
incremental cash flow with 60% to PT-FI and 40% to PT-RTZ. Future expansion
projects in Block A will exclude any interest in future production equivalent
to FCX's expanded 118,000 tonnes of ore per day milling operations based on
its proved and probable ore reserves as of December 31, 1994. Apart from
RTZ's provision of the $750 million for Block A expansions, all costs of
development projects mutually agreed upon by PT-FI and PT-RTZ will be shared
ratably in proportion to the parties' ownership interests therein. The
Implementation Agreement provides that if the closing in respect of, among
other things, the Participation Agreement, is not executed prior to December
31, 1996, RTZ shall have the option to cause the Implementation Agreement to
lapse and the obligations of the parties thereunder, including the obligation
to execute the Participation Agreement, shall thereafter terminate.
The Implementation Agreement also provides that each of FCX and RTZ will
negotiate in good faith with a view to agreeing as soon as practicable one
or more agreements in respect of the Eastern Mining COW, in substantially
the form of the Participation Agreement, as modified to reflect the
parties' intentions as set out in the letter of intent, dated March 7,
1995, between FCX and RTZ, or otherwise to provide an alternative structure
which achieves the same business objective on a mutually more favorable
basis from tax, accounting, corporate and regulatory perspectives.
FCX and RTZ agreed in the Implementation Agreement to negotiate in good
faith with a view to agreeing as soon as practicable one or more agreements
in respect of the acquisition by RTZ and its subsidiaries of a 25% interest
in the Huelva smelter of RTM and certain exploration rights of RTM and its
subsidiaries in Spain at a price pro rata to FCX's cost of acquisition, or
otherwise to provide an alternative structure which achieves the same
business objective on a mutually more favorable basis from tax, accounting,
corporate and regulatory perspectives.
Price Range of the Notes
The Notes are listed and traded on the NYSE. The following table sets
forth the high and low sale prices of the Notes expressed as a percentage of
principal amount at maturity of the Notes as reported by the NYSE for the
fiscal periods indicated:
Fiscal Quarter Notes
-------------- ------------------------
High Low
------ ------
1993:
2nd Quarter 99.50% 91.00%
3rd Quarter 93.25 90.00
4th Quarter 93.50 88.50
1994:
1st Quarter 95.75 91.13
2nd Quarter 93.00 86.50
3rd Quarter 94.75 89.00
4th Quarter 94.75 89.00
1995:
1st Quarter 92.50 89.00
2nd Quarter
(through May 30) 92.00 90.50
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 by the NYSE for the fiscal periods indicated:
Fiscal Quarter Common Stock
-------------- -----------------------
High Low
------ ------
1993:
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 18.63 16.75
2nd Quarter
(through May 30) 18.63 16.88
The Common Stock issuable upon conversion of the Notes has been registered
under the Securities Act of 1933.
Dividends
In early 1992 the Company's Board of Directors fixed the amount of the
regular quarterly Common Stock cash dividend at $.3125 per share. In May
1994, the Board of Directors announced that the Company, in lieu of paying a
$.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 have not been issued in
connection with such dividend distributions. Each Common Stockholder of the
Company entitled to receive a fractional share of FCX Common Stock received
cash in lieu of the fractional share. In light of the anticipated
Distribution, however, the Board of Directors did not declare the dividend in
1995 which would normally be paid on June 1.
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.
In May 1994, 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 by its future financial performance.
Description of the Common Stock
The following statements are brief summaries of the material provisions
relating to the Company's 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 Securities and
Exchange Commission.
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 the Company's $4.375 Convertible Exchangeable Preferred Stock (the
"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.
Solicitation of Conversions; Fees
The Company has not retained any agents to solicit conversions of the Notes
to Common Stock, and the Company will not make any payments to brokers,
dealers or others for soliciting such conversions.
The Company has retained Chemical Bank as Paying Agent in connection with
any redemptions or conversions of the Notes. The Paying Agent will receive
reasonable and customary compensations for their services in connection with
such matters, 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 this Notice of Redemption, the Letter of Transmittal and related
materials to their customers.
Interests of Certain Persons in the Transaction
A trust for the benefit of Richard C. Adkerson, Senior Vice President and
Chief Financial Officer of the Company, beneficially owns $16,000 aggregate
principal amount of Notes. Except as stated herein, as of May 30, 1995, none
of the executive officers or directors of the Company beneficially owned any
of the Notes.
Transactions and Agreements Concerning the Notes and the Common Stock
On March 24, 1995 the Company offered to exchange 2.85 shares of Common
Stock for each share of its Preferred Stock upon the terms and subject to the
conditions set forth in an offering circular dated March 24, 1995 and in the
related letter of transmittal (the "Exchange Offer"). Pursuant to the
Exchange Offer, on April 24, 1995 the Company accepted for exchange 3,998,310
shares of Preferred Stock for 11,395,181 shares of Common Stock.
Except as described 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 Notes or the Common
Stock.
Tax Considerations
A holder of the Notes who does not convert any portion of his Notes into
Common Stock will recognize gain or loss on the redemption of the Notes for
cash, measured by the difference between the amount of cash received and his
tax basis in the Notes. Provided the Notes are held as a capital asset and
have been held for more than one year, any gain or loss recognized would be
long term capital gain or loss. A holder of Notes who converts all of his
Notes into Common Stock will not recognize taxable gain or loss on the
conversion, except for the receipt of cash in lieu of fractional shares. A
holder who converts a portion of his Notes into Common Stock and receives cash
in redemption of a portion of his Notes will realize gain or loss, measured by
the difference between (i) the sum of the fair market value of the Common
Stock and the amount of cash received and (ii) his tax basis in all of the
Notes surrendered, but the amount of gain recognized will not exceed the
amount of cash received. The gain recognized generally would be capital gain
if the holder does not own, directly or indirectly, a substantial stock
interest in the Company. The Company urges holders of Notes to consult their
own tax advisors as to federal, state and local tax treatment applicable to
them on conversion or redemption.
SUMMARY FINANCIAL INFORMATION
Set forth below is certain consolidated historical financial information of
the Company and its subsidiaries derived from the consolidated financial
statements included in the Company's Annual Report on Form 10-K for the year
ended December 31, 1994 and from the unaudited consolidated financial
statements included in the Company's Quarterly Report on Form 10-Q for the
calendar quarter ended March 31, 1995. More comprehensive financial
information is included in such reports and the financial information which
follows is qualified in its entirety by reference to such reports and all of
the financial statements and related notes contained therein, copies of which
may be obtained as set forth in "Additional Available Information". The pro
forma financial data assumes, in separate columns, that (1) 100% of the
outstanding Notes are converted into Common Stock and (2) 100% of the
outstanding Notes are redeemed. The 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.
<TABLE>
<CAPTION>
Pro Forma - Pro Forma -
Historical 100% Conversion<F1> 100% Redeemed<F2>
------------------------------------------------- ------------------------ ------------------------
Three Three
Year Months Year Months
Years Ended Three Months Ended Ended Ended Ended
December 31, Ended March 31, Dec. 31, Mar. 31, Dec. 31, Mar. 31,
1993 1994 1994 1995 1994 1995 1994 1995
---------- ---------- ---------- ---------- ---------- ---------- ---------- -----------
(amounts in thousands, except
per share amounts and ratios)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Revenues $1,610,581 $1,982,396 $ 449,594 $ 663,285 $1,982,396 $ 663,285 $1,982,396 $ 663,285
Interest expense, net 79,882 91,834 23,430 25,059 60,528 17,083 60,626 17,105
Minority interests in net
income (loss) of sub-
sidiaries (61,689) 168,951 26,891 70,740 168,951 70,740 175,356 74,330
Provision for income taxes 17,854 148,388 33,027 50,127 159,345 52,919 159,310 52,911
Net income (loss) applicable
to Common Stock (126,203) 41,443 12,373 19,391 61,792 24,575 55,324 20,971
Average common shares
outstanding 141,595 139,223 141,063 137,326 160,085 158,188 139,223 137,326
Net income (loss) per common
share, before extraordinary
items and accounting changes (0.74) 0.37 0.13 0.14 0.44 0.16 0.46 0.15
Net income (loss) per common
share (0.89) 0.30 0.09 0.14 0.39 0.16 0.40 0.15
Ratio of earnings to fixed
charges<F3> -<F4> 2.0x 1.9x 2.4x 2.2x 2.7x 2.2x 2.7x
Total assets 3,714,067 4,373,575 3,859,990 4,606,035 4,369,477 4,602,109 4,302,431 4,535,063
Long-term debt, including
current portion, and
short term borrowings 1,331,680 1,671,294 1,290,411 1,865,128 1,353,057 1,545,277 1,353,057 1,545,277
Stockholders' equity 649 (230,467) (23,703) (256,543) 94,937 64,540 (48,598) (77,951)
Book value per common share (1.83) (3.50) (2.00) (3.71) (0.98) (1.18) (2.18) (2.40)
<FN>
<F1> Assumes 100% of the Notes outstanding are converted into Common Stock at
a conversion rate of 55.95 shares of Common Stock for each $1,000
principal amount of Notes.
<F2> Assumes 100% of the Notes outstanding are redeemed for $942.16 per $1,000 principal
amount of Notes, and FTX finances the redemption by selling shares of FCX
Class A common stock at a price of $20.90 per share.
<F3> 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.
<F4> In 1993 earnings were inadequate to cover fixed charges by $241.8
million.
</FN>
</TABLE>
ADDITIONAL 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, the
Company's Quarterly Report on Form 10-Q for the quarter ended March 31, 1995
and the Company's Current Report on Form 8-K filed with the Commission on May
26, 1995, 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, 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 transactions described in this
Notice of Redemption. 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 any such Schedule may not be available in the
regional offices of the Commission).
FREEPORT-McMoRan INC.
May 31, 1995
LETTER OF TRANSMITTAL
To Accompany Certificates of
6.55% Convertible Subordinated Notes due January 15, 2001
of
FREEPORT-McMoRan INC.
Name and Address of Paying Agent: Chemical Bank
Delivery Address of Paying Agent:
By Mail: By Courier: By Hand:
Chemical Bank Chemical Bank Chemical Bank
Debt Operations Department IDS Mail Services Room 234 -- North
Church Street Station 450 West 33rd Street Building
P.O. Box 1385 Bay 13 Corporate Trust
New York, NY 10008-1385 New York, NY 10001 Securities Window
55 Water Street
New York, NY 10041
This Letter of Transmittal and accompanying certificate(s) must be
received by the Paying Agent at the above address in order to constitute a
valid delivery. Delivery of this Letter of Transmittal to an address other
than as set forth above, or transmission of instructions via facsimile or
telex to the Paying Agent, does not constitute a valid delivery. The
Instructions accompanying this Letter of Transmittal should be read
carefully before this Letter of Transmittal is completed.
This Letter of Transmittal is to be used to accompany certificates of
6.55% Convertible Subordinated Notes due January 15, 2001 (the "Notes") of
Freeport-McMoRan Inc. (the "Company") surrendered for conversion or
redemption as described in the Company's Notice of Redemption dated May 31,
1995 (the "Notice of Redemption").
To: Chemical Bank
Reference is made to the Notice of Redemption, receipt of which is
hereby acknowledged, whereby the Company has called for redemption on June
30, 1995 (the "Redemption Date") all of the Notes outstanding on that date
at a redemption price, including accrued and unpaid interest to and
including the Redemption Date, of $942.16 for each $1,000 principal amount
of Notes (the "Redemption Price"). As an alternative to redemption, the
Notes may be converted, until 5:00 p.m. (New York City time) on the
Redemption Date and at the option of the holder, into shares of Common
Stock, $1.00 par value, of the Company (the "Common Stock") at a conversion
rate equal to 55.95 shares of Common Stock per each $1,000 principal amount
of Notes.
If you wish to convert your Notes into shares of Common Stock, your Note
certificates(s) and this Letter of Transmittal or other written notice of
election must be received by the Paying Agent at the address shown above no
later than 5:00 p.m. (New York City time) on the Redemption Date. Notes
received after 5:00 p.m. (New York City time) on the Redemption Date will be
redeemed at the Redemption Price.
Although no assurance can be given as to the future market value of the
Common Stock, so long as the market price of the Common Stock is more than
$16.84 per share, holders of Notes will receive upon conversion thereof
shares of Common Stock, and cash in lieu of fractional shares, having a
greater current market value than the amount of cash that they would
otherwise receive upon redemption. On May 30, 1995 the closing price of
the Common Stock as reported by the New York Stock Exchange was $17.75 per
share. Holders of the Notes are urged to obtain current market prices
prior to converting their Notes or surrendering their Notes for redemption.
DESCRIPTION OF NOTES DELIVERED
____________________________________________________________________________
|Box A |Please identify below the |
|Please fill in your name(s) as it appears|certificates representing the |
|on the certificates representing the |Notes enclosed (attach a signed |
|Notes and your present address below. |separate list if space below is |
| |inadequate) |
|____________________________________________________________________________|
| | Certificate | Principal |
| | Number | Amount |
| |__________________|_______________|
| | | |
| |__________________|_______________|
| | | |
| |__________________|_______________|
| | | |
| |__________________|_______________|
| | | |
| |__________________|_______________|
| | | |
| |__________________|_______________|
| | | |
| |__________________|_______________|
| | | |
| |__________________|_______________|
| | Total | |
| | Principal Amount | |
|____________________________________________________________________________|
(PLEASE CHECK ONE OF THE FOLLOWING BOXES)
Alternative 1: (Conversion)
[ ] The undersigned hereby surrenders the Notes listed above in "Box A --
Description of Notes Delivered" and instructs the Paying Agent, on
behalf of the Company (i) to convert such Notes into shares of Common
Stock as soon as practicable after the surrender thereof and prior to
5:00 p.m. (New York City time) on June 30, 1995 at a conversion rate
equal to 55.95 shares of Common Stock per each $1,000 principal amount
of Notes and (ii) to issue to the undersigned (or instead to the
person(s) indicated below in "Box B -- Special Issuance and/or Payment
Instructions", if completed) a certificate representing the total
number of whole shares of such Common Stock resulting from such
conversion (a "Common Certificate") plus a check for the value of any
fractional share resulting from such conversion (a "Conversion
Check"). The undersigned has also completed and signed the Conversion
Notice set forth on the reverse of each certificate for the Notes
surrendered herewith and to be converted in accordance with the
foregoing.
Alternative 2: (Redemption)
[ ] The undersigned hereby surrenders the Notes listed above in "Box A --
Description of Notes Delivered" and enclosed herewith for redemption
at the Redemption Price and instructs the Paying Agent, on behalf of
the Company, to issue to the undersigned (or instead to the person(s)
indicated below in "Box B -- Special Issuance and/or Payment
Instructions", if completed) a check in the amount of the Redemption
Price (a "Redemption Check").
Alternative 3: (Conversion and Redemption)
[ ] The undersigned hereby surrenders the Notes listed above in "Box A -
Description of Notes Delivered" and instructs the Paying Agent, on
behalf of the Company (i) to convert such portion of Notes as
indicated in "Box D - Allocation of Principal Amount" into shares of
Common Stock of the Company as soon as practicable after the surrender
thereof and prior to 5:00 p.m. (New York City time) on June 30, 1995
at a conversion rate equal to 55.95 shares of Common Stock per each
$1,000 principal amount of Notes, (ii) to issue to the undersigned (or
instead to the person(s) indicated below in "Box B - Special Issuance
and/or Payment Instructions", if completed) a certificate representing
the total number of whole shares of Common Stock resulting from such
conversion (a "Common Certificate") plus a check for the value of any
fractional share resulting from such conversion (a "Conversion Check")
and (iii) to issue to the undersigned (or instead to the person(s)
indicated below in "Box B - Special Issuance and/or Payment
Instructions", if completed) a check in the amount of the Redemption
Price for such Notes as indicated in "Box D - Allocation of Principal
Amount" (a "Redemption Check") . Failure to complete "Box D -
Allocation of Principal Amount" shall be deemed an election to convert
the entire principal balance of surrendered Notes into Common Stock in
accordance with the election under Alternative 1. The apportionment
of principal balance to be made in "Box D - Allocation of Principal
Amount" may only be made in integral multiples of $1,000. The
undersigned has also completed and signed the Conversion Notice set
forth on each certificate for the Notes surrendered herewith and to be
converted in accordance with the foregoing.
(Applicable to Alternative 1, Alternative 2 and Alternative 3) Unless
otherwise indicated below under "Box B -- Special Issuance and/or
Payment Instructions" or "Box C -- Special Delivery Instructions", the
undersigned hereby instructs the Paying Agent to deliver (i) the
Common Certificate and Conversion Check (if any), if Alternative 1 or
Alternative 3 has been elected or (ii) the Redemption Check, if
Alternative 2 or Alternative 3 has been elected, to the address
indicated above in "Box A -- Description of Notes Delivered". In the
event that "Box B -- Special Issuance and/or Payment Instructions" or
"Box C -- Special Delivery Instructions" are completed below, the
undersigned hereby instructs the Paying Agent to deliver (i) the
Common Certificate and Conversion Check (if any), if Alternative 1 or
Alternative 3 has been elected or (ii) the Redemption Check, if
Alternative 2 or Alternative 3 has been elected, to the applicable
address indicated therein.
_____________________________________ _____________________________________
| Box B || Box C |
| SPECIAL ISSUANCE and/or || SPECIAL DELIVERY INSTRUCTIONS |
| PAYMENT INSTRUCTIONS || |
| (See Instructions 3 and 5) || Fill in ONLY if the Common |
| || Certificate, Conversion Check or |
| Fill in ONLY if the Common || Redemption Check (as applicable) is |
| Certificate, Conversion Check || to be sent to an address OTHER than |
| or Redemption Check (as applicable) || that appearing in Box A or Box B. |
| is to be issued in a name OTHER than|| |
| the name appearing in Box A above. || |
| (Unless otherwise indicated in Box || Name_______________________________ |
| C, the Common Certificate, || (Please Print) |
| Conversion Check or Redemption || |
| Check (as applicable) will be || Address____________________________ |
| mailed to the address indicated in || |
| his Box B.) || ___________________________________ |
| || |
| || ___________________________________ |
| Name_______________________________ || |
| (Please Print) || (Zip Code) |
| || ___________________________________ |
| Address____________________________ || |
| || Area Code |
|| and Telephone No.__________________ |
| ___________________________________ || |
| (Zip Code) || |
| || |
| ___________________________________ || |
| Tax Identification or || |
| Social Security Number of person || |
| || |
|_____________________________________||_____________________________________|
____________________________________________________________________________
| Box D |
| |
| ALLOCATION OF PRINCIPAL AMOUNT |
| |
| |
| This box should be completed ONLY if a portion of the Notes is to be |
| surrendered for conversion into Common Stock and the balance is to be |
| redeemed. |
| |
| The principal balance of the Notes surrendered is to be apportioned |
| between conversion and redemption as follows: |
| |
| $ ________ principal amount is to be applied toward conversion and |
| |
| $ ________ principal amount is to be applied toward redemption. |
| |
| THE ABOVE APPORTIONMENT MAY ONLY BE MADE IN INCREMENTS OF $1,000 OF |
| PRINCIPAL AMOUNT OF NOTES. |
|____________________________________________________________________________|
________________________________________________________
| |
| SIGN HERE |
|________________________________________________________|
| |
|________________________________________________________|
| |
=====> |________________________________________________________| <=====
| Signature(s) of Owner(s) |
| |
| Dated: _________________________________________, 1995 |
| |
| (Must be signed by registered holder(s) exactly as |
| name(s) appear(s) on Note certificate(s) or |
| by person(s) authorized to become registered |
| holder(s) by certificates and documents transmitted |
| herewith. If signature is by a trustee, executor, |
| administrator, guardian, attorney-in-fact, officer of |
| a corporation or other person acting in a fiduciary of|
| representative capacity, please provide the following |
| information and see Instruction 6.) |
| |
| |
| Name(s)_______________________________________________|
| |
| ______________________________________________________|
| (Please Print) |
| |
| Capacity ______________________________________________|
| |
| Address________________________________________________|
| |
| _______________________________________________________|
| (Zip Code) |
| |
| Area Code and Telephone Number_________________________|
| |
| Tax Identification or |
| Social Seccurity Number _______________________________|
| |
| Guarantee of Signature(s) |
| (See Instructions 3 and 5) |
| |
| Name of Firm__________________________________________|
| |
| Address_______________________________________________|
| |
| ______________________________________________________|
| (Zip Code) |
| |
| Area Code and Telephone No.____________________________|
| |
| Authorized Signature __________________________________|
| |
| Name___________________________________________________|
| (Please Print) |
| Dated:___________________________________________, 1995|
| |
|________________________________________________________|
<TABLE>
<CAPTION>
<S> <C> <C>
PAYER'S NAME: CHEMICAL BANK
_______________________________________________________________________________________________________________________________
| | | |
| SUBSTITUTE | Part 1 - PLEASE PROVIDE YOUR TIN IN THE BOX AT RIGHT | |
| FORM W-9 | AND CERTIFY BY SIGNING AND DATING BELOW(*) | |
| | | |
|_______________________________________________________________________________________________________________________________|
| | |
| Department of | Part 2 - Check the box if you are NOT subject to backup withholding under the provisions of section |
| the Treasury | 3406(a)(1)(C) of the Internal Revenue Code because (1) you have not been notified that you are |
| Internal Revenue | subject to backup withholding as a result of failure to report all interest or dividends or (2) the |
| Service | Revenue Service has notified you that you are no longer subject to backup withholding [ ] |
| |__________________________________________________________________________________________________________|
| | (*)CERTIFICATION - UNDER THE PENALTIES OF PERJURY, I CERTIFY THAT | |
| Payer's Request | THE INFORMATION PROVIDED ON THIS FORM IS TRUE, CORRECT, AND | Part 3 |
| for Taxpayer | COMPLETE. | Awaiting TIN [ ] |
| Identification | | |
| Number (TIN) | SIGNATURE DATE | |
| | | |
|_______________________________________________________________________________________________________________________________|
YOU MUST COMPLETE THE FOLLOWING CERTIFICATE IF YOU
CHECKED THE BOX IN PART 3 OF SUBSTITUTE FORM W-9
________________________________________________________________________________________________________________________________
| CERTIFICATE OF AWAITING TAXPAYER IDENTIFICATION NUMBER |
| |
| I certify under penalties of perjury that a taxpayer identification number has not been issued to me, and either (a) I have |
| mailed an application to receive a taxpayer identification number to the appropriate Internal Revenue Service Center or |
| Social Security Administration Office or (b) I intend to mail or deliver an application in the near future. I understand |
| that, notwithstanding that I have checked the box in Part 3 (and have completed this Certificate of Awaiting Taxpayer |
| Identification Number), all reportable payments made to me prior to the time I provide the Paying Agent with a |
| properly certified taxpayer identification number will be subject to a 31% backup withholding rate. |
| |
| SIGNATURE DATE |
|________________________________________________________________________________________________________________________________|
</TABLE>
NOTE: FAILURE TO COMPLETE AND RETURN THIS FORM MAY RESULT IN BACKUP
WITHHOLDING OF 31% OF ANY CASH PAYMENTS MADE TO YOU IN CONNECTION WITH THE
REDEMPTION OR CONVERSION OF THE NOTES.
FOR ADDITIONAL DETAILS PLEASE REVIEW ENCLOSED GUIDELINES FOR
CERTIFICATION OF TAXPAYER IDENTIFICATION NUMBER ON
SUBSTITUTE FORM W-9
INSTRUCTIONS
1. Completion and Delivery of Letter of Transmittal. Please do not
send certificates representing Notes directly to the Company. This Letter
of Transmittal or photocopy facsimile hereof should be properly filled in,
dated and signed, and delivered or sent with your Note certificate(s) and
any required supporting documents to the Paying Agent, at the appropriate
address listed on the front hereof. If you elect to convert your Notes
into shares of Common Stock pursuant to Alternative 1 or Alternative 3,
please also complete and sign the Conversion Notice set forth on the
reverse of each Note certificate surrendered herewith. The method of
submission is at your option and risk; but if sent by mail, transmission by
registered mail with return receipt requested, properly insured, is
recommended. A return envelope addressed to the Paying Agent is enclosed
for your convenience. Additional copies of this Letter of Transmittal or
the Notice of Redemption may be obtained from Georgeson & Company Inc.,
Wall Street Plaza, New York, NY 10005 (tel. no. 800-223-2064). Note:
Notes surrendered for conversion must be received by the Paying Agent by
5:00 p.m. (New York City time) on June 30, 1995, notwithstanding the date
of postmark.
2. Signatures. The signature (or signatures, in the case of certificates
owned by two or more joint holders) on the Letter of Transmittal must
correspond exactly with the name(s) that appear(s) on the face of the Note
certificate(s) surrendered, unless the Notes represented thereby have been
assigned by the registered holder, in which event the Letter of Transmittal
should be signed in exactly the same form as the name of the last transferee
indicated on the transfers attached to or endorsed on the certificate(s).
(See Instruction 5 below.)
3. Issuance of Redemption Check. If the Redemption Check in payment of
the Notes surrendered for redemption is to be issued in a name different
from that appearing on the face of the surrendered certificate(s), the
certificate(s) must be properly endorsed in blank by the registered holder
thereof or accompanied by a duly executed instrument of assignment in blank
and the signature to the endorsement or assignment must be guaranteed by an
eligible guarantor institution which has been approved by the Paying Agent
(the "Qualified Guarantor") . Such institutions generally include banks,
brokers, dealers, credit unions, savings associations and other entities
which are members in good standing of the Securities Transfer Agents
Medallion Program.
4. Issuance of Common Certificate and Conversion Check (if any) in the
Same Name. If the Common Certificate and Conversion Check (if any) are to
be issued in the name(s) of the record holder as inscribed on the
surrendered Note certificate(s), the surrendered certificate(s) need not be
endorsed. For corrections in name or changes in name(s) not involving
changes in ownership, see Instruction 5(d) below.
5. Issuance of Common Certificate and Conversion Check (if any) in a
Different Name. If the Common Certificate and Conversion Check (if any)
are to be issued in a name different from the name(s) of the record holder
as inscribed on the surrendered Note certificate(s), please be guided by
the following:
(a) Endorsement and Guarantee. The Note certificate(s) surrendered
must be properly endorsed or accompanied by appropriate assignments properly
executed by the record holder of such certificate(s) to the person who is to
receive the Common Certificate and/or Conversion Check. The signature(s) of
the record holder on the endorsement or assignments must correspond with the
name(s) that appear(s) on the face of the certificate(s) in every particular
and must be guaranteed by a Qualified Guarantor as defined in Instruction 3.
(b) Transferee's Signature. If a certificate has been properly
transferred and the transfer has not yet been recorded on the books of the
Company, this Letter of Transmittal must be signed by the transferee or by his
agent and should not be signed by the transferor. The signature of such
transferee or agent on this Letter of Transmittal must be guaranteed by a
Qualified Guarantor as defined in Instruction 3.
(c) Transfer Taxes. In the event that any transfer or other taxes
become payable by reason of the issuance of the Common Certificate and
Conversion Check (if any) in any name other than that of the record holder,
such transferee or assignee must pay such tax to the Company or must establish
to the satisfaction of the Company that such tax has been paid.
(d) Correction of or Change in Name. For correction of name or for
a change in name which does not involve a change of ownership, proceed as
follows: For a change in name by marriage, etc., the surrendered
certificate(s) should be endorsed, e.g., "Mary Doe, now by marriage Mrs.
Mary Jones," with the signature guaranteed by a Qualified Guarantor as
defined in Instruction 3. For a correction in name, the surrendered
certificates should be endorsed, e.g.,
"James E. Brown, incorrectly inscribed as James S. Brown," with the
signature guaranteed by a Qualified Guarantor as defined in Instruction 3.
6. Supporting Evidence. In case any Letter of Transmittal or certificate
endorsement is executed by an agent, attorney, administrator, executor,
guardian, trustee or in any other fiduciary or representative capacity, or by
an officer of a corporation on behalf of the corporation, there should be
submitted documentary evidence of appointment and authority to act in such
capacity (including court orders and corporate resolutions where necessary),
as well as evidence of the authority of the person making such execution to
assign, sell or transfer the shares. Such documentary evidence of authority
must be in form satisfactory to the Paying Agent.
7. Lost or Destroyed Certificate(s). If your Note certificate(s) has been
either lost or destroyed, notify the Paying Agent of this fact promptly at its
address set forth above. You will then be instructed as to the steps you must
take in order to convert, sell or redeem the Notes that you own.
8. Substitute Form W-9. Under the federal income tax laws, the Paying
Agent may be required to withhold 31% of the amount of any cash payments to
holders in connection with the conversion or redemption of the Notes. In
order to avoid such backup withholding, each holder surrendering Notes for
conversion or redemption must, unless it has previously done so (i) provide
the Company with the correct taxpayer identification number of the
registered holder(s) of the Notes delivered herewith (or of the person
authorized to become the registered holder by certificates or documents
transmitted herewith) by completing the Substitute Form W-9 set forth above
or (ii) submit satisfactory evidence that such holder is exempt from such
backup withholding and reporting requirements. In general, if a holder is
an individual, the taxpayer identification number is the Social Security
number of such individual. Certain holders (including, among others, all
corporations and certain foreign individuals) are not subject to these
backup withholding and reporting requirements. In order to satisfy the
Company that a foreign individual qualifies as an exempt recipient, such
holder must submit a statement, signed under penalties of perjury,
attesting to that individual's exempt status. Such statements can be
obtained from the Paying Agent. For further information concerning backup
withholding and instructions for completing the Substitute Form W-9
(including how to obtain a taxpayer identification number if you do not
have one and how to complete the Substitute Form W-9 if the Notes are held
in more than one name), consult the enclosed Guidelines for Certification
of Taxpayer Identification Number on Substitute Form W-9.
Failure to complete the Substitute Form W-9 will not, by itself, cause the
Notes to be deemed invalidly tendered, but may require the Company to
withhold 31% of the amount of cash payments to the holders, if the holder
has not previously furnished the Company with its correct taxpayer
identification number. Backup withholding is not an additional federal
income tax. Rather, the federal tax liability of a person subject to
backup withholding will be reduced by the amount of tax withheld. If
withholding results in an overpayment of taxes, a refund may be obtained.
9. Inquiries. All inquiries with respect to the surrender of the Note
certificate(s) for conversion or redemption should be made directly to
Georgeson & Company Inc., by mail at Wall Street Plaza, New York, NY 10005, or
by telephone at (800) 223-2064.
EXHIBIT 9(a)(3)
FREEPORT-McMoRan INC.
May 31, 1995
TO: Holders of Our 6.55%
Convertible Subordinated
Notes due January 15, 2001
--------------------------
Freeport-McMoRan Inc. (the "Company") has called all of its
outstanding 6.55% Convertible Subordinated Notes due January 15, 2001 (the
"Notes") for redemption on June 30, 1995 (the "Redemption Date"). The
redemption price, including accrued and unpaid interest to and including the
Redemption Date, is $942.16 for each $1,000 principal amount of Notes (the
"Redemption Price"). The Notes are convertible into shares of Common Stock,
$1.00 par value, of the Company (the "Common Stock") at the conversion rate
described below until 5:00 p.m. (New York City time) on the Redemption Date.
At 5:00 p.m. (New York City time) on the Redemption Date, the
conversion privilege expires. Notes which have not been converted into Common
Stock by that time will be redeemed on that date. From and after the
Redemption Date, interest on the Notes shall cease to accrue and holders of
the Notes shall have no right in respect thereof except the right to receive
the Redemption Price thereof upon surrender of certificates representing the
Notes, unless the Company shall not pay the Redemption Price on the Redemption
Date.
The Notes are convertible into Common Stock of the Company at a
conversion rate equal to 55.95 shares of Common Stock per each $1,000
principal amount of Notes (the "Conversion Rate"), until 5:00 p.m. (New York
City time) on the Redemption Date. The Conversion Rate reflects an
enhancement made by the Company to the rate otherwise applicable to the Notes
to make conversion more financially attractive to the holders thereof, as more
fully described in the enclosed Notice of Redemption. In lieu of fractional
shares, the Company will pay the holder of converted Notes cash equal to the
value of any fractional share. Although no assurance can be given as to the
future market value of the Common Stock, so long as the price of the Common
Stock is more than $16.84 per share, holders of Notes will receive upon
conversion thereof shares of Common Stock, and cash in lieu of fractional
shares, having a greater current market value than the amount of cash that
they would otherwise receive upon redemption. On May 30, 1995, the closing
price of the Common Stock as reported by the New York Stock Exchange was
$17.75 per share. Holders of the Notes are urged to obtain current market
prices prior to converting their Notes or surrendering their Notes for
redemption.
A copy of the Notice of Redemption, the Letter of Transmittal
(which sets forth a full description of the terms of the redemption, the
alternatives available to you and the procedures for surrendering your Notes)
and Guidelines for Certification of Taxpayer Identification Number are
enclosed.
The enclosed Letter of Transmittal may be used to surrender the
Notes for conversion or redemption. The method of delivery of the Notes to
Chemical Bank (the "Paying Agent") is at the option and risk of the holder,
but if mail is used, registered mail with return receipt requested,
properly insured, is suggested. Important additional delivery instructions
are contained in the enclosed Letter of Transmittal.
If you wish to convert your Notes into Common Stock, the Notes,
together with a properly completed Letter of Transmittal must be received by
the Paying Agent prior to 5:00 p.m. (New York City time) on the Redemption
Date. Please allow sufficient time to assure that your Notes will be received
by that date.
Please read the enclosed documents carefully. If you desire
additional copies of any of the documents, you may call Georgeson & Company
Inc. at (800) 223-2064.
FREEPORT-McMoRan INC.
Enclosures:
- -----------
Notice of Redemption
Letter of Transmittal
Guidelines for Certification of
Taxpayer Identification Number
Return envelope addressed to:
Chemical Bank
EXHIBIT 9(a)(4)
NEWS RELEASE
NYSE COMMON STOCK SYMBOL "FTX"
Financial Contacts Chris D. Sammons
Craig E. Saporito (504) 582-4474
(504) 582-4476
Freeport-McMoRan
Global Resource Companies
FREEPORT-McMoRan INC. TO REDEEM
6.55% CONVERTIBLE SUBORDINATED NOTES
DUE JANUARY 15, 2001
NEW ORLEANS, LA., May 31, 1995 -- Freeport-McMoRan Inc. (NYSE:FTX)
announced today that it has called for redemption on June 30, 1995 all of its
outstanding 6.55% Convertible Subordinated Notes due January 15, 2001 (the
"Notes"), having a total of approximately $373 million principal value at
maturity. The redemption price will be $942.16 for each $1,000 principal
amount of the Notes including accrued interest of $30.02 from January 15,
1995. A notice of redemption will be mailed today by FTX to all holders of
record of the Notes.
As an alternative to redemption and at the option of the holder, the
Notes are convertible until 5:00 p.m. (New York City time) on the June 30,
1995 redemption date into 55.95 shares of FTX common stock for each $1,000
principal amount of Notes. The conversion rate reflects an enhancement made
by FTX to the rate otherwise applicable to the Notes to make conversion more
financially attractive to holders of the Notes. So long as the market price
of FTX common stock is more than $16.84 per share, holders of the Notes will
receive more value upon conversion of the Notes into shares of FTX common
stock and cash in lieu of fractional shares, than the cash that they would
otherwise receive upon redemption. On May 30, 1995 the closing price of FTX
common stock as reported on the New York Stock Exchange Composite Tape was
$17.75.
The redemption and/or conversion of the Notes is 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. As part of the restructuring,
FTX has sold approximately 21.5 million Class A common shares in FCX to a
subsidiary of The RTZ Corporation PLC (RTZ) and RTZ has an option to buy an
additional approximately 3.5 million Class A common shares of FCX at $20.90
per share. FTX's agreements with RTZ also provide that FTX may request RTZ to
tender for the Notes. However, FTX has elected not to request RTZ to tender
for the Notes since FTX believes, for various reasons including timing
considerations, that the conversion rate enhancement and the absence of a
tender offer by RTZ will result in the most favorable outcome. The
agreements provide that, if any or all of the Notes are redeemed, then, at
FTX's option, RTZ is obligated to purchase from FTX additional FCX Class A
common shares at $20.90 per share in order to finance the redemption. FTX
anticipates that the maximum number of additional FCX Class A common shares
to be acquired by RTZ, including its 3.5 million share purchase option,
will not exceed 16.8 million shares.
FTX is a leader in the exploration, mining, development, production,
processing and marketing of natural resources. The company's products include
copper, gold, silver, phosphate fertilizers, phosphate rock, sulphur, oil and
other natural resources.
* * *
