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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report: September 22, 1999
(Date of earliest event reported)
Phelps Dodge Corporation
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(Exact name of registrant as specified in its charter)
New York 1-82 13-1808503
- ---------------------------- ---------------- -------------------
(State or other jurisdiction (Commission File (I.R.S. Employer
of incorporation) Number) Identification No.)
2600 North Central Avenue, Phoenix, AZ 85004-3089
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code:
(602) 234-8100
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<PAGE>
Item 5. Other Events.
The information set forth in the press release issued by Phelps Dodge
Corporation on September 22, 1999 and the investor slide presentation, dated
September 22, 1999, attached hereto as Exhibits 99.1 and 99.2 incorporated
herein by reference.
Item 7. Financial Statements and Exhibits.
(c) Exhibits
99.1 Press release of Phelps Dodge Corporation, dated September 22, 1999
99.2 Investor slide presentation, dated September 22, 1999
2
<PAGE>
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
PHELPS DODGE CORPORATION
(Registrant)
By: /s/ Ramiro G.Peru
----------------------------------------
Name: Ramiro G. Peru
Title: Senior Vice President and
Chief Financial Officer
Date: September 22, 1999
3
<PAGE>
EXHIBIT INDEX
Exhibit
Number Exhibits
- ------- --------
99.1 Press release of Phelps Dodge Corporation, dated September 22, 1999
99.2 Investor slide presentation, dated September 22, 1999
4
FOR IMMEDIATE RELEASE
Contacts:
Investors Media
Phelps Dodge Phelps Dodge
Thomas M. Foster Susan M. Suver
(602) 234-8139 (602) 234-8003
Gregory W. Stevens
(602) 234-8166
Arthur Schmidt & Associates, Inc. Sard Verbinnen & Co
Martin Zausner/Alan Weinstein/Joan Harper George Sard/Paul Caminiti
(212) 953-5555 /Debbie Miller
(212) 687-8080
PHELPS DODGE INCREASES OFFERS TO ACQUIRE ASARCO AND CYPRUS AMAX; ADDS
SUBSTANTIAL CASH COMPONENT TO BOTH OFFERS
OFFERS PROVIDE 40% PREMIUMS TO ASARCO, CYPRUS AMAX SHAREHOLDERS
- --------------------------------------------------------------------------------
PHOENIX, AZ, September 22, 1999 -- Phelps Dodge Corporation (NYSE: PD)
announced today that it has increased its offers to acquire Asarco Incorporated
(NYSE: AR) and Cyprus Amax Minerals Company (NYSE: CYM) and added a substantial
cash component to both offers. The revised offers would provide approximately
40% premiums to the shareholders of both Asarco and Cyprus Amax, based on the
unaffected stock prices of all three companies.
Phelps Dodge is now offering to acquire all shares of Asarco for $9.00 in
cash and 0.2880 Phelps Dodge shares per Asarco share on a fully prorated basis.
Based on Phelps Dodge's closing share price yesterday, the revised offer
currently values Asarco at $25.47 per share, or a total equity value of $1.01
billion, based on approximately 39.8 million Asarco shares outstanding.
Phelps Dodge is now offering to acquire all shares of Cyprus Amax for $6.89
in cash and 0.2203 Phelps Dodge shares per Cyprus Amax share on a fully prorated
basis, maintaining the Asarco/Cyprus Amax announced exchange ratio of 0.765.
Based on Phelps Dodge's closing share price yesterday, the revised offer
currently values Cyprus Amax at $19.49 per share, or a total equity value of
$1.76 billion, based on approximately 90.5 million Cyprus Amax shares
outstanding.
- more -
<PAGE>
-2-
In the revised offers, shareholders of Asarco and Cyprus Amax will have the
right to elect to receive all cash or all Phelps Dodge shares. The all-cash
election for Asarco shareholders is $25.90 per Asarco share and the all-stock
election is 0.4413 Phelps Dodge shares per Asarco share, subject to proration to
maintain the overall cash/stock allocation. The all-cash election for Cyprus
Amax shareholders is $19.81 per Cyprus Amax share and the all-stock election is
0.3376 Phelps Dodge shares per Cyprus Amax share, subject to proration to
maintain the overall cash/stock allocation. The stock portion of the
consideration received will be tax-free to shareholders of both companies.
Phelps Dodge expects the revised three-way merger to remain immediately and
substantially accretive to its cash flow and significantly accretive to its
earnings per share beginning in the second year after closing, based on the
current portfolio of the combined companies and analysts' estimates of copper
prices of $0.80 to $0.85 per pound in 2001. Based on its strong balance sheet,
Phelps Dodge expects to finance the approximately $1 billion cash portion of the
offers primarily through existing credit facilities and cash on hand.
"With these substantial increases, there can be no question that our offers
provide clearly superior value to Asarco and Cyprus Amax shareholders compared
to the no-premium two-way merger," said Douglas C. Yearley, Chairman and Chief
Executive Officer of Phelps Dodge. "It is now time for Asarco and Cyprus Amax to
come to the table. With their cooperation, we will be in a position to close
this compelling three-way merger immediately following the October 13 Phelps
Dodge shareholder meeting."
Yearley added: "The Asarco and Cyprus Amax shareholder votes on September 30
will be a clear-cut referendum. If shareholders approve the two-way no-premium
merger, we will immediately withdraw our clearly superior offers and will not
bid further."
Phelps Dodge Corporation is among the world's largest producers of copper.
The company also is one of the world's largest producers of carbon black, one of
the world's largest manufacturers of magnet wire, and has operations and
investments in mines and wire and cable manufacturing facilities around the
world. Phelps Dodge has operations in 28 countries.
STATEMENTS IN THIS PRESS RELEASE INCLUDE "FORWARD-LOOKING STATEMENTS" THAT
EXPRESS EXPECTATIONS OF FUTURE EVENTS OR RESULTS. ALL STATEMENTS BASED ON FUTURE
EXPECTATIONS RATHER THAN ON HISTORICAL FACTS ARE FORWARD-LOOKING STATEMENTS THAT
INVOLVE A NUMBER OF RISKS AND UNCERTAINTIES, AND THE COMPANY CANNOT GIVE
ASSURANCE THAT SUCH STATEMENTS WILL PROVE TO BE CORRECT. PLEASE REFER TO THE
MANAGEMENT'S DISCUSSION AND ANALYSIS SECTIONS OF THE COMPANY'S REPORT ON FORM
10-K FOR THE YEAR ENDED DECEMBER 31, 1998.
[PHELPS DODGE CORPORATION LOGO]
September 22, 1999
1
<PAGE>
FORWARD-LOOKING STATEMENTS
These slides include "forward-looking statements" that express expectations of
future events or results. All statements based on future expectations rather
than on historical facts are forward-looking statements that involve a number of
risks and uncertainties, and the company cannot give assurance that such
statements will prove to be correct. Please refer to the Management's Discussion
and Analysis section of the company's report on Form 10-K for the year ended
December 31, 1998.
2
<PAGE>
SUPERIOR OFFERS
[Phelps Dodge Corporation LOGO]
3
<PAGE>
NOW THERE IS NO COMPARISON
<TABLE>
<S> <C>
PHELPS DODGE OFFERS ASARCO CYPRUS OFFER
- - 40% premiums* - No premium
- Values AR at $25.47 per share - Values AR at $5.00 + 1 new
- $9.00 + 0.2880 PD shares AR/CYM share
- Values CYM at $19.49 per share - Values CYM at $3.83 + 0.765 new
- $6.89 + 0.2203 PD shares AR/CYM share
- - Cash component - Cash component
- Shareholder preference - Fixed
- - $2.00/share annual dividend - $0.20/share annual dividend
- Approximate 3.5% current yield - Approximate 0.9% current yield
- - Enhanced upside potential - More promises after years of
due to proven track record underperformance
</TABLE>
* Valuations based on 9/21/99 closing stock price; premiums based on
share prices before trading was halted for these stocks on the morning
of 8/20/99; $58.69 Phelps Dodge; $18.50 Asarco; $14.25 Cyprus Amax;
maintains Asarco/Cyprus Amax announced
exchange ratio of 0.765.
4
<PAGE>
INCREASED PHELPS DODGE OFFERS
- - 33% INCREASE in premiums
- - Substantial cash component added
- Represents approximately 35% of total offer price
- - Cash election feature allows shareholders to indicate preference for
cash or stock
- AR shareholders can elect $25.90 or 0.4413 PD shares per AR share
- CYM shareholders can elect $19.81 or 0.3376 PD shares per CYM share
- Final allocation subject to proration
5
<PAGE>
PHELPS DODGE IS OFFERING ATTRACTIVE PREMIUMS
SELECTED NATURAL RESOURCES PREMIUMS PAID
<TABLE>
<CAPTION>
Date Premium to
Announced Acquiree/Acquiror Industry Unaffected Price
<S> <C> <C> <C>
9/22/1999 Asarco, Cyprus Amax/Phelps Dodge Copper 40%*
3/8/1998 Alumax/Alcoa Aluminum 39%
8/4/1999 Union Carbide/Dow Chemical Chemicals 38%
4/1/1999 Atlantic Richfield/BP Amoco Oil/Gas 26%
1/25/1998 Norcen Energy/Union Pacific Resources Energy 26%
8/16/1999 Poco Petroleums/Burlington Resources Oil/Gas 25%
8/11/1999 Reynolds/Alcoa Aluminum 24%
8/11/1998 Amoco/British Petroleum Oil/Gas 23%
12/1/1998 Mobil/Exxon Oil/Gas 15%
</TABLE>
* Premiums based on share prices before trading was halted for these stocks on
the morning of 8/20/99: $58.69 Phelps Dodge; $18.50 Asarco; $14.25 Cyprus
Amax; maintains Asarco/Cyprus Amax announced exchange ratio of 0.765
Source: Morgan Stanley Dean Witter
6
<PAGE>
FINANCIAL IMPACT OF INCREASED OFFERS
- - Cash flow per share
- Accretive at cooper prices exceeding $0.60
- - Earnings per share
- Accretive in year two based on analysts' estimates of copper prices of
$0.80-$0.85 per pound in 2001
- - Use of cash increases PD shareholder ownership
- - Retain investment grade rating
7
<PAGE>
CREDIT PROFILE (AS OF JUNE 30, 1999)
Phelps Dodge
Asarco Cyprus
($ MM) Phelps Dodge Pro Forma (1)
- - Cash 144 300
- - Total debt 1,077 3,173
- - Total book equity 2,373 4,515
- - Net debt/Book cap. 28% 36%
- - Credit rating(2) A-
(1) Based on PD offers; assumes $850 MM raised from sale of non-core assets (no
gain or loss assumed) and excess cash used for debt reduction.
Source: Morgan Stanley Dean Witter
(2) Standard & Poor's; Asarco and Cyprus Amax are both rated BBB-
Source: Phelps Dodge, Asarco, and Cyprus Amax 10-Qs for the quarter ended
June 30, 1999
8
<PAGE>
CLEAR PATH TO COMPLETION
September 30: Asarco and Cyprus Amax shareholder meetings; vote on two-way
merger
October 10: Phelps Dodge Hart Scott Rodino initial waiting period
scheduled to expire
October 13: Phelps Dodge shareholder meeting
October 14: Close transaction with cooperation of Asarco and Cyprus Amax
9
<PAGE>
THREE-WAY COMBINATION
[Phelps Dodge Corporation Logo]
10
<PAGE>
STRATEGIC VISION
- - Challenging industry environment mandates consolidation
- - Truly unique opportunity for regional integration
- - Enhanced scale and scope provide strategic and operational opportunities
- - Combination will create a new U.S.-based global leader (e.g., Exxon, Alcoa,
Dow Chemical)
11
<PAGE>
PRODUCTION/ CASH COST PROFILE
Phelps Dodge brings approximately two-thirds of the low cost production
[Graphical display omitted
This graph displays the attributable copper production (billions of pounds) of
the different mines of Phelps Dodge, Asarco and Cyprus Amax compared to the cash
costs (cents/pound). The mines that are displayed are El Abra (Cyprus Amax),
Cerro Verde (Cyprus Amax), Candelaria (Phelps Dodge), SPCC (Asarco share), SPCC
(Phelps Dodge share), Morenci before and after MFL (Phelps Dodge), Chino (Phelps
Dodge), Tyrone (Phelps Dodge), Bagdad (Cyprus Amax), Miami (Cyprus Amax),
Sierrita (Cyprus Amax), Mission (Asarco) and Ray (Asarco).]
Source: Brook Hunt; modified 1999 (est.)
12
<PAGE>
BENEFITS OF THREE-WAY COMBINATION
- - Create world-class global copper player
- - Focus on cost reduction, cash flow and returns
- Ability to upgrade/integrate asset portfolio
- - Potential sale of non-core assets to pay down debt
- - Market prefers larger capitalization liquid stocks
- - Strong, liquid balance sheet with excellent access to capital
13
<PAGE>
RESOURCE-RICH, COST-COMPETITIVE
- - Current production levels = 3.8 billion pounds
- - Target CASH production cost = or less than $0.50 per pound
- - Target FULL production costs = or less than $0.60 per pound
- - Core portfolio of world-class copper mines represents more than 50% of
current annual production
- Morenci, SPCC, El Abra, Candelaria, Cerro Verde
- 2.0 billion pounds at average cash cost of less than $0.50 per pound
14
<PAGE>
WHY PHELPS DODGE?
[Phelps Dodge Corporation Logo]
15
<PAGE>
SUPERIOR SHAREHOLDER RETURNS
LAST 15 YEARS
[Graphical display omitted
This graph displays the total return to the shareholders of Phelps Dodge, Asarco
and Cyprus Amax. The base date is 8/10/84 and the end date 8/11/99. The total
return to shareholders of Phelps Dodge is 1024%, Cyprus Amax 102% and Asarco
25%.]
Source: Morgan Stanley Dean Witter
Note: Cyprus Amax returns measured from 5/85 IPO
16
<PAGE>
CUMULATIVE EVA(TM)
[Graphical display omitted
This graph shows the cumulative EVA of Phelps Dodge, Cyprus Amax and Asarco. The
base year is 1987 and end year 1997. The EVA varies between -$2,500,000,000 and
$1,000,000,000. The cumulative EVA of Phelps Dodge is $1.0 billion, of Asarco
- -$1.3 billion and of Cyprus Amax -$2.3 billion. The graph also displays the
price of copper ($/lb.) From 1988 to 1997.]
Source: Stern Stewart Performance 1000; latest available
17
<PAGE>
PHELPS DODGE RETURNS SUBSTANTIALLY IN EXCESS OF ITS COST CAPITAL
5-Year Return on Equity History*
[Graphical display omitted
This graph displays the 5-year return on equity history of Phelps Dodge, Asarco
and Cyprus Amax.]
Average COMEX
Copper price per
Phelps Dodge Cyprus Amax Asarco pound
1994 17% 8% 2% $1.07
1995 30% 18% 13% $1.35
1996 17% 7% 5% $1.06
1997 16% 11% 5% $1.04
1998 3% 1% -7% $0.75
5-year average 17% 9% 4%
* ROE is defined as net income (excluding non-recurring gains/losses) divided by
average shareholders' equity
18
<PAGE>
SUPERIOR VALUE CREATION
Total Growth
(1989-1998)
[Graphical display omitted
This graph displays the total percentage growth of the book value/share of
Phelps Dodge, Cyprus Amax and Asarco between 1989 and 1998. The book value/share
of Phelps Dodge has grown 129.2%, of Cyprus Amax 11.2% and of Asarco decreased
16.9%.]
Source: Factset
19
<PAGE>
SHAREHOLDER-ORIENTED MANAGEMENT
- - History of share buybacks
- 14.4 million shares since end of 1994;
20% of outstanding
- - Track record of increasing dividend per share
- - Stock option plan prohibits re-pricing
- - Manage for cash
- - Active management of asset portfolio
20
<PAGE>
TRANSACTION SUMMARY
Phelps Dodge
3-way Merger
- - Significant premiums x
- - $2.00 annual dividend x
- - Substantial synergy savings x
- - Larger core of low cost production x
- - Larger ore reserves x
- - Track record of performance x
- - Commitment to shareholder value x+
21
<PAGE>
THE TIME IS NOW
- - Three is better than two
- - Integrate once, not twice
- - September 30 vote is referendum on value
- - Phelps Dodge will withdraw offers if two-way merger is approved
22
<PAGE>
[PHELPS DODGE CORPORATION LOGO]
23
<PAGE>
APPENDIX
Page
Historical Timeline 25
Operating Excellence 26
Capital Efficiency 29
Contained Copper 30
Cash Synergies 31
Shareholder Value 33
Exchange Offer Detail 35
[PHELPS DODGE CORPORATION LOGO]
24
<PAGE>
HISTORICAL TIMELINE
July 15: Asarco and Cyprus Amax announce merger
August 10: Phelps Dodge approaches Asarco and Cyprus Amax CEOs
Asarco and Cyprus refuse to talk
August 11: Phelps Dodge sends initial proposals to CEOs
August 12: Asarco and Cyprus Amax refuse to talk
Phelps Dodge sends initial proposals to Boards
AUGUST 20: ASARCO AND CYPRUS AMAX PUBLICLY REJECT PROPOSALS
WITHOUT NEGOTIATING
Phelps Dodge publicly announces higher bids
August 25: Asarco and Cyprus Amax reject higher Phelps Dodge bids
without negotiating by proposing "unreasonable" exchange
ratios; revise two-way proposal
August 27: Phelps Dodge files exchange offer registration statements
and proxy materials against Asarco/Cyprus Amax merger;
commences litigation
September 1: Phelps Dodge schedules vote of shareholders for October 13
September 3: Phelps Dodge commences offers
September 10: Phelps Dodge Hart Scott Rodino filed
25
<PAGE>
OPERATING EXCELLENCE
Growth in Copper Production
[Graphical display omitted
This graph displays differences in the amount of copper production (million
pounds) of Phelps Dodge (CAGR=9.8%), Asarco (CAGR=3.9%) and Cyprus Amax
(CAGR=8.9%) between 1993 and 1998.]
26
<PAGE>
OPERATING EXCELLENCE
Technology Pacesetter
[Graphical display omitted
This graph displays the amount of copper produced (MM lbs) by the different
mines between years 1983 and 1998. The mines listed on the graph are Tyrone
SX/EW, Morenci SX/EW, Chino SX/EW, Northwest Extension, Candelaria 1, Southside,
Candelaria 2.]
- - Large scale SX/EW - "Expert" control systems
- - Computerized haul truck dispatch - Concentrator adaptive control
- - GPS ore control - Mine for leach
- - Leach recovery optimization - Haul truck tire technology
- - Concentrate grade enhancement
27
<PAGE>
OPERATING EXCELLENCE
MORENCI MINE TO CONVERT ALL PRODUCTION TO SX/EW ADDING
APPROXIMATELY $0.50 TO PHELPS DODGE EPS
- - Most capital efficient alternative
- $220 million conversion complete by 1Q 2001
- - Conversion will reduce unit costs
- $0.09/lb. cash cost ($72 million/year)
- $0.07/lb. full cost ($56 million/year)
- - Leverages SX/EW competency
- - Strengthens Morenci's position within Phelps Dodge Portfolio
[Graphical display omitted
This graph displays the attributable copper production (billions of pounds) of
the different mines of Phelps Dodge, Asarco and Cyprus Amax compared to the cash
costs (cents/pound). The mines listed are El Abra (Cyprus Amax), Morenci after
MFL (Asarc), Cerro Verde (Cyprus Amax), Candelaria (Phelps Dodge), SPCC
(Asarco), SPCC (Phelps Dodge), Chino (Phelps Dodge), Tyrone (Phelps Dodge),
Bagdad (Cyprus Amax), Miami (Cyprus Amax), Sierrita (Cyprus Amax), Mission
(Asarco), Ray (Asarco).]
28
<PAGE>
CAPITAL EFFICIENCY
<TABLE>
<CAPTION>
Acquisition Capital Cu Equivalent
Cost Cost Production $ per
$MM $MM MM lbs.* Pound
<S> <C> <C> <C> <C>
- - El Abra (Cyprus share) 330 690 250 4.05
- - Batu Hijau 285 1,950 590 3.79
- - Los Pelambres 640 1,200 550 3.36
- - Collahuasi 590 1,650 670 3.35
- - Alumbrera 500 1,200 520 3.26
- - Candelaria
(Phelps Dodge share) -- 640 390 1.64
- - Phelps Dodge
Share purchase
(since 1/1/95) 980 -- 350 2.84**
</TABLE>
* Average annual production
** BEFORE ascribing any value to Phelps Dodge Industries, SPCC share or
other downstream copper facilities.
29
<PAGE>
CONTAINED COPPER (BILLIONS OF LBS.)
ASARCO PHELPS DODGE
- - Ore reserves 36.5 - Ore reserves 43.2
- - Mineralized - Minority reserves 4.5
material 3.6 - Mineralized
CYPRUS AMAX material 30.1
- - Ore reserves 25.2 ----
---- 77.8
65.3
[Graphical display omitted
This circle diagram displays the percentages of copper that Phelps Dodge (54%)
and combined Asarco Cyprus (46%) have of the aggregate copper amount of the
three companies.]
Source: 1998 Form 10-Ks
30
<PAGE>
CASH COST SAVINGS OF $200 MM
(In $ Millions)
SG&A EXPENSE $ 85
EXPLORATION 55
------
OPERATING SYNERGIES
Reduce Supply Costs................................................28
Reduce Electric Power Costs........................................12
Optimize Copper Refining Operations.................................7
Optimize Mill/Leach Mix.............................................7
Integrate Arizona Management and Support Services...................6
---
TOTAL OPERATING SYNERGIES 60
---
TOTAL CASH COST SAVINGS $200
Note: All estimates are based on public information and Phelps Dodge experience
31
<PAGE>
AR/CYM CASH SYNERGY ESCALATION
[Graphical display omitted
This graph displays the ASARCO/Cyprus Amax cash synergy escalations from April 2
to September 16, 1999. - "[ASARCO CEO] noted that...rationalization through
mergers of operations would yield minimal benefits." The Mining Journal, 4/2/99
- - Cyprus Amax Minerals...will see savings of about $150 million a year from
cost-cutting and productivity improvements. Cyprus Amax Chairman, Bloomberg,
5/6/99 - "We expect cash savings of $100 million by 2001." ASARCO CEO, on the
ASARCO/Cyprus Amax merger, American Metal Market, 7/19/99 - "the estimate of
annual expense reductions...[includes] $50 million in reduced administrative and
overhead costs, $50 million from lower costs of purchased materials and
services, $25 million in other costs..." ASARCO/Cyprus Amax press release,
8/20/99 - Phelps Dodge offers become public [Aug 20, 1999] - Cash cost savings =
$200 million. ASARCO/Cyprus Amax Investor Presentation, September 1999 - ASARCO
and Cyprus...have targeted an extra $50 million...in cash savings. Reuters,
9/16/99]
32
<PAGE>
AR/CYM SHAREHOLDER VALUE?
ASARCO AND CYPRUS AMAX MERGER AGREEMENT HAS EXTREMELY ONEROUS
PROVISIONS
- - Unusual "no talk" clause
- - Management entrenchment
- Guaranteed positions for four senior executives through 2002 annual
meeting
- 75% of Board vote required for change in roles through 2002
annual meeting;
25% of Board seats held by management
- - Unreasonable break-up fees
- - 90-day takeover "relaxation" disingenuous
- No ability to replace Board
- Current change-of-control arrangements remain in effect
- Shareholder mechanism to redeem pill unnecessarily cumbersome
- - Boards could easily authorize discussions to achieve highest shareholder
value
33
<PAGE>
<TABLE>
<CAPTION>
SUPERIOR SHAREHOLDER RETURNS
Through August 11, 1999
1 Year 3 Years 5 Years 10 Years 15 Years
<S> <C> <C> <C> <C> <C>
Phelps Dodge 22% 13% 20% 161% 1,024%
Asarco (7) (16) (27) (20) 25
Cyprus Amax 26 (22) (40) (26) 102
S&P 500 23% 107% 213% 369%* 687%**
S&P Metals 36 (22) (16) 25* 124**
</TABLE>
Source: Morgan Stanley Dean Witter
Note: Dividends reinvested
* S&P 500 and S&P Metals are from 1/1/90
** Without dividend reinvestment
34
<PAGE>
EXCHANGE OFFER DETAIL
- - We are offering to exchange an aggregate of approximately 11.5 million
PD shares and $358 million in cash for all outstanding AR shares. AR
shareholders can elect to receive either 0.4413 of a PD share or $25.90
in cash for each AR share.
- - We are offering to exchange an aggregate of approximately 19.9 million
PD shares and $623 million in cash for all outstanding CYM shares. CYM
shareholders can elect to receive either 0.3376 of a PD share or $19.81
in cash for each CYM share.
- - PD will allocate total cash or stock proportionally among the respective
AR and CYM shareholders who elect either component, in the event either
aggregate amount is oversubscribed.
- - Allocation to AR and CYM shareholders who do not make an election will
be based on the amount remaining after accounting for the preferences
for those AR and CYM shareholders who make elections.
- - Shareholders not tendering their shares will receive remaining
component(s) after giving effect to the exchange offer.
35
<PAGE>
[PHELPS DODGE CORPORATION LOGO]
36
