Filed Pursuant to Rule 424(b)(2)
SEC File No. 32-37441
PROSPECTUS SUPPLEMENT
(To Prospectus dated December 6, 1990)
$150,000,000
[LOGO] Freeport-McMoRan Resource Partners,
Limited Partnership
7% Senior Notes due 2008
_______________________
Interest Payable February 15 and August 15
________________________
The Senior Notes (the "Senior Notes") mature on February 15, 2008.
The Senior Notes will be redeemable, in whole or in part, at the option
of the Company at any time at a redemption price equal to the greater
of (i) 100% of their principal amount or (ii) the sum of the present
values of the remaining scheduled payments of principal and interest
discounted to the date of redemption on a semi-annual basis (assuming a
360-day year consisting of twelve 30-day months) at the Treasury Yield
(as defined herein) plus 30 basis points, plus in each case accured
interest to the date of redemption. The Senior Notes are not entitled
to the benefit of a sinking fund.
The Senior Notes will be represented by one or more global
securities ("Global Notes") registered in the name of The Depository
Trust Company (the "Depositary"), as Depositary, or its nominee.
Beneficial interests in the Global Notes will be shown on, and transfers
thereof will be effected through, records maintained by the Depositary and
its participants. Except as described in this Prospectus Supplement, Senior
Notes in definitive form will not be issued in exchange for Global Notes.
Settlement for the Senior Notes will be made in immediately available funds.
The Senior Notes will trade in the Depositary's Same-Day Funds Settlement
System until maturity, and secondary market trading activity for the Senior
Notes will therefore settle in immediately available funds. See
"Description of the Senior Notes-Same Day Settlement."
______________________
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
NOR HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE
SECURITIES COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY
OF THIS PROSPECTUS SUPPLEMENT OR THE PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
===========================================================================
Price to Underwriting Proceeds to
Public<F1> Discounts<F2> Company<F1><F3>
___________________________________________________________________________
Per Senior Note 99.554% 0.800% 98.754%
___________________________________________________________________________
Total $149,331,000 $1,200,000 $148,131,000
===========================================================================
<F1> Plus accrued interest, if any, from February 21, 1996.
<F2> The Company has agreed to indemnify the Underwriters against
certain liabilities, including liabilities under the Securities
Act of 1933, as amended. See "Underwriting".
<F3> Before deducting expenses payable by the Company estimated
at $300,000.
______________________
The Senior Notes offered by this Prospectus Supplement are
offered by the Underwriters subject to prior sale, to
withdrawal, cancellation or modification of the offer without notice,
to delivery to and acceptance by the Underwriters and to certain
further conditions. It is expected that delivery of the Senior Notes
will be made in book-entry form through the facilities of the
Depositary against payment therefor in immediately available funds on
or about February 21, 1996.
LEHMAN BROTHERS
MERRILL LYNCH & CO.
SALOMON BROTHERS INC.
February 14, 1996
<PAGE> S-2
FRP OPERATIONS
[FLOW CHART ON FRP OPERATIONS INSERTED HERE]
IN CONNECTION WITH THIS OFFERING, THE UNDERWRITERS MAY OVER-ALLOT
OR EFFECT TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET
PRICE OF THE SENIOR NOTES AT A LEVEL ABOVE THAT WHICH MIGHT
OTHERWISE PREVAIL IN THE OPEN MARKET. SUCH STABILIZING, IF
COMMENCED, MAY BE DISCONTINUED AT ANY TIME.
<PAGE> S-3
PROSPECTUS SUPPLEMENT SUMMARY
The following summary is qualified in its entirety by the more
detailed information and financial data appearing elsewhere in this
Prospectus Supplement and in the accompanying Prospectus or
incorporated by reference herein and therein. Capitalized terms used
and not otherwise defined herein have the meanings set forth in the
Prospectus.
THE COMPANY
Freeport-McMoRan Resource Partners, Limited Partnership ("FRP"
or the "Company"), through its subsidiaries and joint venture
operations, is one of the world's leading integrated phosphate
fertilizer producers. The Company is a joint venture partner in IMC-
Agrico Company ("IMC-Agrico"), the world's largest and one of the
world's lowest cost producers, marketers and distributors of
phosphate fertilizers. FRP's Main Pass sulphur mine, offshore
Louisiana in the Gulf of Mexico, and its Culberson mine in Texas,
also make FRP the largest producer of Frasch sulphur in the world.
The combined sulphur and phosphate mining and fertilizer production
operations provide FRP with the competitive advantages of vertical
integration and operating efficiencies and reduce the sensitivity of
FRP's phosphate fertilizer costs to changes in raw materials prices.
IMC-Agrico's business includes the mining and sale of phosphate
rock and the production, marketing and distribution of phosphate
fertilizers and animal feed ingredients. IMC-Agrico was formed as a
joint venture partnership in July 1993 when FRP and IMC Global Inc.
("IMC") contributed their respective phosphate fertilizer businesses
to IMC-Agrico. FRP believes that the combination of its internal
production of raw materials, through its sulphur division and the
IMC-Agrico joint venture, and the strategic location of IMC-Agrico's
fertilizer operations provide it with a competitive advantage over
other fertilizer producers.
FRP's sulphur operations include the mining, purchase,
transportation, terminalling and marketing of sulphur. The Main Pass
deposit, which was discovered in 1988, contains the largest known
sulphur reserve in North America. FRP's Main Pass offshore mining
complex is the largest structure of its type in the Gulf of Mexico
and one of the largest in the world. The mining complex reached full
design capacity of 5,500 long tons per day in December 1993 and has
since operated at or above design level. FRP has a 58.3% interest in
the Main Pass mine and serves as its manager and operator. In
January 1995, the Company began operating the Culberson mine when it
acquired substantially all of the domestic assets of Pennzoil Sulphur
Co. As of December 31, 1995, the Main Pass and Culberson mines were
estimated to contain proved and probable sulphur reserves totaling
55.2 million long tons net to FRP.
Main Pass also contains proved oil reserves from which FRP
produces and sells oil for the Main Pass joint venture. Oil
production averaged approximately 12,400 barrels per day (6,000
barrels net to FRP) during the year ended December 31, 1995. As of
December 31, 1995, Main Pass was estimated to contain 15.9 million
barrels (6.6 million barrels net to FRP) of proved oil reserves.
FRP continues to benefit from significant improvements in
phosphate fertilizer markets that began in late 1993 and continue
into 1996. FRP's 1995 average realization for its principal
fertilizer product, diammonium phosphate ("DAP"), increased
approximately 55% to approximately $175 per short ton from the 1993
average of approximately $113 per short ton. In February 1996, the
spot market price for DAP was approximately $210 per short ton, FOB
Central Florida.
The Company is a publicly traded Delaware limited partnership
organized in 1986, the managing general partners of which are
Freeport-McMoRan Inc. ("FTX") and FMRP Inc. ("FMRP"), a wholly-owned
subsidiary of FTX. As of December 31, 1995, FTX and FMRP held
partnership units representing an approximate 51.5% interest in FRP,
with the remaining interest being publicly owned and traded on the
New York Stock Exchange. The public unitholders are entitled,
through the fourth quarter of 1996, to receive minimum quarterly
distributions prior to any distribution on the partnership units held
by FTX and FMRP. See "Relationship Between the Company and the FTX
Group."
<PAGE> S-4
THE OFFERING
Securities Offered.................$150,000,000 principal amount of 7%
Senior Notes due 2008 (the "Senior Notes").
Maturity...........................February 15, 2008.
Interest Payment Dates.............Semi-annually on February 15 and August 15,
commencing August 15, 1996.
Ranking............................The Senior Notes will be senior unsecured
obligations of the Company, will rank
senior in priority to all subordinated
indebtedness of the Company and will rank
pari passu with all other unsecured and
unsubordinated indebtedness of the Company.
The Senior Notes will be effectively
subordinated to all of FRP's secured
indebtedness and to the indebtedness and
other liabilities of IMC-Agrico. The
Senior Indenture governing the Senior Notes
does not limit the amount of indebtedness
that the Company or its subsidiaries may
incur or contain restrictions on the
Company's ability to make distributions to
its partners. After giving pro forma
effect to the sale of the Senior Notes
offered hereby and the use of the estimated
net proceeds described under "Use of
Proceeds", at December 31, 1995, the
Company would have had approximately $236.8
million of senior indebtedness and $150
million of subordinated indebtedness.
Optional Redemption................The Senior Notes will not be entitled to
any sinking fund. The Senior Notes will be
redeemable, in whole or in part, at the
option of the Company at any time at a
redemption price equal to the greater of
(i) 100% of their principal amount or (ii)
the sum of the present values of the
remaining scheduled payments of principal
and interest discounted to the date of
redemption on a semi-annual basis (assuming
a 360-day year consisting of twelve 30-day
months) at the Treasury Yield (as defined
herein) plus 30 basis points, plus in each
case accrued interest to the date of
redemption.
Covenants..........................The Senior Indenture will contain certain
covenants limiting liens and sale/leaseback
transactions.
Use of Proceeds....................The estimated net proceeds of approximately
$147.8 million from the sale of the Senior
Notes will be used to repay outstanding
indebtedness. See "Use of Proceeds."
<PAGE> S-5
USE OF PROCEEDS
The estimated net proceeds from the sale of the Senior Notes
offered hereby are estimated to be approximately $147.8 million, all
of which will be used to repay a portion of the long-term
indebtedness outstanding under the Company's credit facility (the
"Credit Facility"), including indebtedness incurred under the Credit
Facility in October 1995 to finance the Company's share of the
purchase price paid by IMC-Agrico for the animal feed ingredients
business of the Mallinckrodt Group. See "Capitalization" and
"Business of the Company--Agricultural Minerals--Animal Feed Business."
The average interest rate for indebtedness outstanding under the
Credit Facility on December 31, 1995 was 6.84% and all indebtedness
outstanding under the Credit Facility matures on June 30, 2000.
CAPITALIZATION
The following table sets forth the Company's unaudited capitalization
as of December 31, 1995 and as adjusted to give effect to the issuance
of the Senior Notes and the application of the estimated net proceeds
therefrom as described under "Use of Proceeds."
<TABLE>
<CAPTION>
December 31, 1995
_________________________
Actual As Adjusted
_________________________
(In thousands)
<S> <C> <C>
Cash and short-term investments $ 22,508 $ 22,508
======= ======
Short-term debt $ 339 $ 339
Long-term debt: ________ _______
Long-term debt, less current portion<F1> 234,241 86,441
Senior Notes offered hereby -- 150,000
8-3/4% Senior Subordinated Notes due 2004 150,000 150,000
________ ________
Total long-term debt 384,241 386,441
________ ________
Partners' capital<F2>:
General partners 208,445 208,445
Limited partners 196,021 196,021
________ ________
Total partners' capital 404,466 404,466
________ ________
Total capitalization $789,046 $791,246
_____________________
<FN>
<F1> The Credit Facility currently provides $400 million of credit.
Following the sale of the Senior Notes, the committed amount
under the Credit Facility will be reduced to $300 million, all
of which will be available to FRP and $75 million of which will
be available to FTX. See "Relationship Between the Company and
the FTX Group--Credit Arrangements." After application of the
estimated net proceeds from this offering, as of December 31,
1995 the Company would have had $39.2 million outstanding and
$260.8 million in remaining availability under the Credit
Facility.
<F2> On February 15, 1996, FRP will pay a distribution of 62.5 cents
per publicly held unit ($31.3 million) and 67.35 cents per FTX-
owned unit ($35.9 million). See "Relationship Between the
Company and the FTX Group."
</FN>
</TABLE>
<PAGE> S-6
SELECTED FINANCIAL AND OPERATING DATA
The following table sets forth summary financial and operating
data of the Company. The financial data as of and for each of the
two years ended December 31, 1994 and 1993 were derived from the
Company's previously published audited financial statements. The
1995 data reflect the Company's unaudited results. The table should
be read in conjunction with the Company's financial statements and
related notes for the applicable period.
<TABLE>
<CAPTION>
Years Ended December 31,
________________________________________
1995<F1> 1994<F1> 1993<F1>
(In thousands, except prices and per unit amounts)
<S> <C> <C> <C>
FINANCIAL
Income statement data:
Revenues $995,112 $765,278 $669,160
Operating income (loss) 194,625<F2> 120,618<F3> (210,848)<F4>
Net income (loss) 161,408<F2> 83,966<F3> (246,111)<F4><F5>
Net income (loss) per unit 1.56<F2> .81<F3> (2.37)<F4><F5>
Ratio of earnings to fixed charges<F6> 5.5x 3.2x -- <F7>
Balance sheet data (at end of period):
Property, plant and equipment, net 949,131 910,469 970,960
Total assets 1,229,105 1,146,931 1,296,873
Long-term debt 384,241 368,637 488,102
Partners' capital 404,466 447,660 492,404
Cash flow data:
Depreciation and amortization 44,830 52,344 104,686
Capital expenditures, excluding
Mallinckrodt acquisition 39,485 29,681 52,170
Cash interest paid 28,997 26,349 22,997
Cash distributions paid 202,541 127,368 121,180
Cash received in excess of
Capital Interest in IMC-Agrico 40,835 43,293 --
EBIDA<F8> 280,290 216,255 (106,162)
EBIDA, adjusted for restructuring<F9> 280,290 216,255 42,587
EBIDA cash interest paid coverage 9.7x 8.2x 1.9x
EBIDA/Long-term debt 73% 59% 9%
OPERATING
Phosphate fertilizers - primarily DAP
Sales (short tons) 3,428 3,193 3,347
Average realized price
All phosphate fertilizers $169.07 $144.13 $110.03
DAP $175.11 $149.32 $113.09
Phosphate rock
Sales (short tons) 4,470 4,373 3,840
Average realized price $22.53 $21.38 $22.02
Sulphur sales (long tons)<F10> 3,050 2,088 1,973
Oil
Sales (barrels) 2,218 2,534 3,443
Average realized price $15.82 $13.74 $14.43
<FN>
<F1> Reflects FRP's 46.5% Capital Interest and 58.6% Current
Interest during the year ending June 30, 1994, FRP's 45.1%
Capital Interest and 55% Current Interest during the year
ending June 30, 1995 and FRP's 43.6% Capital Interest and
53.1% Current Interest during the year ending June 30, 1996.
See "Business of the Company - Agricultural Minerals."
<PAGE> S-7
<F2> Includes charges totaling $18.1 million ($0.18 per unit) for
stock option costs resulting from the rise in the FTX common
stock price during the year and an early retirement program.
<F3> Includes a $10.9 million charge ($0.11 per unit) primarily
for certain remediation costs.
<F4> Includes charges totaling $173.6 million ($1.67 per unit)
primarily for restructuring, asset recoverability and other
related charges.
<F5> Includes a $23.7 million cumulative charge ($0.23 per unit)
for changes in accounting principle.
<F6> For purposes of calculating the ratio of earnings to fixed
charges, earnings consist of income from continuing
operations (including the restructuring and valuation
charges discussed in Note <F4>) before fixed charges. Fixed
charges consist of interest and that portion of rent deemed
representative of interest.
<F7> Earnings were inadequate to cover fixed charges in 1993 by
$233.5 million, reflecting charges totaling $173.6 million
related to the restructuring and valuation charges discussed
in Note <F4>.
<F8> Earnings before interest and depreciation and amortization
("EBIDA") consist of operating income plus depreciation and
amortization and cash received in excess of FRP's Capital
Interest in IMC-Agrico. See "Business of the Company -
Agricultural Minerals." Includes the restructuring and
valuation charges/gains discussed in Note <F4>.
<F9> EBIDA excluding provision for restructuring charges ($33.9
million) and loss on valuation and sale of assets ($114.8
million) (Note <F4>).
<F10> Includes internal consumption and Main Pass start-up sales
totaling 754,400 tons, 739,900 tons and 1,138,800 tons for
1995, 1994 and 1993, respectively.
</FN>
</TABLE>
<PAGE> S-8
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
1995 1994 1993
_____ _____ _____
(In millions, except per unit amounts)
Revenues $995.1 $765.3 $669.2
Operating income (loss) 194.6<F1> 120.6<F2> (210.8)<F3>
Net income (loss) 161.4<F1> 84.0<F2> (246.1)<F3><F4>
Net income (loss) per unit 1.56<F1> .81<F2> (2.37)<F3><F4>
<F1> Includes charges totaling $18.1 million ($0.18 per unit) for stock
option costs resulting from the rise in FTX's common stock price
during the year and an early retirement program.
<F2> Includes a $10.9 million charge ($0.11 per unit) primarily for
certain remediation costs.
<F3> Includes a net charge of $173.6 million ($1.67 per unit) primarily
for restructuring, asset recoverability and other related charges.
<F4> Includes a $23.7 million cumulative charge ($0.23 per unit) for
changes in accounting principle.
1995 Compared With 1994
FRP benefited from the significant strengthening in the phosphate
fertilizer markets throughout 1995 and the expansion of its sulphur
production capacity resulting in higher revenues and improved
operating results. See "Selected Financial and Operating Data."
Depreciation and amortization for 1995 decreased $7.5 million from
the 1994 amount, primarily caused by a $10.5 million decline relating
to FRP's disproportionate interest in the IMC-Agrico joint venture
cash distributions, partially offset by a $2.7 million increase
resulting from the acquired sulphur assets.
General and administrative expenses for 1995 increased by $23.1
million, primarily because of the $18.1 million of stock option and
early retirement charges noted above. The 1994 amount benefited from
a $2.2 million reduction in the estimated cost of excess office space
FTX allocated to FRP. FRP's general and administrative expenses
include costs incurred by FTX on FRP's behalf which are allocated to
FRP on a cost-reimbursement basis. See "Relationship Between the
Company and the FTX Group - Administrative Services Agreement."
Interest expense decreased from 1994 as a result of lower average
debt levels, partially offset by higher market interest rates.
Agricultural Minerals Operations - FRP's agricultural minerals
operations, which include its fertilizer and phosphate rock
operations (conducted through IMC-Agrico) and its sulphur business,
reported 1995 operating income of $205.9 million on revenues of $960
million compared with operating income of $123.8 million on revenues
of $730.4 million in 1994. Significant items impacting operating
income are as follows (in millions):
Agricultural minerals operating income - 1994 $ 123.8
__________
Increases (decreases):
Sales volumes 81.3
Realizations 147.7
Other 0.6
__________
Revenue variance 229.6
Cost of sales (135.4)<F1>
General and administrative (12.1)<F2>
__________
82.1
___________
Agricultural minerals operating income - 1995 $205.9
===========
___________
<F1> Includes a reduction in depreciation and amortization of $26.3
million and $15.8 million for 1995 and 1994, respectively, caused
by FRP's disproportionate interest in IMC-Agrico cash
distributions.
<F2> Includes $10.3 million of the $18.1 million stock option charge
discussed above.
<PAGE> S-9
FRP's 1995 phosphate fertilizer sales volumes were 7 percent
higher than those in 1994, with IMC-Agrico experiencing continued
excellent export demand and strong domestic sales for DAP, its
principal fertilizer product. The increased demand resulted in IMC-
Agrico phosphate fertilizer facilities operating near capacity for
the majority of 1995. Despite recent industrywide capacity
utilization above 100 percent, domestic phosphate fertilizer producer
inventories remain below normal. This tight supply/demand situation
is reflected in the improved phosphate fertilizer realizations, with
FRP's average DAP realization increasing 17 percent from 1994. FRP's
1995 DAP realizations include large forward sales to China at prices
which were ultimately below market prices at the time of shipment.
In late 1995 IMC-Agrico reached an agreement with China providing for
significant shipments of DAP throughout 1996 at market-related prices
at the time of shipment. FRP's phosphate fertilizer unit production
costs were increased from 1994, reflecting higher raw material costs
for ammonia and phosphate rock.
FRP's 1995 phosphate rock sales volumes were slightly higher
than in 1994. Increased demand from phosphate fertilizer producers
and the addition of a long-term supply contract in October 1994 were
offset by the expiration of a contract in October 1995 providing
annual sales of 1.5 million tons net to FRP. Because of the low
margin associated with sales under the expired contract, the impact
to FRP's earnings is not significant.
FRP's increased sulphur production capacity resulting from the
Culberson mine purchase, combined with continued strong demand from
the domestic phosphate fertilizer industry, resulted in a 46 percent
increase in sulphur sales volumes. FRP also benefited from the
strengthening in sulphur prices during 1995. To the extent U.S.
phosphate fertilizer production remains strong, improved sulphur
demand is expected to continue, although the availability of Canadian
sulphur limits the potential for significant price increases. Main
Pass unit production costs for 1995 were virtually unchanged from
1994.
Oil Operation
1995 1994
______ _____
Sales (barrels) 2,217,600 2,533,700
Average realized price $15.82 $13.74
Operating income (in millions) $1.9 $2.8
In 1995, Main Pass oil operating income was impacted by $1.8
million of the previously discussed $18.1 million stock option
charge. Net production for 1996 is estimated to approximate 1995
levels, as workover activities are expected to generate production
sufficient to offset declining reservoir production.
1994 Compared With 1993
FRP's 1994 results primarily reflect the improvement in the
phosphate fertilizer market during the year and the benefits from the
formation of IMC-Agrico and other restructuring activities undertaken
in 1993, discussed below. Partially offsetting these positive
factors were increased raw material prices for ammonia and reduced
oil sales volumes.
During 1993, FTX undertook a restructuring of its
administrative organization. This restructuring represented a major
step by FTX to lower the costs of operating and administering its
businesses in response to weak market prices of commodities produced
by its operating units. As part of this restructuring, FTX
significantly reduced the number of employees engaged in
administrative functions, changed its management information systems
environment to achieve efficiencies, reduced its needs for office
space, outsourced a number of administrative functions and took other
actions to lower costs. The restructuring process resulted in FTX
incurring one-time costs, portions of which were allocated to FRP
pursuant to its management services agreement with FTX.
<PAGE> S-10
Depreciation and amortization during 1994 declined by $52.3
million compared with 1993, primarily consisting of a $26.6 million
decrease relating to the disproportionate interest in IMC-Agrico cash
distributions, a $15.3 million reduction from Main Pass oil
operations caused by the decline in sales volumes between periods,
and the $7.6 million in restructuring charges recorded in 1993.
These decreases were partially offset by a $6 million increase in
sulphur depreciation because of higher Main Pass sulphur production.
General and administrative expenses reflect the benefits from
the formation of IMC-Agrico and the other 1993 restructuring
activities. The 1994 amount also benefited from a $2.2 million
reduction in the estimated cost of excess office space FTX allocated
to FRP (originally estimated as part of 1993 restructuring costs),
whereas 1993 includes $7.3 million in restructuring related charges.
Interest expense in 1994 increased as a result of the Main Pass
sulphur project becoming operational for accounting purposes in July
1993 (previously, related interest costs totaling $11.1 million in
1993 were capitalized), rising interest rates and the issuance of the
8 3/4% Senior Subordinated Notes due 2004 which were used to reduce
lower variable rate bank borrowings. These increases were partially
offset by a reduction in average debt levels.
FRP's 1993 earnings include a $23.7 million charge for the
cumulative effect of changes in accounting principle for periodic
scheduled maintenance costs, deferred charges and costs of management
information systems. These changes were adopted to improve the
measurement of operating results by expensing cash expenditures when
incurred unless they directly relate to long-lived additions. These
changes did not have a material impact on 1993 operating income.
Agricultural Minerals Operations - FRP's agricultural minerals
operations reported 1994 operating income of $123.8 million on
revenues of $730.4 million compared with an operating loss of $105
million on revenues of $619.3 million in 1993. Significant items
impacting operating income are as follows (in millions):
Agricultural minerals operating loss - 1993 $ (105.0)
____________
Increases (decreases):
Sales volumes 15.8
Realizations 102.7
Other (7.4)
____________
Revenue variance 111.1
Cost of sales 46.8<F1><F2>
1993 provision for restructuring charges 33.9
1993 loss on valuation and sale of assets, net 14.8
General and administrative and other 22.2<F1>
____________
228.8
____________
Agricultural minerals operating income - 1994 $ 123.8
============
_______________
<F1> 1993 included $17.5 million in cost of sales and $7.3 million
in general and administrative expenses resulting from the
restructuring project.
<F2> 1994 included a $15.8 million reduction and 1993 included a
$10.8 million increase in depreciation and amortization caused
by FRP's disproportionate interest in IMC-Agrico cash
distributions.
FRP's 1994 phosphate fertilizer sales volumes were slightly
below 1993 levels. Producer inventories remained at prior year
levels despite a rise in industrywide production. As a result,
phosphate fertilizer prices rose sharply from the near 20-year lows
experienced during 1993, with FRP's average DAP realization
increasing 32 percent. Unit production costs benefited from
efficiencies at IMC-Agrico, somewhat offset by higher raw material
prices for ammonia.
<PAGE> S-11
FRP's phosphate rock sales volumes rose 14 percent during 1994,
reflecting increased demand and the advent of a supply contract in
October 1994 adding annual sales of approximately 0.8 million tons
net to FRP through 2004.
Main Pass sulphur production increased during 1994, reducing
unit production costs below 1993 levels. With increased Main Pass
production, FRP ceased operating the marginally profitable Caminada
mine in January 1994. Average sulphur realizations for 1994 were
lower, reflecting the decline in prices which occurred throughout
1993. However, improved phosphate fertilizer operating rates,
coupled with reduced imports, resulted in sulphur price increases
during the second half of 1994.
Oil Operation
1994 1993
_____ _____
Sales (barrels) 2,533,700 3,443,000
Average realized price $13.74 $14.43
Operating income (in millions) $2.8 $(61.5)
Main Pass oil production was limited during 1994 because of a
redevelopment program which involved drilling two additional wells
and recompleting three existing wells. Oil realizations recovered
somewhat from the significant decline which occurred in late 1993.
The 1993 price decline resulted in a $60 million charge to FRP's
earnings for the excess net book value of its oil assets over the
estimated future net cash flow to be received.
CAPITAL RESOURCES AND LIQUIDITY
Net cash provided by (used in) operating activities was $284.9
million in 1995, $221.4 million in 1994 and $(2.9) million in 1993.
Fluctuations in these amounts were caused primarily by the varying
level of FRP's earnings. Also benefiting the 1995 and 1994 periods
were working capital reductions achieved by IMC-Agrico and the sale
of receivables.
Net cash provided by (used in) investing activities was $(83.8)
million in 1995, $15.6 million in 1994 and $2.5 million in 1993.
Based on current estimates, capital expenditures for 1996 will
approximate $45 million. Investing cash flows for 1995 included the
Mallinckrodt acquisition, while 1994 and 1993 benefited from the
receipt of proceeds from asset sales.
Net cash provided by (used in) financing activities totaled
$(188.5) million in 1995, $(251.6) million in 1994 and $17.8 million
in 1993. Distributions to partners rose in 1995, as higher cash flow
from operations resulted in continued distributions to the public
unitholders and an increased level of distributions paid to FTX. In
early 1994, FRP issued $150 million of 8 3/4% Senior Subordinated
Notes, using the proceeds to reduce bank indebtedness, thereby
lengthening the maturity and fixing the interest cost on a portion of
FRP's debt at a time when long-term interest rates were favorable.
FRP believes that its short-term cash requirements will be met from
internally generated funds and borrowings under the Credit Facility.
See "Relationship Between the Company and the FTX Group -- Credit
Arrangements."
Publicly owned FRP units have cumulative preferential rights to
receive quarterly distributions of 60 cents per unit through the
distribution for the quarter ending December 31, 1996 before any
distributions may be made to FTX. On January 19, 1996, FRP declared
a distribution of 62.5 cents per publicly held unit ($31.3 million)
and 67.35 cents per FTX-owned unit ($35.9 million), payable February
15, 1996, reducing the unpaid distributions to FTX by $2.6 million.
The remaining $379.9 million of unpaid distributions to FTX will be
recoverable from one-half of the excess of future quarterly FRP
distributions over 60 cents per unit for all units. FRP's future
distributions will depend primarily on distributions received from
IMC-Agrico and cash flow from FRP's sulphur and oil operations.
<PAGE> S-12
FRP received a $64.3 million distribution from IMC-Agrico
attributable to the fourth quarter of 1995 that was included in
calculating the cash distribution declared by FRP in January 1996.
Future distributions made by IMC-Agrico to FRP will depend primarily
on IMC-Agrico's cash flow available for distribution, market
conditions in the phosphate fertilizer business and FRP's share of
cash distributions made by IMC-Agrico from ongoing operations (its
Current Interest). In January 1996, FRP and IMC-Agrico agreed that
current and future levels of FRP's Current Interest would be
increased by 0.85 percent effective as of the date on which IMC
consummates a proposed merger with another fertilizer company.
Before giving effect to this increase, FRP's Current Interest will be
53.1 percent until June 30, 1996, when it will increase to 53.5
percent for the twelve months ending June 30, 1997 and then decline
and be fixed at 40.6 percent thereafter. See "Business of the
Company - Agricultural Minerals."
The results of operations reported and summarized above are not
necessarily indicative of future operating results.
BUSINESS OF THE COMPANY
FRP, through its subsidiaries and joint venture operations, is
one of the world's leading integrated phosphate fertilizer producers.
The Company is a joint venture partner in IMC-Agrico, the world's
largest and one of the world's lowest cost producers, marketers and
distributors of phosphate fertilizers. Through FRP's Main Pass and
Culberson sulphur mines, FRP is also the largest producer of Frasch
sulphur in the world. IMC-Agrico's business includes the mining and
sale of phosphate rock and the production, distribution and sale of
phosphate fertilizers and animal feed ingredients. FRP's business
also includes the purchase, transportation, terminalling and sale of
sulphur, and the production of oil reserves at Main Pass.
AGRICULTURAL MINERALS
FRP's agricultural minerals operations consists of its
interest in the IMC-Agrico joint venture and FRP's sulphur business.
Fertilizer Business - IMC-Agrico Company
In July 1993, FRP and IMC contributed to IMC-Agrico their
respective phosphate fertilizer businesses, including the
mining and sale of phosphate rock and the production, marketing and
distribution of phosphate fertilizers. At the time, FRP and IMC were
among the largest and lowest cost phosphate fertilizer producers in
the world. The formation of IMC-Agrico has reduced production costs
by permitting the more efficient use of existing plant capacity as
well as eliminating duplicative administrative and marketing
functions. FRP expects that in IMC-Agrico's fiscal year ending June
30, 1996, IMC-Agrico will be able to achieve as much as $135 million
of savings in aggregate production costs and selling, general and
administrative expenses that otherwise would have been incurred if
FRP and IMC had continued their independent operations.
IMC-Agrico makes quarterly cash distributions to FRP and IMC,
based on sharing ratios that vary from year to year until the fiscal
year ending June 30, 1998. In January 1996, FRP and IMC agreed that
FRP's Current Interest would be increased by 0.85% effective as
of the date on which IMC consummates a proposed merger with another
fertilizer company. In addition, on the July 1st subsequent to the
merger date, FRP's Capital Interest will be increased by 0.85%.
FRP's Current Interest and its Capital Interest, and as adjusted to
give effect to the adjustment described above, are as follows:
<TABLE>
<CAPTION>
Fiscal Year Current Current Capital Capital
Ending June 30 Interest Interest Interest Interest
As Adjusted As Adjusted
_____________________ ___________ __________ _________ ___________
<S> <C> <C> <C> <C>
1996 53.10% 53.95%<F1> 43.60% 43.60%
1997 53.50% 54.35% 42.20% 43.05%
1998 and thereafter 40.60% 41.45% 40.60% 41.45%
<F1> FRP's Current Interest will be increased effective as of the
date that the merger is consummated.
</TABLE>
<PAGE> S-13
The IMC-Agrico policy committee establishes policies relating to the
strategic direction of IMC-Agrico and assures that its policies are
implemented. FRP and IMC have equal representation on the policy
committee. The policy committee has the sole authority to make certain
decisions affecting IMC-Agrico, including the authorization of certain
expansion capital expenditures, incurring certain indebtedness, approving
significant acquisitions and dispositions and certain other decisions.
In January 1996, IMC-Agrico's day-to-day management was
restructured so that it operates as a stand-alone entity. Included in
the restructing was the establishment of a new office of the president of
IMC-Agrico who is responsible for managing the business affairs of IMC-
Agrico. The president is appointed by IMC subject to the approval of the
policy committee. An executive officer of FRP was selected as the initial
president of IMC-Agrico and has joined IMC-Agrico in that role. The
president reports to IMC who maintains responsibility for the operation of
IMC-Agrico, subject to the terms of the partnership agreement governing
IMC-Agrico and the direction of the policy committee.
Phosphate Rock
IMC-Agrico's phosphate mining operations and
production plants, located in Polk, Hillsborough, Hardee and Manatee
Counties in central Florida, produce phosphate rock principally for
the manufacture of phosphate fertilizers. IMC-Agrico sells phosphate
rock to foreign distributors, domestic animal feed manufacturers and
other phosphate fertilizer producers. IMC-Agrico uses phosphate rock
internally in the production of phosphate fertilizers at its plants
located in central Florida and in Louisiana. Phosphate rock is
generally mixed with sulphuric acid to produce phosphoric acid from
which various granulated phosphate products can be produced. IMC-
Agrico's annual phosphate rock mining capacity is approximately 27
million tons per year and currently accounts for approximately 50% of
domestic phosphate rock mining capacity and 19% of the western
world's capacity. IMC-Agrico produced approximately 25 million tons
of phosphate rock during the year ended December 31, 1995.
As of December 31, 1995, FRP's share of IMC-Agrico's
proved and probable phosphate rock reserves were approximately 186.4
million short tons that are mineable from existing operations, plus
an additional 183.8 million short tons of phosphate rock deposits.
Deposits are ore bodies which require additional economic and mining
feasibility studies before they can be classified as reserves. These
reserves are either owned by IMC-Agrico or controlled by it through
long-term lease or royalty arrangements.
Phosphate Fertilizers
IMC-Agrico manufactures phosphate fertilizers, principally
diammonium phosphate ("DAP"), monoammonium phosphate ("MAP") and
granular triple superphosphate ("GTSP"), and related products,
including sulphuric acid, phosphoric acid, anhydrous ammonia and
urea. IMC-Agrico's fertilizer operations consist of six phosphoric
acid and fertilizer manufacturing facilities, three in central Florida
and three on the Mississippi River in Louisiana.
IMC-Agrico's New Wales, Nichols and South Pierce plants are
located in Florida. The New Wales complex, located near Mulberry,
Florida, primarily produces DAP, MAP, GTSP and merchant
grade phosphoric acid. The New Wales plant also produces animal feed
ingredients (see "Animal Feed Ingredients" below). The Nichols
plant, located in Nichols, Florida, produces DAP, sulphuric acid and
phosphoric acid. The South Pierce plant, located in Bartow, Florida,
produces GTSP, sulphuric acid and phosphoric acid.
IMC-Agrico's Faustina, Uncle Sam and Taft plants are located in
Louisiana. The Faustina plant, located in Donaldsonville, Louisiana,
produces DAP, MAP, anhydrous ammonia, urea, sulphuric acid and phosphoric
acid. The Uncle Sam plant, located at Uncle Sam, Louisiana, produces
sulphuric acid and phosphoric acid which is then shipped to the nearby
Faustina and Taft plants, where it is used to produce DAP and MAP.
The Taft plant, located in Taft, Louisiana, produces DAP and MAP. As
market conditions dictate, operations at Taft are suspended by IMC-Agrico
to avoid building excessive inventories.
<PAGE> S-14
Phosphate rock, sulphur and ammonia are the three principal raw
materials used in the production of phosphate fertilizers. Phosphate rock
is supplied by IMC-Agrico's Florida mines. FRP supplies its share of
IMC-Agrico's sulphur requirements through its production from the Main
Pass and Culberson mines and IMC supplies IMC-Agrico with its sulphur
requirements from its share of Main Pass production and purchases from
third parties, including FRP. IMC-Agrico's ammonia needs are fulfilled by
internal production from its Faustina plant and third party domestic
suppliers under long-term contracts.
IMC-Agrico's phosphoric acid capacity is approximately
4.0 million tons of contained P2O5 (P2O5 is an industry term
indicating a product's phosphate content measured chemically in units
of phosphorous pentoxide), which represents approximately 32% of U.S.
production capacity and 11% of world capacity. IMC-Agrico operated
at approximately 97% of P2O5 capacity in 1995 as compared to 93% in
1994.
IMC-Agrico's plants have an estimated annual sustainable
capacity to produce approximately 8.2 million tons of granulated
phosphates (DAP, MAP and GTSP), 10.4 million tons of
sulphuric acid, 260,000 tons of urea and 565,000 tons of anhydrous
ammonia. During 1995, IMC-Agrico produced approximately 7.6 million
tons of granulated phosphates, as compared to 7.1 million tons in
1994.
Animal Feed Ingredients
In October 1995, IMC-Agrico acquired the animal feed
ingredients business of Mallinckrodt Group Inc. for $110 million
cash. Prior to the acquisition, this business was IMC-Agrico's
largest P2O5 customer, consuming nearly 300,000 tons per year
(approximately 7%) of IMC-Agrico's capacity. FRP's portion of the
purchase price was $46.2 million and was funded by borrowings under
the Credit Facility. See "Relationship Between the Company and the
FTX Group - Credit Arrangements."
Prior to the acquisition, IMC-Agrico managed Mallinckrodt's animal
feed plant operations on a contractual basis. The prinicipal manufacturing
facilities of the animal feed operations are located within IMC-Agrico's
New Wales complex. This newly acquired business is one of the world's
largest producers of phosphate-based animal feed ingredients and enhances
IMC-Agrico's flexibility in maximizing returns from its core phosphate
production.
Marketing
IMC-Agrico sells its fertilizer products in the
domestic and export markets under spot market and long-term contract
terms. IMC-Agrico markets its products domestically throughout the
eastern two-thirds of the United States. In 1995, approximately 40%
of IMC-Agrico's phosphate fertilizer shipments were sold in the
domestic market. Approximately 60% of IMC-Agrico's phosphate rock
production was used in 1995 to produce phosphate fertilizers at its
plants in Florida and Louisiana, with a majority of the remaining
amount sold in the domestic market.
Virtually all of FRP's export sales of phosphate
fertilizers are marketed through the Phosphate Chemical Export
Association ("Phoschem"), a Webb-Pomerene Act association. Since
January 1995, IMC has been responsible for marketing DAP, MAP and
GTSP for PhosChem's members. This marketing arrangement allows IMC-
Agrico to interface directly with its major international customers
and enhances its ability to pursue growth and marketing opportunities
on a global basis.
Although phosphate fertilizer sales are fairly
constant from month to month, seasonal increases occur in the
domestic market prior to the fall and spring planting of crops.
Generally, domestic sales taper off after the spring planting season.
However, this decline in domestic sales generally coincides with a
time when major international buyers such as China, India and
Pakistan purchase product for mid-year delivery.
In conducting business abroad, IMC-Agrico is subject
to the customary risks encountered in foreign operations, including
changes in currency and exchange controls, the availability of
foreign exchange, laws, policies and actions affecting foreign trade
and government subsidies, tariffs and quotas.
<PAGE> S-15
All of the Company's major products are commodities,
and the markets and prices for such products have been volatile
historically and may continue to be volatile in the future. The
Company's operating margins and cash flow are subject to substantial
fluctuations in response to changes in supply and demand for its
products, conditions in the domestic and foreign agriculture
industry, market uncertainties and a variety of additional factors
beyond the Company's control.
SULPHUR BUSINESS
FRP's sulphur operations include the mining, purchase,
transportation, terminalling and sale of sulphur. In January 1995,
FRP acquired essentially all of the domestic assets of Pennzoil
Sulphur Co. ("Pennzoil"), including the Culberson mine in Texas,
sulphur terminals and loading facilities in Galveston, Texas and
Tampa, Florida, land and marine transportation equipment and related
commercial contracts and obligations. As a result, FRP now produces
sulphur from its Main Pass and Culberson mines for sale to IMC-Agrico
and to third parties.
Production
The Main Pass and Culberson mines utilize the Frasch
mining process, which involves drilling wells and injecting
superheated water into the underground sulphur deposit to melt the
solid sulphur, which is then brought to the surface in liquid form.
FRP and its predecessors have been using the Frasch process for over
80 years. FRP has also developed technology that allows it to use
sea water in the Frasch process. FRP is not aware of any competitor
that has developed a Frasch sulphur mine using superheated sea water.
The Main Pass deposit was discovered by FRP in 1988.
The mine currently has the highest production rate of any sulphur
mine in the world and contains the largest known existing Frasch
sulphur reserve in North America. The Main Pass offshore complex,
more than a mile in length, is one of the largest structures of its
type in the world and the largest in the Gulf of Mexico. The Main
Pass mine reached full design capacity of 5,500 long tons per day in
December 1993 and has since operated at or above design capacity.
During the year ended December 31, 1995, production averaged
approximately 6,000 long tons per day. The mine is owned 58.3% by
FRP, 25% by IMC and 16.7% by Homestake Sulphur Company. At December
31, 1995, the Main Pass deposit was estimated to contain proved and
probable sulphur reserves totaling 68.1 million long tons (39.7
million long tons net to FRP).
FRP began operating the Culberson mine in January 1995
after acquiring the mine from Pennzoil. For the year ended December
31, 1995, production at the Culberson mine averaged approximately
2,500 long tons per day. FRP is implementing strategies to
strengthen operating efficiencies at the Culberson mine to further
reduce costs. As of December 31, 1995, the Culberson mine was
estimated to contain proved and probable sulphur reserves totaling
15.5 million long tons.
FRP also supplements its sulphur production by
purchasing sulphur from third parties who recover sulphur in the
production of oil and natural gas and the refining of petroleum
products.
Marketing
Sulphur produced at the Main Pass mine is transported
by barge in liquid form to its storage, handling and shipping
facilities located at Port Sulphur, Louisiana. Sulphur production
from the Culberson mine is transported in liquid form by unit train
to Galveston where storing, handling and shipping facilities are
located. At both Port Sulphur and Galveston, sulphur purchased from
others or transported for others may also be received. Sulphur is
transported from Port Sulphur by barge to IMC-Agrico's and other
customers' plants in Louisiana on the Mississippi River. Molten
sulphur is also transported from Galveston and Port Sulphur by tanker
to FRP's terminals at Tampa. Similar facilities at Pensacola,
Florida are used for storage, handling and shipping of sulphur
purchased from others or transported for others. FRP processes and
transports for a fee both IMC's and Homestake's share of Main Pass
sulphur and serves as marketing agent for Homestake.
<PAGE> S-16
FRP's production of sulphur accounted for an estimated
30% of domestic and 8% of world elemental sulphur production in 1995.
FRP's sulphur is used primarily to manufacture sulphuric acid, which
is used primarily to produce phosphoric acid, one of the basic
materials used to produce phosphate fertilizers. During the year
ended December 31, 1995, sales to domestic phosphate fertilizer
producers, including IMC-Agrico, accounted for approximately 65% of
FRP's total sulphur sales. A small number of companies account for a
large portion of total United States sulphur consumption.
OIL
Oil reserves are associated with the same caprock
reservoir as the sulphur reserves at Main Pass. Oil production
commenced in the fourth quarter of 1991 and averaged approximately
12,400 barrels per day (6,000 barrels per day net to FRP) during the
year ended December 31, 1995. As of December 31, 1995, FRP estimated
that the remaining proved recoverable oil reserves at Main Pass were
approximately 15.9 million barrels (6.6 million barrels net to FRP).
FRP currently does not intend to pursue oil operations that are not
related to Main Pass.
GENERAL
Competition
The sulphur, fertilizer and phosphate rock mining
industries are highly competitive. All of the Company's products are
commodities and the markets for such products can be volatile.
Because competition is based largely on price, maintaining low
production costs is critical to competitiveness. In this global
business, IMC-Agrico faces stiff competition from overseas producers,
most of which are state supported, especially those in North Africa
and the former Soviet Union. Additionally, foreign competitors are
frequently motivated by non-market factors such as the need for hard
currency. In the United States, IMC-Agrico competes against a number
of major phosphate fertilizer producers, including large
cooperatives. FRP competes in the sulphur business with a number of
marketers of recovered sulphur and with Canadian and Mexican imports.
Operating Hazards
The production of sulphur and phosphate fertilizer
involves the handling of hazardous or toxic substances, some of which
may have the potential, if released into the environment in
sufficient quantities, to expose FRP and IMC-Agrico to significant
liability. See "Business of the Company - Environmental Matters."
FRP's offshore sulphur mining and oil production
operations, and its marine transportation operations, are subject to
marine perils, including hurricanes and other adverse weather
conditions. FRP's mining operations are also subject to the usual
risks encountered in the mining industry, including unexpected
geological conditions resulting in cave-ins, flooding and rock-bursts
and unexpected changes in rock stability conditions. FRP's oil
activities are subject to all of the risks normally incident to the
development and production of oil, including blowouts, cratering and
fires, each of which could result in injury to personnel and/or
damage to property and the environment.
The Company has in place programs to minimize the
risks associated with its businesses. In addition, it has the
benefit of certain liability, property damage, business interruption
and other insurance coverage in types and amounts that it considers
reasonable and believes to be customary in the Company's business.
This insurance provides protection against loss from some, but not
all, potential liabilities normally incident to the ordinary conduct
of the Company's business, including coverage for certain types of
damages associated with environmental and other liabilities that
arise from sudden, unexpected and unforeseen events, with such
coverage limits as management deems prudent. Through FTX, the
Company also maintains a property insurance program that covers some,
but not all of the risks of physical damage to tangible property of
the Company as well as the corresponding cost of business
interruption.
<PAGE> S-17
Environmental Matters
FTX and FRP have a history of commitment to
environmental responsibility. Since the 1940s, long before the
general public recognized the importance of maintaining environmental
quality, FTX has conducted preoperational, bioassay, marine
ecological and other environmental surveys to ensure the
environmental compatibility of its operations. FTX's Environmental
Policy commits its operations to compliance with applicable laws and
regulations. FTX has implemented corporate-wide environmental
programs that include the activities of FRP and continues to study
methods to reduce discharges and emissions.
FRP's operations are subject to federal, state and
local laws and regulations relating to the protection of the
environment. Exploration, mining, development and production of
natural resources, and the chemical processing operations of IMC-
Agrico, like similar operations of other companies, may affect the
environment. Moreover, such operations involve the extraction,
handling, production, processing, treatment, storage, transportation
and disposal of materials and waste products that, under certain
conditions, may be toxic or hazardous and are regulated under
environmental laws. Although significant capital expenditures and
operating costs have been and will continue to be incurred based on
these requirements, FRP does not believe these expenditures and costs
have had a material adverse effect on its business. Continued
government and public emphasis on environmental issues can be
expected to result in increased capital expenditures and operating
costs in the future. However, the impact of future laws and
regulations or of future changes to existing laws and regulations
cannot be predicted or quantified.
Federal legislation (sometimes referred to as
"Superfund") imposes liability, without regard to fault, for cleanup
of certain waste sites, even though such waste management activities
may have been performed in compliance with regulations applicable at
the time. Under the Superfund legislation, one party may be required
to bear more than its proportional share of cleanup costs at a site
where it has responsibility pursuant to the legislation, if payments
cannot be obtained from other responsible parties. Other legislation
mandates cleanup of certain wastes at operating sites. States also
have regulatory programs that can mandate waste cleanup. Liability
under these laws can be significant and involves inherent
uncertainties.
The Company has received notices from governmental
agencies that it is one of many potentially responsible parties at
certain sites under relevant federal and state environmental laws.
Some of these sites involve significant cleanup costs; however, at
each of these sites other large companies with equal or larger
proportionate shares are among the potentially responsible parties.
The ultimate settlement for such sites usually occurs several years
subsequent to the receipt of notices identifying potentially
responsible parties because of the many complex technical and
financial issues associated with site cleanup. FRP believes that the
aggregate costs involved with these potential liabilities at sites
for which notification has been received will not exceed amounts
accrued and expects that any resulting costs would be incurred over a
period of years.
Legal Proceedings
FRP is involved from time to time in various legal
proceedings of a character normally incident to its businesses. FRP
believes that its potential liability in any such pending or
threatened proceedings will not have a material adverse effect on the
financial condition or results of operations of FRP. FRP, through
FTX, maintains liability insurance to cover some, but not all,
potential liabilities normally incident to the ordinary course of its
businesses with such coverage limits as management deems prudent.
<PAGE> S-18
RELATIONSHIP BETWEEN THE COMPANY AND THE FTX GROUP
MANAGEMENT AND OWNERSHIP
FTX and FMRP serve as the managing general partners of
the Company and the directors and officers of FTX, together with
FRP's officers, perform all FRP management functions and carry out
the activities of FRP. The officers of FRP continue to be employees
and officers of FTX and its other subsidiaries, but subject to
certain exceptions, are employed principally for the operation of
FRP's business. As of December 31, 1995, FTX and FMRP held
partnership interests that represented an approximate 51.5% interest
in the Company. As a result of being the administrative managing
general partner and this ownership, FTX has the ability to control
all matters relating to the management of the Company, including any
determination with respect to the acquisition or disposition of
Company assets, future issuance of additional debt or other
securities of the Company and any distributions payable in respect of
the Company's partnership interests. In addition to such other
obligations as it may assume, FTX has the general duty to act in good
faith and to exercise its rights of control in a manner that is fair
and reasonable to the holders of partnership interests.
Under the terms of the Credit Facility, the failure by
FTX to maintain control of FRP, or the direct or indirect ownership
of at least 50.1% of the partnership interests in FRP, would allow
acceleration of the indebtedness thereunder. See "- Credit
Arrangements."
Publicly owned FRP units have cumulative preferential
rights to receive minimum quarterly distributions of 60 cents per
unit through the distribution to be made with respect to the quarter
ending December 31, 1996 before any distributions may be made to FTX.
On January 15, 1996, FRP declared a distribution of 62.5 cents per
publicly held unit ($31.3 million) and 67.35 cents per FTX owned unit
($35.9 million) payable February 15, 1996, which will reduce the
total unpaid distribution due FTX by $2.6 million to $379.9 million.
FTX may recover this unpaid distribution on a quarterly basis from
one half of the excess of future quarterly distributions over 60
cents per unit for all units.
CREDIT ARRANGEMENTS
On June 30, 1995, FTX and FRP entered into the Credit
Facility, which is structured as a five-year revolving line of credit
maturing on June 30, 2000. The Credit Facility currently provides
for $400 million of credit. Following the sale of the Senior Notes,
the committed amount under the Credit Facility will be reduced to
$300 million, all of which will be available to FRP and $75 million
of which will be available to FTX. As of December 31, 1995, $187
million was outstanding and $213 million was available under the
Credit Facility.
Under the Credit Facility, FTX is required to maintain
at least a 50.1% ownership interest in FRP and control of FRP. FRP
is not permitted to enter into any agreement restricting its ability
to make distributions and is restricted in its ability to create
liens and security interests on its assets. To secure the Credit
Facility, FTX has pledged its FRP units representing a minimum 50.1%
ownership in FRP and FRP has granted a security interest in its
interest in IMC-Agrico and the Main Pass oil reserves. The Credit
Facility places restrictions on, among other things, additional
borrowings and requires FRP to maintain minimum working capital
levels, specified cash flow to interest coverage ratios and maximum
debt-to-capitalization ratios.
FRP has minimized amounts outstanding under the Credit
Facility by borrowing excess funds from FTX. As of December 31,
1995, $24.7 million was outstanding under this arrangement. Interest
is charged based on interest rates under the Credit Facility.
In February 1994, IMC-Agrico entered into a $75
million revolving credit facility with a group of banks (the "IMC-
Agrico Facility"). The IMC-Agrico Facility, which has a letter of
credit subfacility for up to $25 million, provides for a three-year
maturity with IMC-Agrico having the right to request one-year
extensions of the revolving period. As of December 31, 1995, there
were no borrowings outstanding under the IMC-Agrico Facility.
Borrowings under the IMC-Agrico Facility are unsecured, with a
negative pledge on substantially all of IMC-Agrico's assets. The
IMC-Agrico Facility has minimum net partners' capital and fixed
charge coverage requirements and a current ratio test, and places
limitations on the incurrence of additional debt. It also prohibits
changes, without bank approval, to the IMC-Agrico partnership
agreement relating to distributions.
<PAGE> S-19
CONFLICTS OF INTEREST
The nature of the respective businesses of the Company
and FTX and its affiliates may give rise to conflicts of interest
between the Company and FTX. Conflicts could arise, for example,
with respect to transactions involving potential acquisitions of
businesses or mineral properties, the issuance of additional
partnership interests, the determination of distributions to be made
by the Company, the allocation of general and administrative expenses
between FTX and the Company and other business dealings between the
Company and FTX and its affiliates. Except in cases where a
different standard may have been provided for, FTX has a general duty
to act in good faith and to exercise rights of control in a manner
that is fair and reasonable to the holders of FRP's partnership
interests. In resolving conflicts of interest, FRP's partnership
agreement permits FTX to consider the relative interest of each party
to a potential conflict situation which, under certain circumstances,
could include the interest of FTX and its affiliates. The extent to
which this provision is enforceable under Delaware law is not clear.
ADMINISTRATIVE SERVICES AGREEMENT
Pursuant to the terms of an Administrative Services
Agreement (the "Services Agreement"), an affiliate of FTX furnishes
general executive, administrative, financial, accounting, legal,
environmental, insurance, personnel, engineering, tax, research and
development, sales and certain other services to FTX in order to
enable it to perform its duties as administrative managing general
partner of the Company. The nature and timing of the services
provided under the Services Agreement are similar to those
historically provided directly by FTX to the Company. FRP reimburses
FTX, at FTX's cost, including allocated overhead, for such services
on a monthly basis, including amounts paid by FTX under the Services
Agreement and allocated to FRP. Such costs are allocated among FRP,
FTX and FTX's other affiliates based on direct utilization whenever
possible and an allocation formula based on a combination of the
operating income, property, plant and equipment and capital
expenditures of FRP, FTX and FTX's other affiliates.
DESCRIPTION OF THE SENIOR NOTES
The Senior Notes offered hereby are a series of "Debt
Securities" as defined and described in the accompanying Prospectus
dated December 6, 1990 (the "Prospectus"), and the following
description of the terms of the Senior Notes supplements the
description of the general terms and provisions of the Debt Securities
set forth in the Prospectus.
The Senior Notes are to be issued under the Senior
Indenture dated as of February 1, 1996, as supplemented by a
First Supplemental Indenture dated as of February 14, 1996 (as
supplemented, the "Senior Indenture") between the Company and
Chemical Bank, as Trustee (the "Trustee"). A copy of the form of
Senior Indenture is incorporated by reference as an exhibit to the
Registration Statement of which this Prospectus Supplement is a part.
The following summaries of certain provisions of the Senior Notes and
the Senior Indenture should be read in conjunction with the
statements under "Description of Debt Securities" in the Prospectus.
Such information does not purport to be complete and is subject to,
and is qualified in its entirety by reference to, all of the
provisions of the Senior Notes and the Senior Indenture, including
the definitions therein of certain terms that are not otherwise
defined in the Prospectus or this Prospectus Supplement. Wherever
particular provisions or defined terms of the Senior Indenture are
referred to, such provisions or defined terms are incorporated herein
by reference. Unless otherwise indicated, references herein are to
sections in the Senior Indenture.
<PAGE> S-20
The Senior Notes will be limited to $150,000,000
aggregate principal amount, and will mature on February 15, 2008.
The Senior Notes will bear interest from February 21, 1996, payable in
arrears on February 15 and August 15 of each year, commencing August
15, 1996, at the rate of 7% per annum, to the persons in whose
names the Senior Notes are registered at the close of business on the
last day of the month preceding the month in which such interest
payment occurs. Interest will be computed on the basis of a 360-day
year of twelve 30-day months. All payments of interest and principal
will be in United States dollars.
The Senior Notes will be senior unsecured obligations
of the Company and will rank prior to all subordinated indebtedness
of the Company and pari passu with all other unsecured indebtedness
of the Company. For further information on the Company's debt, see
"Capitalization." At December 31, 1995 and after giving pro forma
effect to the use of the net proceeds described under "Use of
Proceeds," the Company had approximately $236.8 million of senior
indebtedness ($52.7 million of which was secured) and $150 million of
subordinated indebtedness. The Senior Notes will be effectively
subordinated to all of FRP's secured indebtedness and to the
indebtedness and other liabilities of IMC-Agrico and any other
subsidiaries of the Company. The Senior Indenture does not contain
any covenants or other provisions applicable to the Senior Notes that
limit the amount of indebtedness that may be issued or incurred by
the Company or any of its subsidiaries, restrict the Company's
ability to make distributions to its partners or contain provisions
that would afford holders of the Senior Notes protection in the event
of a change in control, highly leveraged transaction,
recapitalization or similar transaction involving the Company, any of
which could adversely affect the holders of the Senior Notes.
The Senior Notes will be obligations solely of the
Company and neither the limited nor the general partners of the
Company will have any obligation under, or be liable in respect of,
the Senior Notes.
OPTIONAL REDEMPTION
The Senior Notes will be redeemable as a whole or in
part, at the option of the Company at any time, at a redemption price
equal to the greater of (i) 100% of their principal amount or (ii)
the sum of the present values of the remaining scheduled payments of
principal and interest thereon discounted to the date of redemption
on a semiannual basis (assuming a 360-day year consisting of twelve
30-day months) at the Treasury Yield plus 30 basis points, plus in
each case accrued interest to the date of redemption.
"Treasury Yield" means, with respect to any redemption
date, the rate per annum equal to the semiannual equivalent yield to
maturity of the Comparable Treasury Issue, assuming a price for the
Comparable Treasury Issue (expressed as a percentage of its principal
amount) equal to the Comparable Treasury Price for such redemption
date.
"Comparable Treasury Issue" means the United States
Treasury security selected by an Independent Investment Banker as
having a maturity comparable to the remaining term of the Senior
Notes that would be utilized, at the time of selection and in
accordance with customary financial practice, in pricing new issues
of corporate debt securities of comparable maturity to the remaining
term of the Senior Notes. "Independent Investment Banker" means
Lehman Brothers Inc. or, if such firm is unwilling or unable to
select the Comparable Treasury Issue, an independent investment
banking institution of national standing appointed by the Company.
"Comparable Treasury Price" means, with respect to any
redemption date, (i) the average of the bid and asked prices for the
Comparable Treasury Issue (expressed in each case as a percentage of
its principal amount) on the third business day preceding such
redemption date, as set forth in the daily statistical release (or
any successor release) published by the Federal Reserve Bank of New
York and designated "Composite 3:30 p.m. Quotations for U.S.
Government Securities" or (ii) if such release (or any successor
release) is not published or does not contain such prices on such
business day, (A) the average of the Reference Treasury Dealer
Quotations for such redemption date, after excluding the highest and
lowest such Reference Treasury Dealer Quotations, or (B) if the
Trustee obtains fewer than four such Reference Treasury Dealer
Quotations, the average of all such Quotations. "Reference Treasury
Dealer Quotations" means, with respect to each Reference Treasury
Dealer and any redemption date, the average, as determined by the
Trustee, of the bid and asked prices for the Comparable Treasury
Issue (expressed in each case as a percentage of its principal
amount) quoted in writing to the Trustee by such Reference Treasury
Dealer at 5:00 p.m. on the third business day preceding such
redemption date.
<PAGE> S-21
"Reference Treasury Dealer" means each Lehman Brothers
Inc., Merrill Lynch, Pierce, Fenner & Smith Incorporated and Salomon
Brothers Inc; and their respective successors; provided however, that
if any of the foregoing shall cease to be a primary U.S. Government
securities dealer in New York City (a "Primary Treasury Dealer"), the
Company shall substitute therefor another Primary Treasury Dealer.
Holders of Senior Notes to be redeemed will receive
notice thereof by first-class mail at least 30 and not more than 60
days prior to the date fixed for redemption. Any such notice to the
Holders of a redemption need not set forth the redemption price but
need only set forth the calculation thereof as described in the first
paragraph of this section entitled "Optional Redemption". The redemption
price, calculated as aforesaid, shall be set forth in an officer's
certificate delivered to the Trustee no later than two business days
prior to the redemption date.
GLOBAL SECURITIES
The Senior Notes will be issued in the form of one or
more Registered Global Securities that will be deposited with, or on
behalf of, The Depository Trust Company, New York, New York (the
"Depositary"). Unless and until it is exchanged in whole or in part
for Securities in definitive form, a Registered Global Security may
not be transferred except as a whole to a nominee of the Depositary
for such Registered Global Security, or by a nominee of the
Depositary to the Depositary or another nominee of the Depositary, or
by the Depositary or any such nominee to a successor Depositary or a
nominee of such successor Depositary.
BOOK-ENTRY SYSTEM
Initially, the Senior Notes will be registered in the
name of Cede & Co., the nominee of the Depositary. Accordingly,
beneficial interests in the Senior Notes will be shown on, and
transfers thereof will be effected only through, records maintained
by the Depositary and its participants.
The Depositary has advised the Company and the
Underwriters as follows: the Depositary is a limited-purpose trust
company organized under the New York Banking Law, a "banking
organization" within the meaning of the New York Banking Law, a
member of the United States Federal Reserve System, a "clearing
corporation" within the meaning of the New York Uniform Commercial
Code and a "clearing agency" registered pursuant to the provisions of
Section 17A of the United States Securities Exchange Act of 1934, as
amended. The Depositary holds securities that its participants
("Direct Participants") deposit with the Depositary. The Depositary
also facilitates the settlement among Direct Participants of
securities transactions, such as transfers and pledges, in deposited
securities through electronic computerized book-entry changes in such
Direct Participants' accounts, thereby eliminating the need for
physical movement of securities certificates. Direct Participants
include securities brokers and dealers (including the Underwriters),
banks, trust companies, clearing corporations, and certain other
organizations. The Depositary is owned by a number of its Direct
Participants and by the New York Stock Exchange, Inc., the American
Stock Exchange, Inc. and the National Association of Securities
Dealers, Inc. Access to the Depositary's book-entry system is also
available to others such as securities brokers and dealers, banks and
trust companies that clear through or maintain a custodial
relationship with a Direct Participant, either directly or indirectly
("Indirect Participants"). The rules applicable to the Depositary
and its Direct and Indirect Participants are on file with the United
States Securities and Exchange Commission.
The Depositary advises that its established procedures
provide that (i) upon issuance of the Senior Notes of the Company,
the Depositary will credit the accounts of Participants designated by
the Underwriters with the principal amounts of the Senior Notes
purchased by the Underwriters and (ii) ownership of interests in the
Registered Global Securities will be shown on, and the transfer of
the ownership will be effected only through, records maintained by
the Depositary, the Direct Participants and the Indirect
Participants. The laws of some states require that certain persons
take physical delivery in definitive form of securities which they
own. Consequently, the ability to transfer beneficial interest in
the Registered Global Securities is limited to such extent.
<PAGE> S-22
So long as a nominee of the Depositary is the
registered owner of the Registered Global Securities, such nominee
for all purposes will be considered the sole owner or holder of such
Registered Global Securities under the Indenture. Except as provided
below, owners of beneficial interests in the Registered Global
Securities will not be entitled to have Senior Notes registered in
their names, will not receive or be entitled to receive physical
delivery of Senior Notes in definitive form and will not be
considered the owners or holders thereof under the Indenture.
Neither the Company, the Trustee, any paying agent nor
the registrar will have any responsibility or liability for any
aspect of the records relating to or payments made on account of
beneficial ownership interests in the Registered Global Securities,
or for maintaining, supervising or reviewing any records relating to
such beneficial ownership interests.
Principal and interest payments on the Senior Notes
registered in the name of the Depositary's nominee will be made in
immediately available funds to the Depositary's nominee as the
registered owner of the Registered Global Securities. Under the
terms of the Senior Notes, the Company and the Trustee will treat the
persons in whose names the Senior Notes are registered as the owners
of such Senior Notes for the purpose of receiving payment of
principal and interest on such Senior Notes and for all other
purposes whatsoever. Therefore, neither the Company, the Trustee nor
any paying agent has any direct responsibility or liability for the
payment of principal or interest on the Senior Notes to owners of
beneficial interest in the Registered Global Securities. The
Depositary has advised the Company and the Trustee that its current
practice is, upon receipt of any payment of principal or interest, to
credit Direct Participants' accounts on the payment date in
accordance with their respective holdings of beneficial interests in
the Registered Global Securities as shown on the Depositary's
records, unless the Depositary has reason to believe that it will not
receive payment on the payment date. Payments by Direct and Indirect
Participants to owners of beneficial interests in the Registered
Global Securities will be governed by standing instructions and
customary practices, as is the case with securities held for the
accounts of customers in bearer form or registered in "street name,"
and will be the responsibility of such Direct and Indirect
Participants and not of the Depositary, the Trustee, or the Company,
subject to any statutory requirements that may be in effect from time
to time. Payment of principal and interest to the Depositary is the
responsibility of the Company or the Trustee, and disbursement of
such payments to the owners of beneficial interests in the Registered
Global Securities shall be the responsibility of the Depositary and
Direct and Indirect Participants.
Senior Notes represented by a Registered Global
Security will be exchangeable for Senior Notes in definitive form of
like tenor as such Registered Global Security in denominations of
$1,000 and in any greater amount that is an integral multiple if the
Depositary notifies the Company that it is unwilling or unable to
continue as Depositary for such Registered Global Security or if at
any time the Depositary ceases to be a clearing agency registered
under applicable law and a successor depositary is not appointed by
the Company within 90 days or the Company in its discretion at any
time determines not to require all of the Senior Notes to be
represented by a Registered Global Security and notifies the Trustee
thereof. Any Senior Notes that are exchangeable pursuant to the
preceding sentence are exchangeable for Senior Notes issuable in
authorized denominations and registered in such names as the
Depositary shall direct. Subject to the foregoing, a Registered
Global Security is not exchangeable, except for a Registered Global
Security or Registered Global Securities of the same aggregate
denominations to be registered in the name of the Depositary or its
nominee.
SAME DATE SETTLEMENT
Settlement for the Senior Notes will be made by the Underwriters
in immediately available funds. Secondary trading in long-term notes and
debentures of corporate issuers is generally settled in clearing-house
or next-day funds. In contrast, the Senior Notes will trade in the
Depositary's Same-Day Funds Settlement System, and secondary market
trading activity in the Senior Notes will therefore be required by the
Depositary to settle in immediately available funds. No assurance can
be given as to the effect, if any, of settlement in immediately available
funds on trading activity in the Senior Notes.
<PAGE> S-23
COVENANTS
Limitation on Liens
The Senior Indenture provides that the Company will
not, and will not permit any Restricted Subsidiary to, issue, create,
assume or incur any Lien upon any of its or their property or assets
or upon any shares of stock, indebtedness or other obligations of any
Restricted Subsidiary which secures any indebtedness for money
borrowed without in each such case effectively providing concurrently
that the Senior Notes (together with, if the Company shall so
determine, any other indebtedness of or guarantee by the Company or
such Restricted Subsidiary ranking equally with the Senior Notes)
shall be secured equally and ratably with or prior to such secured
debt so long as such other indebtedness shall be so secured. The
foregoing restriction, however, will not apply to: (a) (i) Liens on
any property or other assets owned on the date hereof by the Company
or any of its Restricted Subsidiaries, (ii) Liens on the proceeds and
products of any such property or assets, any property or assets
acquired with the proceeds of or in exchange for any such property or
assets or the accounts receivable generated from any such property or
assets and (iii) Liens on any other assets that are granted pursuant
to any agreements existing on the date hereof, in each case to secure
Debt in an aggregate amount not exceeding the total committed amount
under the Credit Facility and the IMC-Agrico Facility as of
3:00 p.m (New York City Time) on February 14, 1996; (b) Liens on
property, shares of stock or indebtedness or other assets existing at
the time of acquisition thereof, including acquisition through
merger, consolidation or the purchase of assets; (c) Liens on real
or personal property or assets of the Company or a Restricted
Subsidiary to secure Debt incurred for the purpose of (i) financing
all or any part of the purchase price of such property or assets
incurred prior to, at the time of, or within 180 days after, the
acquisition of such property or assets or (ii) financing all or any
part of the cost of construction, improvement, development or
expansion of any such property or assets; (d) Liens to secure Debt of
a Restricted Subsidiary owing to the Company and/or another
Restricted Subsidiary or of the Company owing to a Restricted
Subsidiary; (e) Liens to secure Debt incurred in connection with the
construction, installation or financing of pollution control or
abatement facilities or other forms of industrial revenue or
development bond financing, which Liens extend solely to the property
which is the subject thereof; (f) Liens to secure Debt issued or
guaranteed by the United States or any state or any department,
agency or instrumentality of the United States, incurred in
connection with the financing of the construction, refurbishment or
operation of any marine vessels or other property or assets of the
Company or any of its Restricted Subsidiaries, which Liens extend
solely to the property which is the subject thereof; (g) Liens upon
property or assets of any Restricted Subsidiary not incorporated in
the United States that is acquired after the date hereof (other than
property or assets acquired from the Company or a Restricted
Subsidiary) to secure Debt of that foreign Restricted Subsidiary; (h)
Liens arising from or in connection with a conveyance by the Company
or any Restricted Subsidiary of any production payment or similar
obligation or instrument with respect to any oil, gas, natural gas,
carbon dioxide, sulphur, coal or other mineral or natural resource
that is not in production as of the date hereof; (i) Liens arising by
reason of deposits necessary to obtain standby letters of credit in
the ordinary course of business; (j) Liens in favor of customs and
revenue authorities or incurred upon any property or assets in
accordance with customary banking practice to secure any Debt
incurred by the Company or any Restricted Subsidiary in connection
with the exporting of goods to, or between, or the marketing of
goods, or the importing of goods from, foreign countries, which Liens
extend only to the property or asset being so exported or imported;
(k) Liens upon property or assets sold by the Company or any
Restricted Subsidiary resulting from the exercise of any rights or
arising out of defaults on receivables to secure Debt relating to the
sale of such property or assets; and (l) Liens to secure Debt
incurred to extend, refinance, renew, replace or refund (or
successive extensions, refinancings, renewals, replacements or
refundings) of any Debt secured by any Lien referred to in the
foregoing clauses (b) through (k) so long as such Lien does not
extend to any other property and the amount of such Debt so secured
is not increased above the amount outstanding immediately prior to
such refinancing. Notwithstanding the foregoing, the Company or any
Restricted Subsidiary may create or assume Liens in addition to those
permitted by the preceding sentence of this paragraph and renew extend
or replace such Liens, provided that at the time of such creation,
assumption or replacement, and after giving effect thereto, the Debt
so secured by any such Lien plus any Attributable Debt does not exceed
10% of Consolidated Net Tangible Assets as shown on the balance sheet
of the Company as of the end of the most recent fiscal quarter prior to
the incurrence of the Debt for which a balance sheet is available.
Notwithstanding the foregoing, the Company or any Restricted Subsidiary
may create or assume Liens in addition to those permitted by the
preceding sentence of this paragraph and renew, extend or replace
such Liens, provided that at the time of such creation, assumption
or replacement, and after giving effect thereto, the Debt so secured
by any such Lien plus any Attributable Debt does not exceed 10% of
Consolidated Net Tangible Assets as shown on the balance sheet of the
Company as of the end of the most recent fiscal quarter prior to the
incurrence of the Debt for which a balance sheet is available.
<PAGE> S-24
Limitation on Sale/Leaseback Transactions
The Senior Indenture provides that the Company will
not, and will not cause or permit any Restricted Subsidiary to, enter
into any arrangement with any person (other than with the Company or
a Restricted Subsidiary) providing for the leasing to the Company or
a Restricted Subsidiary for a period of more than three years of any
property or assets which has been, or is to be, sold or transferred
by the Company or such Restricted Subsidiary (in the case of
IMC-Agrico having a sales price of $25 million or more) to such
person or to any person (other than the Company or a Restricted
Subsidiary) and funds have been or are to be advanced by such person
on the security of the leased property unless (a) the Company or such
Restricted Subsidiary would be entitled to incur Debt in a principal
amount equal to or exceeding the value of such sale and lease-back
transaction (as determined in good faith by FTX), secured by a Lien on
the property to be leased, without equally and ratably securing the
outstanding Senior Notes; (b) since the date hereof and within a
period commencing six months prior to the effective date of such sale
and lease-back transaction and ending six months thereafter, the Company
or any Restricted Subsidiary has expended or will expend for any property
(including amounts expended for the acquisition, and for additions,
alterations, improvements and repairs thereto) an amount equal to all or
a portion of the net proceeds received from such transaction and the
Company elects to designate such amount as a credit against the
application of the restrictions set forth hereunder and under "Limitation
on Liens" to such transaction (with any such amount not being so
designated to be applied as set forth in (c) below); or (c) the
Company, during or immediately after the expiration of the 12 months
after the effective date of any such sale and lease-back transaction,
applies to the voluntary defeasance or retirement of the Senior Notes
and its other Senior Indebtedness an amount equal to the greater of
the net proceeds of the sale or transfer of the property leased in
such transaction or the Attributable Debt as determined by FTX in an
officer's certificate delivered to the Trustee at the time of
entering into such transaction (in either case adjusted to reflect
the remaining term of the lease and any amount utilized by the
Company as set forth in (b) above), less an amount equal to the
principal amount of the Senior Notes delivered within 12
months after the date of such arrangement to the Trustee for
retirement and cancellation and excluding retirements of Senior Notes
and other Senior Indebtedness as a result of conversions or pursuant
to mandatory sinking fund or mandatory prepayment provisions or by
payment at maturity.
Limitation on Merger, Consolidation or Sale of Assets
The Senior Indenture provides that the Company may,
without the consent of the holders of the Senior Notes, consolidate
with, or sell, lease or convey all or substantially all of its assets
to, or merge with or into, any other entity provided that: (a)
either the Company shall be the continuing entity, or the successor
entity (if other than the Company) formed by or resulting from any
such consolidation or merger or which shall have received the
transfer of such assets is organized under the laws of any domestic
jurisdiction (the "Successor Company") and assumes the Company's
obligations to pay principal of (and premium or Make Whole Amount, if
any) and interest on all of the Senior Notes and the due and punctual
performance and observance of all of the covenants and conditions
contained in the Senior Indenture; (b) immediately after given effect
to such transaction and treating any indebtedness that becomes an
obligation of the Company or any subsidiary as a result thereof as
having been incurred by the Company or such subsidiary at the time of
such transaction, no Event of Default under the Senior Indenture, and
no event which, after notice or the lapse of time, or both, would
become such an Event of Default, shall have occurred and be
continuing; (c) if, as a result of any such transaction, property or
assets of the Company or a Restricted Subsidiary would become subject
to a Lien prohibited by the provisions described under "Limitation on
Liens," above, the Company or the Successor Company shall have
secured the Senior Notes as required by said covenant; and (d) an
officers' certificate and legal opinion covering such conditions
shall be delivered to the Trustee.
<PAGE> S-25
If the Successor Company is not a partnership, the
Senior Indenture will be amended so that terms such as "partners"
and "distributions to partners" are revised to refer to
"Stockholders" and "dividends or other distributions to stockholders"
or similar terms that are appropriate to the type of entity which
constitutes the Successor Company.
Provision of Financial Information
The Company will provide to the Trustee a copy of all
financial reports it files with the Securities and Exchange
Commission. If, during any reporting period, the Company is not
required to file such reports with the Securities and Exchange
Commission, the Company will provide to the Trustee the same
financial reports concerning the Company as if the Company were so
required.
Events of Default
The following events are defined as "Events of Default":
(i) default in payment of any of the
principal, premium, if any, or interest with respect to any
Senior Note, when such becomes due and payable, and, in the
case of interest, continuance of such default for 30 days;
(ii) failure by the Company to comply with any
of its other agreements in the Senior Notes or the Senior
Indenture, upon the receipt by the Company of notice of such
default from the Trustee or from holders of not less than 25%
in aggregate principal amount of the Senior Notes then
outstanding and the Company's failure to cure such default
within 60 days after receipt by the Company of such notice;
(iii) failure to pay Debt of the Company for
money borrowed (other than non-recourse debt) at maturity (or upon
any redemption), after any grace period, or a default resulting in
the acceleration of the maturity of any other Debt of the Company
for money borrowed (other than non-recourse Debt); in either case
involving Debt in an aggregate principal amount equal to or exceeding
$25 million and such Debt has not been paid or such acceleration has
not been rescinded or annulled within 30 days after such grace period
or acceleration as the case may be;
(iv) the rendering of a final judgment or
judgments against the Company or any Restricted Subsidiary in an
aggregate amount equal to or in excess of $25 million, and any such
judgments are not vacated, discharged or stayed or bonded
pending appeal within 60 days after the judgment becomes final
and nonappealable; and
(v) certain events of bankruptcy, insolvency
or reorganization affecting the Company or any Restricted Subsidiary.
If an Event of Default other than an Event of Default
described in clause (v) above shall occur and be continuing, either
the Trustee or the holders of at least 25% in aggregate principal
amount of the outstanding Senior Notes may accelerate the maturity of
all of the Senior Notes; provided, however, that after such
acceleration, but before a judgment or decree based on acceleration,
the holders of a majority in aggregate principal amount of
outstanding Senior Notes may, under certain circumstances, rescind
and annul such acceleration if all Events of Default, other than the
non-payment of accelerated principal, have been cured or waived as
provided in the Senior Indenture. If an Event of Default specified
in clause (v) above occurs, the outstanding Senior Notes will ipso
facto become immediately due and payable without any declaration or
other act on the part of the Trustee or any holder.
DEFEASANCE
The Senior Indenture will provide that (A) if
applicable, the Company will be discharged from any and all
obligations in respect of the outstanding Senior Notes or (B) if
applicable, the Company may omit to comply with certain restrictive
covenants under the Senior Indenture, and certain events will cease
to be Events of Default under the Senior Indenture ("Defeasible
Events"), in either case (A) or (B) upon irrevocable deposit with
the Trustee, in trust, of money and/or U.S. government obligations
that will provide money in an amount sufficient in the opinion of a
nationally recognized firm of independent certified public
accountants to pay the principal of and premium, if any, and each
installment of interest, if any, on the outstanding Senior Notes (x)
at maturity or (y) at the earliest date at which the Company may
optionally redeem such Senior Notes if the Company has made adequate
arrangements with the Trustee to redeem such Senior Notes at such
time. With respect to Clause (B), the obligations under the Senior
Indenture other than with respect to certain covenants, and certain
Events of Default shall remain in full force and effect. Such trust
may only be established if, among other things:
<PAGE> S-26
(i) with respect to Clause (A), the Company
has received from, or there has been published by, the Internal
Revenue Service a ruling or there has been a change in law,
that in the opinion of counsel provides that holders of the
Senior Notes will not recognize gain or loss for Federal income
tax purposes as a result of such deposit, defeasance and
discharge and will be subject to Federal income tax on the same
amounts, in the same manner and at the same times as should
have been the case if such deposit, defeasance and discharge
had not occurred; or, with respect to Clause (B), the Company
has delivered to the Trustee an opinion of counsel to the
effect that the holders of the Senior Notes will not recognize
gain or loss for Federal income tax purposes as a result of
such deposit and defeasance and will be subject to Federal
income tax on the same amount, in the same manner and at the
same times as would have been the case if such deposit and
defeasance had not occurred;
(ii) no Event of Default (other than an Event
of Default relating to a Defeasible Event) or event that with
the passing of time or the giving of notice, or both, shall
constitute such an Event of Default shall have occurred or be
continuing;
(iii) the Company has delivered to the Trustee
an opinion of counsel to the effect that such deposit shall not
cause the Trustee or the trust so created to be subject to the
Investment Company Act of 1940; and
(iv) certain other customary conditions
precedent are satisfied.
CERTAIN DEFINITIONS
"Attributable Debt" when used in connection with a
sale and lease-back transaction means, at the time of determination,
the lesser of: (a) the fair value of such property (as determined in
good faith by FTX); or (b) the then present value of the total net
amount of rent required to be paid under the lease in respect of such
sale and lease-back transaction during the remaining term thereof
(including any renewal term or period for which such lease has been
extended) or until the earlier date on which the lessee may terminate
such lease upon payment of a penalty or a lump-sum termination
payment (in which case the total net rent shall include such penalty
or termination payment), computed by discounting from the respective
due dates to such dates such total net amount of rent at the actual
interest factor included in such rent or implicit in the terms of the
applicable sale and lease-back transaction, as determined in good
faith by the Company. For purposes of the foregoing definition, rent
shall not include amounts required to be paid by the lessee, whether
or not designated as rent or additional rent, on account of or
contingent upon maintenance and repair, insurance, taxes,
assessments, water rates and similar charges.
"Consolidated Net Tangible Assets" means at any date
the consolidated assets of the Company and its consolidated
Subsidiaries, including all investments by the Company or its
consolidated Subsidiaries in other persons (less applicable reserves
and other properly deductible items) after deducting therefrom (a)
all current liabilities of the Company and its consolidated
Subsidiaries, (ii) current maturities of long-term debt and (iii)
current maturities of obligations under capital leases, less all
goodwill (or plus if negative goodwill), trade names, trademarks,
patents, unamortized debt discount and other like intangibles, all as
included in the most recent consolidated balance sheet of the Company
and its consolidated Subsidiaries.
"Debt" means (without duplication), with respect to
any person, whether recourse is to all or a portion of the assets of
such person, and whether or not contingent, (i) all obligations of
such person for money borrowed, including all obligations for the
repayment of debt and payments of other amounts, (ii) all obligations
of such person evidenced by bonds, debentures, notes or other similar
instruments, (iii) all obligations of such person to pay the deferred
purchase price of property or services, except accounts payable
arising in the ordinary course of business, (iv) all capital lease
obligations of such person, (v) all Debt of others secured by any
mortgage, lien, pledge, charge, security interest or encumbrance of
any kind on any asset of such person and (vi) all debt of others
guaranteed by such person or for the payment of which such person is
directly or indirectly responsible.
<PAGE> S-27
"Lien" means, with respect to any property or assets,
any mortgage or deed of trust, pledge, hypothecation, assignment,
deposit arrangement, security interest, lien, charge, easement (other
than any easement not materially impairing usefulness or
marketability), encumbrance, preference, priority or other security
agreement or preferential arrangement of any kind or nature
whatsoever on or with respect to such property or assets (including,
without limitation, any conditional sale or other title retention
agreement having substantially the same economic effect as any of the
foregoing); provided, however, that Lien shall not include a trust
established for the purpose of defeasing any Debt, pursuant to the
terms evidencing or providing for the issuance of such Debt.
"Non-Restricted Subsidiary" means (i) any Subsidiary
of the Company organized after the date hereof for the purpose of
acquiring the stock or assets of another person that is not a Restricted
Subsidiary or for start-up ventures or exploration programs or activities
and designated as a Non-Restricted Subsidiary by FTX in an officer's
certificate to the Trustee as of the time of its organization, (ii)
any Subsidiary of any Non-Restricted Subsidiary, and (iii) any
surviving corporation (other than the Company or a Restricted
Subsidiary) into which any of such corporations referred to in clause
(i) or (ii) is merged or consolidated subject to the terms of the
Senior Indenture.
"Restricted Subsidiary" means IMC-Agrico and any
other Subsidiary of the Company other than a Non-Restricted Subsidiary.
"Senior Indebtedness" means Debt of the Company,
whether outstanding on the date of issue of any Subordinated Debt
Securities or thereafter created, incurred, assumed or guaranteed by
the Company, other than the following: (a) any Debt as to which, in
the instrument evidencing such Debt or pursuant to which such Debt
was issued, it is expressly provided that such Debt is subordinate in
right of payment to all indebtedness of the Company not expressly
subordinated to such Debt; (b) any Debt which by its terms refers
explicitly to the Subordinated Debt Securities and states that such
Debt shall not be senior, shall be pari passu or shall be
subordinated in right of payment to the Subordinated Debt Securities;
and (c) with respect to any series of Subordinated Debt Securities,
any Debt of the Company evidenced by Subordinated Debt Securities of
the same or of another series. Notwithstanding anything to the
contrary in the foregoing, Senior Indebtedness shall not include: (x)
Debt of or amounts owed by the Company for compensation to employees,
or for goods, materials and services purchased in the ordinary course
of business, or (y) Debt of the Company to a Subsidiary.
"Subordinated Debt Securities" means any Debt issued
by the Company pursuant to that certain Subordinated Indenture dated
as of October 26, 1990 between the Company and Chemical Bank, as
successor to Manufacturers Hanover Trust Company, as trustee, as
amended and supplemented by that certain First Supplemental Indenture
dated as of February 15, 1994, and as hereafter amended or
supplemented from time to time.
"Subsidiary" means (i) with respect to the Company,
IMC-Agrico or (ii) with respect to any person, (a) a corporation
more than 50% of the outstanding voting stock of which is owned,
directly or indirectly, by such person or by one or more other
Subsidiaries of such person or by such person and one or more
Subsidiaries thereof or (b) any other person (other than a
corporation) in which such person, or one or more other Subsidiaries
of such person or such person and one or more other Subsidiaries
thereof, directly or indirectly, has at least a majority ownership
and power to direct the policies, management and affairs thereof.
<PAGE> S-28
Regarding the Trustee
The Senior Indenture provides that, except during the
continuance of an Event of Default, the Trustee will perform only
such duties as are specifically set forth in the Senior Indenture.
During the existence of an Event of Default, the Trustee will
exercise such rights and powers vested in it under the Senior
Indenture and use the same degree of care and skill in its exercise
as a prudent person would exercise under the circumstances in the
conduct of such person's own affairs.
The Senior Indenture and provisions of the Trust
Indenture Act incorporated by reference therein contain limitations
on the rights of the Trustee, should it become a creditor of the
Company, to obtain payment of claims in certain cases or to realize
on certain property received by it in respect of any such claim as
security or otherwise. The Trustee does banking business on a
regular basis with the Company, is one of the lenders and is the co-
agent for the lenders under the Credit Facility and is the Trustee
under the Indenture relating to the Company's 8 3/4% Senior
Subordinated Notes due 2004. The Trustee is permitted to engage in
these and other transactions with the Company or any Affiliate,
provided, however, that, if it acquires any conflicting interest (as
defined in the Indenture or in the Trust Indenture Act), it must
eliminate such conflict or resign.
UNDERWRITING
The names of the Underwriters of the Senior Notes, and
the principal amount thereof which each has severally agreed to
purchase from the Company, subject to the terms and conditions of the
Underwriting Agreement dated February 14, 1996, are as follows:
Principal
Amount of
Senior Notes
_____________
Lehman Brothers Inc. ............................$ 50,000,000
Merrill Lynch, Pierce, Fenner & Smith
Incorporated ............................ 50,000,000
Salomon Brothers Inc ............................ 50,000,000
_____________
$150,000,000
==============
The Underwriting Agreement provides that the
obligations of the Underwriters thereunder are subject to approval of
certain legal matters by counsel and to various other conditions. The
nature of the Underwriters' obligations are such that the
Underwriters are committed to purchase all of the Senior Notes if any
are purchased.
The Underwriters propose to offer the Senior Notes
directly to the public at the public offering price set forth on the
cover page of this Prospectus Supplement and to certain dealers at
such prices less a concession not in excess of 0.50% of principal
amount of the Senior Notes. The Underwriters may allow and such
dealers may reallow a concession not in excess of 0.25% of principal
amount of the Senior Notes to certain other dealers. After the
initial offering, the offering price and other selling terms may be
changed.
The Company has agreed to indemnify the Underwriters
against certain liabilities, including liabilities under the
Securities Act of 1933, as amended, or to contribute to payments that
the Underwriters may be required to make in respect thereof.
Each of the Underwriters and/or certain of its
affiliates performs investment banking services for the Company and
certain of its affiliates from time to time in the ordinary course of
business.
VALIDITY OF SECURITIES
The validity of the Senior Notes being offered hereby
will be passed upon for the Company by Jones, Walker, Waechter,
Poitevent, Carrere & Denegre L.L.P., New Orleans, Louisiana and for
the Underwriters by Sullivan & Cromwell, New York, New York.
<PAGE>
PROSPECTUS
$500,000,000
FREEPORT-McMoRan RESOURCE PARTNERS,
LIMITED PARTNERSHIP
Debt Securities
Warrants to Purchase Debt Securities
___________________
Freeport-McMoRan Resources Partners, Limited Partnership (the
"Company") may offer and issue from time to time in one or more
series debt securities ("Debt Securities") with an initial offering
price not to exceed $500,000,000 (or the equivalent in foreign
currency or units based on or relating to currencies, including
European Currency Units). The Company may issue and sell debt
warrants ("Debt Warrants") to purchase Debt Securities on terms to be
determined at the time of sale. The Debt Securities and Debt
Warrants are herein collectively referred to as "Securities". The
Company will offer Debt Securities to the public on terms determined
by market conditions. Debt Securities of a series may be issuable as
individual securities in registered form without coupons or in bearer
form with or without coupons attached. Debt Warrants may be offered
with Debt Securities or separately. Securities may be sold for U.S.
dollars, foreign currency or currency units; principal of and any
interest on Debt Securities may likewise be payable in U.S. dollars,
foreign currency or currency units -- in each case, as the Company
specifically designates. The amounts payable by the Company in
respect of principal, premium (if any) or interest on, or upon the
redemption of, Debt Securities may be calculated by reference to the
value, rate or price of one or more specified commodities, currencies
or indices as set forth in an accompanying Prospectus Supplement.
The Securities will be obligations solely of the Company and
neither the limited nor the general partners of the Company will have
any obligation under, or be liable in respect of, the Securities.
The accompanying Prospectus Supplement sets forth the ranking
as senior or subordinated Debt Securities, the redeemability of Debt
Securities (if applicable), the specific designation, aggregate
principal amount, purchase price, maturity, interest rate (or manner
of calculation thereof), time of payment of interest (if any),
listing (if any) on a securities exchange and any other specific
terms of Debt Securities, the exercise price and terms of any Debt
Warrants, the intention (if any) of the underwriters to make a market
in the Securities (whether or not the Securities are listed) and the
name of and compensation to each dealer, underwriter, or agent (if
any) involved in the sale of the offered Securities. The managing
underwriters with respect to each series sold to or through
underwriters will be named in the accompanying Prospectus Supplement.
Freeport-McMoRan Inc. ("FTX"), the Administrative Managing
General Partner of the Company, has filed a registration statement
(the "FTX Registration Statement") with the Securities and Exchange
Commission under which FTX may offer and issue from time to time debt
securities in an amount not to exceed $500,000,000 and debt warrants
to purchase debt securities. At this time, the Company anticipates
that the total of the Debt Securities issued under this Registration
Statement and the debt securities issued by FTX under the FTX
Registration Statement will have an aggregate initial offering price
of not more than $500,000,000.
______________
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
NOR HAS THE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON
THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
_______________
Securities may be offered through dealers, through
underwriters, or through agents designated from time to time, as set
forth in the accompanying Prospectus Supplement. Net proceeds to the
Company will be the purchase price in the case of a dealer, the
public offering price less discount in the case of an underwriter or
the purchase price less commission in the case of any agent -- in
each case, less other expenses attributable to issuance and
distribution. See "Plan of Distribution" for possible
indemnification arrangements for dealers, underwriters and agents.
December 6, 1990
<PAGE> 2
No dealer, salesman or any other person has been authorized to
give any information or to make any representations other than those
contained or incorporated by reference in this Prospectus and, if
given or made, such information or representations must not be relied
upon as having been authorized by the Company or any underwriter,
dealer or agent. Neither the delivery of this Prospectus nor any
sale made hereunder shall under any circumstances create an
implication that there has been no change in the affairs of the
Company since the date hereof. This Prospectus does not constitute
an offer to sell or a solicitation of an offer to buy Securities by
anyone in any jurisdiction in which such offer or solicitation is not
authorized or in which the person making such offer or solicitation
is not qualified to do so or to any person to whom it is unlawful to
make such offer or solicitation.
________________
AVAILABLE INFORMATION
The Company is subject to the informational requirements of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), and
in accordance therewith files reports and other information with the
Securities and Exchange Commission (the "Commission"). Reports and
other information filed by the Company with the Commission can be
inspected and copied at the public reference facilities maintained by
the Commission at Room 1024, 450 Fifth Street, N.W., Washington, D.C.
20549 or at its Regional Offices located at Room 3190, Kluczynski
Federal Building, 230 South Dearborn Street, Chicago, Illinois 60604
and Room 1400, 75 Park Place, New York, New York 10007, and copies of
such material can be obtained from the Public Reference Section of
the Commission at 450 Fifth Street, N.W., Washington, D.C. 20549, at
prescribed rates, The Company's Depositary Units (the "Depositary
Units") are listed on the New York Stock Exchange (the "NYSE").
Reports and other information concerning the Company can be inspected
at the offices of the NYSE, 20 Broad Street, New York, New York
10005.
The Prospectus constitutes a part of a Registration Statement
filed by the Company with the Commission under the Securities Act of
1933, as amended (the "Securities Act"). This Prospectus omits
certain of the information contained in the Registration Statement in
accordance with the rules and regulations of the Commission.
Reference is hereby made to the Registration Statement and related
exhibits for further information with respect to the Company and the
Securities. Statements contained herein concerning the provisions of
any document are not necessarily complete and, in each instance,
reference is made to the copy of such document filed as an exhibit to
the Registration Statement or otherwise filed with the Commission.
Each such statement is qualified in its entirety by such reference.
_______________
INCORPORATION OF DOCUMENTS BY REFERENCE
The Annual Report on Form 10-K of the Company for the fiscal
year ended December 31, 1989, Forms 8-K of the Company dated March
13, 1990 and July 16, 1990 and Quarterly Reports on Form 10-Q of the
Company for the fiscal quarters ended March 31, 1990, June 30, 1990
and September 30, 1990 have been filed with the Commission and are
incorporated herein by reference.
All documents filed by the Company pursuant to Section 13(a),
13(c), 14 or 15(d) of the Exchange Act subsequent to the date of this
Prospectus and prior to the termination of the offering of the
Securities shall be deemed to be incorporated by reference in this
Prospectus and to be a part hereof from the date of filing of such
documents.
<PAGE> 3
Any statement contained herein or in a document incorporated or
deemed to be incorporated by reference herein shall be deemed to be
modified or superseded for purposes of this Prospectus to the extent
that a statement contained herein or in any subsequently filed
document which also is or is deemed to be incorporated by reference
herein modifies or supersedes such statement. Any such statement so
modified or superseded shall not be deemed, except as so modified or
superseded, to constitute a part of this Prospectus.
Copies of the above documents (excluding exhibits) may be
obtained upon request without charge from the Company, 1615 Poydras
Street, New Orleans, Louisiana 70112 (telephone (504) 582-4000),
attention: Michael C. Kilanowski, Jr.
IN CONNECTION WITH THE OFFERING OF CERTAIN SECURITIES, THE
UNDERWRITERS MAY OVER-ALLOT OR EFFECT TRANSACTIONS WHICH STABILIZE OR
MAINTAIN THE MARKET PRICES OF SUCH OFFERED SECURITIES OR OTHER
SECURITIES OF THE COMPANY AT LEVELS ABOVE THOSE WHICH MIGHT OTHERWISE
PREVAIL IN THE OPEN MARKET, SUCH STABILIZING, IF COMMENCED, MAY BE
DISCONTINUED AT ANY TIME.
THE COMPANY
The Company, a Delaware limited partnership, was formed on
April 17, 1986 to succeed to substantially all of the sulphur,
phosphate fertilizer and geothermal energy business of Freeport-
McMoRan Inc. ("FTX") and to the technology used in its uranium
recovery business. Currently, the Company's business consists of the
mining of phosphate rock and the production and distribution of
phosphate fertilizers; the exploration for, and the mining, handling
and transportation of, sulphur; and the ownership and licensing of
technology covering a proprietary extraction process for the recovery
of uranium oxide from phosphoric acid. The Company is in the process
of developing the Main Pass Block 299 sulphur and oil reserves which
it discovered in 1988 and in which it has a 58.3% interest.
The August 2, 1990 Iraqi invasion of Kuwait, together with the
worldwide response to the invasion, has impacted world oil, sulphur
and fertilizer markets. Though the Company cannot accurately predict
future consequences, this situation has not materially affected the
Company to date.
The Company's principal executive office is located at 1615
Poydras Street, New Orleans, Louisiana 70112 and its telephone
number is (504) 582-4000.
USE OF PROCEEDS
Unless otherwise set forth in the applicable Prospectus
Supplement, the net proceeds from the sale of the Securities will be
used to fund the development of Main Pass Block 299 sulphur and oil
reserves and for the general corporate purposes, including the
repayment of existing indebtedness and additions to working capital.
The Company anticipates that it will raise additional funds from time
to time through equity or debt financings, including borrowings under
its revolving credit agreement, to finance its businesses.
<PAGE> 4
RATIO OF EARNINGS TO FIXED CHARGES
The following table sets forth the ratio of earnings to fixed
charges for the Company for the periods indicated.
<TABLE>
<CAPTION>
Nine Months
Years Ended December 31, Ended September 30,
_____________________________________________ _______________________
1985 1986 1987 1988 1989 1989 1990
____ ____ ____ ____ ____ _____ _____
<S> <C> <C> <C> <C> <C> <C> <C>
Ratio of earnings to fixed
charges<F1> (unaudited)........ --<F2> 36.7x<F2> 7.9x 7.1x 8.4x 5.3x 18.0x
Ratio of earnings to fixed
charges after pro forma
adjustments to reflect impact
of asset dispositions and
additions<F1><F3> (unaudited).......................................... 40.0x 30.4x 36.3x
______________
<FN>
<F1> For purposes of calculating the ratio of earnings to fixed
charges, earnings consist of income from continuing operations
before fixed charges. Fixed charges consist of interest and
that portion of rent which is deemed representative of an
interest factor.
<F2> On June 27, 1986 FTX transferred substantially all of its
sulphur, phosphate and geothermal properties and certain other
related assets and liabilities to the Company. As no long-term
debt was transferred to the Company, the predecessor entities
did not reflect any interest expenses in their results of
operations. The predecessor entities' net income totaled $87.6
million in 1985 and $51.3 million for the 1986 period ended
June 26, 1986. The ratio of earnings to fixed charges for 1986
presented above reflects only the period from June 27, 1986
through December 31, 1986.
<F3> As further discussed in the notes to the Company's financial
statements, incorporated by reference herein, the Company sold
certain nitrogen fertilizer assets in February 1990 and its
producing geothermal energy properties effective March 1, 1990
and a wholly-owned subsidiary of the Company sold its
investments in Namhae Chemical Corporation in June 1990. In
June 1990 the Company and its joint-venture partners acquired
the oil and natural gas reserves associated with its Main Pass
Block 299 sulphur discovery. The pro forma ratio of earnings
to fixed charges has been computed assuming these transactions
occurred on January 1 of the respective periods.
</FN>
</TABLE>
DESCRIPTION OF DEBT SECURITIES
The Debt Securities will constitute either senior or
subordinated debt of the Company and will be issued, in the case of
Debt Securities that will be senior debt, under a Senior Indenture
(the "Senior Debt Indenture") dated as of October 26, 1990 between
the Company and The Chase Manhattan Bank (National Association), as
Trustee, and, in the case of Debt Securities that will be
subordinated debt, under a Subordinated Indenture (the "Subordinated
Debt Indenture") dated as of October 26, 1990 between the Company and
Manufacturers Hanover Trust Company, as Trustee. The Senior Debt
Indenture and the Subordinated Debt Indenture are sometimes
hereinafter referred to individually as an "Indenture" and
collectively as the "Indentures." The Chase Manhattan Bank (National
Association) and Manufacturers Hanover Trust Company are hereinafter
referred to individually as a "Trustee" and collectively as the
"Trustees." The Indentures are filed as exhibits to the Registration
Statement of which this Prospectus is a part. The following
summaries of certain provisions of the Indentures and the Debt
Securities do not purport to be complete and such summaries are
subject to the detailed provisions of the applicable Indenture to
which reference is hereby made for a full description of such
provisions, including the definition of certain terms used herein,
and for other information regarding the Debt Securities. Numerical
references in parentheses below are to sections in the applicable
Indenture. Wherever particular sections or defined terms of the
applicable Indenture are referred to, such sections or defined terms
are incorporated herein by reference as part of the statement made,
and the statement is qualified in its entirety by such reference.
The Indentures are substantially identical, except for provisions
relating to subordination. See "Subordinated Debt." The Debt
Securities offered by this Prospectus and the accompanying Prospectus
Supplement are referred to herein as the "Offered Debt Securities."
The Debt Warrants offered by this Prospectus and the accompanying
Prospectus Supplement are referred to herein as the "Offered Debt
Warrants." The Offered Debt Securities and the Offered Debt Warrants
are collectively referred to herein as the "Offered Securities."
<PAGE> 5
General
Neither of the Indentures limits the amount of Debt Securities,
debentures, notes or other evidences of indebtedness that may be
issued by the Company. The Debt Securities will be unsecured senior
or subordinated obligations of the Company.
The Debt Securities will be obligations solely of the Company
and neither FTX nor any other general partner or limited partner of
the Company (individually or as a partner of the Company) will have
any obligation under, or be liable in respect of, the Debt
Securities.
The Indenture provide that Debt Securities may be issued from
time to time in one or more series and may be denominated and payable
in foreign currencies or units based on or relating to foreign
currencies, including European Currency Units ("ECUs"). The
Indentures further provide that amounts payable by the Company in
respect of principal, premium (if any) or interest on, or upon the
redemption of, Debt Securities may be calculated by reference to the
value, rate or price of one or more specified commodities, currencies
or indices. Special United States federal income tax considerations
applicable to any such Debt Securities will be described in the
relevant Prospectus Supplement.
Reference is made to the Prospectus Supplement for the
following terms of and information relating to the Offered Debt
Securities (to the extent such terms are applicable to such Debt
Securities): (i) classification as senior or subordinated Debt
Securities, the specific designation, aggregate principal amount,
purchase price and denomination; (ii) the currency or units based on
or relating to currencies in which such Debt Securities are
denominated and/or in which principal (and premium, if any) and/or
any interest will or may be payable; (iii) any date of maturity; (iv)
the method by which amounts payable in respect of principal, premium
(if any) or interest on, or upon the redemption of, such Debt
Securities may be calculated, and any commodities, currencies or
indices, or value, rate or price, relevant to such calculation, (v)
interest rate or rates (or the method by which such rate will be
determined), if any; (vi) the dates on which any such interest will
be payable; (vii) the place or places where the principal of and
interest, if any, on the Offered Debt Securities will be payable;
(viii) any redemption, repayment or sinking fund provisions; (ix)
whether the Offered Debt Securities will be issuable in registered
form or bearer form ("Bearer Securities") or both and, if Bearer
Securities are issuable, any restrictions applicable to the exchange
of one form for another and to the offer, sale and delivery of Bearer
Securities; (x) any applicable United States federal income tax
consequences, including whether and under what circumstances the
Company will pay additional amounts on Offered Debt Securities held
by a person who is not a U.S. person (as defined in the Prospectus
Supplement) in respect of any tax, assessment or government charge
withheld or deducted and, if so, whether the Company will have the
option to redeem such Debt Securities rather than pay such additional
amounts; and (xi) and other specific terms of the Offered Debt
Securities, including any additional or difference events of default,
remedies or covenants provided for with respect to such Debt
Securities, and any terms which may be required by or advisable under
applicable laws or regulations.
Debt Securities may be presented for exchange and registered
Debt Securities may be presented for transfer in the manner, at the
places and subject to the restrictions set forth in the Debt
Securities and the Prospectus Supplement. Such services will be
provided without charge, other than any tax or other governmental
charge payable in connection therewith, but subject to the
limitations provided in the applicable Indenture. Bearer Securities
and the coupons, if any ("Coupons"), appertaining thereto will be
transferable by delivery.
<PAGE> 6
Debt securities may bear interest at a fixed rate ("Fixed Rate
Security") or a floating rate (a "Floating Rate Security"). Debt
securities bearing no interest or interest at a rate that at the time
of issuance is below the prevailing market rate may be sold at a
discount below their stated principal amount. Special United Sates
federal income tax considerations applicable to any such discounted
Debt Securities or to certain Debt Securities issued at par which are
treated as having been issued at a discount for United Sates federal
income tax purposes will be described in the relevant Prospectus
Supplement.
Debt Securities may be issued from time to time with payment
terms which are calculated by reference to the value or price of one
or more commodities, currencies or indices. Holders of such Debt
Securities may receive a principal amount on any principal payment
date or a payment of interest on any interest payment date, that is
greater than or less than the amount of principal or interest
otherwise payable on such dates, or a redemption amount on any
redemption date that is greater than or less than the principal
amount of such Debt Securities, depending upon the value or price on
such dates of the applicable currency, commodity or index.
Information for determining the amount of principal, premium (if
any), interest or redemption amounts payable on any date, the
currencies, commodities or indices, commodities or indices to which
the amount payable on such date is linked and certain additional tax
considerations will be set forth in the relevant Prospectus
Supplement.
Global Securities
The registered Debt Securities of a series may be issued in the
form of one or more fully registered global Securities (a "Registered
Global Security") that will be deposited with a depositary (a
"Depositary") or with a nominee of a Depositary identified in the
Prospectus Supplement relating to such series. In such case, one ore
more Registered Global Securities will be issued in a denomination or
aggregate denominations equal to the portion of the aggregate
principal amount of outstanding registered Debt Securities of the
series to be represented by such Registered Global Security or
Securities. Unless and until it is exchanged in whole for Debt
Securities in definitive registered form, a Registered Global
Security may not be transferred except as a whole by the Depositary
for such Registered Global Security to a nominee of such Depositary
or by a nominee of such Depositary to such Depositary or another
nominee of such Depositary or by such Depositary or any such nominee
to a successor of such Depositary or nominee of such successor.
The specific terms of the depositary arrangement with respect
to any portion of a series of Debt Securities to be represented by a
Registered Global Security will be described in the Prospectus
Supplement relating to such series. The Company anticipates that the
following provisions will apply to all depositary arrangements.
Upon the issuance of a Registered Global Security, the
Depositary for such Registered Global Security will credit, on its
book-entry registration and transfer system, the respective principal
amounts of the Debt Securities represented by such Registered Global
Security to the accounts of persons that have accounts with such
Depositary ("participants"). The accounts to be credited shall be
designated by any underwriters or agents participating in the
distribution of such Debt Securities. Ownership of beneficial
interests in a Registered Global Security will be limited to
participants or persons that may hold interests through participants.
Ownership of beneficial interests in such Registered Global Security
will be shown on, and the transfer of that ownership will be effected
only through, records maintained by the Depositary for such
Registered Global Security (with respect to interests of participants)
or persons that hold through participants (with respect to interests
of persons other than participants).
So long as the Depositary for a Registered Global Security, or
its nominee, is the registered owner of such Registered Global
Security, such Depositary or such nominee, as the case may be, will
be considered the sole owner or holder of the Debt Securities
represented by such Registered Global Security for all purposes under
the applicable Indenture. Except as set forth below, owners of
beneficial interests in a Registered Global Security will not be
entitled to have the Debt Securities represented by such Registered
Global Security registered in their names, will not receive or be
entitled to receive physical delivery of such Debt Securities in
definitive form and will not be considered the owners or holders
under the applicable Indenture.
<PAGE> 7
Principal, premium, if any, and interest payments on Debt
Securities represented by a Registered Global Security registered in
the name of a Depositary or its nominee will be made to such
Depositary or its nominee, as the case may be, as the registered
owner of such Registered Global Security. None of the Company, the
Trustee or any paying agent for such Debt Securities will have any
responsibility or liability for any aspect of the records relating to
or payments made on account of beneficial ownership interest in such
Registered Global Security or for maintaining, supervising or
reviewing any records relating to such beneficial ownership
interests.
The Company expects that the Depositary for any Debt Securities
represented by a Registered Global Security, upon receipt of any
payment of principal, premium or interest, will immediately credit
participants' accounts with payments in amounts proportionate to
their respective beneficial interests in the principal amount of such
Registered Global Security as shown on the records of such
Depositary. The Company also expects that payments by participants
to owners of beneficial interest in such Registered Global Security
held through such participants will be governed by standing
instructions and customary practices, as is now the case with the
securities held for the accounts of customers registered in "street
name" and will be the responsibility of such participants.
If the Depositary for any Debt Securities represented by a
Registered Global Security is at any time unwilling or unable to
continue as Depositary and a successor Depositary is not appointed by
the Company within ninety days, the company will issue such Debt
Securities in definitive form in exchange for such Registered Global
Security. In addition, the Company any at any time and in its sold
discretion determine not to have any of the Debt Securities of a
series represented by one or more Registered Global Securities and,
in such event, will issue Debt Securities of such series in
definitive for in exchange for all of the Registered Global Security
or Securities representing such Debt Securities.
The Debt Securities of a series may also be issued in the form
of one or more bearer Global Securities (a "Bearer Global Security")
that will be deposited with a common depositary for Euro-clear and
CEDEL, or with a nominee of such depositary identified in the
Prospectus Summary relating to such series. The specific terms and
procedures, including the specific terms of the depositary
arrangement, with respect to any portion of a series of Debt
Securities to be represented by a Bearer Global Security will e
described in the relevant Prospectus Supplement.
Senior Debt
The Debt Securities and Coupons, if any, appertaining thereto
that will constitute part of the senior debt of the Company will be
issued under the Senior Debt Indenture and will rank pari passu with
all other unsecured and unsubordinated debt of the Company.
Subordinated Debt
The Debt Securities and Coupons, if any, appertaining thereto
that will constitute part of the subordinated debt of the Company
(the "Subordinated Debt Securities") will be issued under the
Subordinated Debt Indenture and will be subordinate and junior in
right of payment, to the extent and in the manner set forth in the
Subordinated Debt Indenture, to all "Senior Indebtedness" of the
Company. The Subordinated Debt Indenture defines "Senior
Indebtedness" as obligations (other than non-recourse obligations,
the Subordinated Debt Securities or any other obligations
specifically designated as being subordinate in right of payment to
Senior Indebtedness) of, or guaranteed or assumed by, the Company for
borrowed money or evidenced by bonds, debentures, notes or other
similar instruments, and amendments, renewals, extensions,
modifications and refundings of any such indebtedness or obligation.
(Subordinated Debt Indenture, Section 1.1).
<PAGE> 8
In the event (a) of any insolvency or bankruptcy proceedings,
or any receivership, liquidation, reorganization or other similar
proceedings in respect of the Company or a substantial part of its
property or (b) that (i) a default shall have occurred with respect
to the payment of principal of (and premium, if any) or any interest
on or other monetary amounts due and payable on any Senior
Indebtedness or (ii) there shall have occurred an event of default
(other than a default in the payment of principal, premium, if any,
or interest, or other monetary amounts due and payable) with respect
to any Senior Indebtedness, as defined therein or in the instrument
under which the same is outstanding, permitting the holder or holders
thereof to accelerate the maturity thereof (with notice or lapse of
time, or both) and such event of default shall have continued beyond
the period of grace, if any, in respect thereof, and such default or
event of default shall not have been cured or waived or shall not
have ceased to exist, or (c) that the principal of and accrued
interest on the Subordinated Debt Securities shall have been declared
due and payable upon an Event of Default pursuant to Section 5.1 of
the Subordinated Debt Indenture and such declaration shall not have
been rescinded and annulled as provided therein, then the holders of
all Senior Indebtedness shall first be entitled to receive payment of
the full amount unpaid thereon, or provision shall be made, in
accordance with the relevant Senior Indebtedness, for such payment in
money or money's worth, before the holders of any of the Subordinated
Debt Securities or Coupons are entitled to receive a payment on
account of the principal of (and premium, if any) or any interest on
the indebtedness evidences by such Subordinated Debt Securities or of
such Coupons. (Subordinated Debt Indenture Section 13.1). If this
Prospectus is being delivered in connection with a series of
Subordinated Debt Securities, the accompanying Prospectus Supplement
or the information incorporated herein by reference will set forth
the approximate amount of Senior Indebtedness outstanding as of the
end of the most recent fiscal quarter.
Certain Covenants of the Company
Each Indenture provides that the Company will not merge or
consolidate with any corporation, partnership or other entity and
will not sell, lease or convey all or substantially all its assets to
any entity, unless the Company shall be the surviving entity, or the
successor entity that acquires all or substantially all the assets of
the Company shall be a corporation or partnership organized under the
laws of the United States or a State thereof or the District of
Columbia and shall expressly assume all obligations of the Company
under the Indenture and the Debt Securities issued thereunder, and
immediately after such merger, consolidation, sale, lease or
conveyance, the Company or such successor entity shall not be in
default in the performance of the covenants and conditions of the
Indenture to be performed or observed by the Company. (Section 9.1)
Events of Default
An Event of Default is defined under each Indenture with
respect to Debt Securities of any series issued under such Indenture
as being: (a) default in payment of any principal of the Debt
Securities of such series, either at maturity (or upon any
redemption), by declaration or otherwise; provided that, if such
default is a result of the voluntary redemption by the holders of
such Debt Securities, the amount thereof shall be in excess of
$10,000,000 or the equivalent thereof in any other currency or
composite currency; (b) default for 30 days in payment of any
interest on any Debt Securities of such series; (c) default for 60
days after written notice in the observance or performance of any
other covenant or agreement in the Debt Securities of such series or
the Indenture other than a covenant included in the Indenture solely
for the benefit of a series of Debt Securities other than such
series; (d) certain events of bankruptcy, insolvency or
reorganization; (e) failure by the Company to make any payment at
maturity, including any applicable grace period, in respect of
Indebtedness in an amount in excess of $50,000,000 or the equivalent
thereof in any other currency or composite currency and continuance
of such failure for a period of 30 days after written notice thereof
to the Company by the Trustee, or to the Company and the Trustee by
the holders of not less than 25% in principal amount of outstanding
Debt Securities of such series; or (f) a default with respect to any
Indebtedness, which default results in the acceleration of any
Indebtedness in an amount in excess of $50,000,000 without such
Indebtedness having been discharged or such acceleration having been
cured, waived, rescinded or annulled for a period of 30 days after
written notice thereof to the Company by the Trustee, or to the
Company and the Trustee by the holders of not less than 25% in
principal amount of outstanding Debt Securities of such series,
Indebtedness being defined to mean obligations (other than non-
recourse obligations or the Debt Securities of such series) of, or
guaranteed or assumed by, the Company for borrowed money or evidenced
by bonds, debentures, notes or other similar instruments; provided,
however, that if any such failure, default or acceleration referred
to in clause (e) or (f) or the proviso to clause (a) above shall
cease to exist or be cured, waived, rescinded or annulled, then the
Event of Default by reason thereof shall be deemed likewise to have
been thereupon cured. (Section 5.1)
<PAGE> 9
Each Indenture provides that if an Event of Default due to the
default in payment of principal of, premium, if any, or interest on,
the Debt Securities of any series issued under such Indenture, or due
to the default in the performance or breach of any other covenant or
warranty of the Company applicable to the Debt Securities of such
series or due to certain events of bankruptcy, insolvency and
reorganization of the Company shall have occurred and be continuing,
either the Trustee or the holders of not less than 25% in the
principal amount of the Debt Securities of such series then
outstanding may then declare the principal of all Debt Securities of
such series and interest accrued thereon to be due and payable
immediately, but upon certain conditions such declarations may be
annulled and past defaults may be waived (except a continuing default
in payment of principal of (or premium, if any) or interest on such
Debt Securities) by the holders of a majority in principal amount of
the Debt Securities of such series then outstanding. (Sections 5.1
and 5.10) Except as otherwise provided in the relevant Prospectus
Supplement, Debt Securities beneficially owned FTX and any other
general partner or limited partner of the Company and any affiliates
thereof (other than the Company) shall be deemed to be "outstanding."
Each Indenture provides that the Trustee, subject to the duty
of the Trustee during a default to act with the required standard of
care, has no obligation to exercise any right or power granted it
under the Indenture at the request of holders of Debt Securities
unless the Trustee is indemnified by such holders. (Section 6.2)
Subject to such provisions in each Indenture for the indemnification
of the Trustee and certain other limitations, the holders of a
majority in principal amount of the outstanding Debt Securities of
each series issued under such Indenture may direct the time, method
and place of conducting any proceeding for any remedy available to
the Trustee, or exercising any trust or power conferred on the
Trustee. (Section 5.9)
Each Indenture provides that no holder of Debt Securities of
any series issued under such Indenture may institute any action
against the Company under such Indenture (except actions for payment
of overdue principal, premium (if any) or interest) unless such
holder previously shall have given to the Trustee written notice of
default and continuance thereof and the holders of not less than 25%
in principal amount of the Debt Securities of such series issued
under such Indenture and then outstanding shall have requested the
Trustee to institute such action and shall have offered the Trustee
reasonable indemnity, the Trustee shall not have instituted such
action within 60 days of such request and the Trustee shall not have
received direction inconsistent with such written request by the
holders of a majority in principal amount of the Debt Securities of
such series issued under such Indenture and then outstanding.
(Sections 5.6 and 5.9)
Each Indenture contains a covenant that the Company will file
annually with the Trustee a certificate of no default or a
certificate specifying any default that exists. (Section 3.5)
Discharge and Defeasance
Unless otherwise specified in the applicable Prospectus
Supplement, the Company can discharge or defease its obligations with
respect to each series of Debt Securities as set forth below.
(Section 10.1)
Under terms satisfactory to the Trustee, the Company may
discharge certain obligations to holders of any series of Debt
Securities issued under such Indenture which have not already been
delivered to the Trustee for cancellation and which have either
become due and payable or are by their terms due and payable within
one year (or scheduled for redemption within one year) by irrevocably
depositing with the Trustee cash or, in the case of Debt Securities
payable only in U.S. dollars, U.S. Government Obligations (as defined
in such Indenture) as trust funds in an amount certified to be
sufficient to pay at maturity (or upon redemption) the principal of
and interest on such Debt Securities.
<PAGE> 10
The Company may also discharge any and all of its obligations
to holders of any series of Debt Securities issued under an Indenture
at any time ("defeasance"), but may not thereby avoid its duty to
register the transfer or exchange of such series of Debt Securities,
to replace any temporary, mutilated, destroyed, lost, or stolen
series of Debt Securities or to maintain an office or agency in
respect of such series of Debt Securities. Defeasance may be
effected only if, among other things: (i) the Company irrevocably
deposits with the Trustee cash or, in the case of Debt Securities
payable only in U.S. dollars, U.S. Government Obligations, as trust
funds in an amount certified to be sufficient to pay at maturity (or
upon redemption) the principal of and interest on all outstanding
Debt Securities of such series issued under the Indenture; (ii) the
Company delivers to the Trustee an opinion of counsel to the effect
that the holders of such series of Debt Securities will not recognize
income, gain or loss for United States federal income tax purposes as
a result of such defeasance and that defeasance will not otherwise
alter such holders' United States federal income tax treatment of
principal and interest payments on such series of Debt Securities
(such opinion must be based on a ruling of the Internal Revenue
Service or a change in United States federal income tax law occurring
after the date of such Indenture, since such a result would not occur
under current tax law); and (iii) in the case of the Subordinated
Debt Indenture (a) no event or condition shall exist that, pursuant
to certain provisions described under "Subordinated Debt" above,
would prevent the Company from making payments of principal of (and
premium, if any) and interest on the Subordinated Debt Securities at
the date of the irrevocable deposit referred to above or at any time
during the period ending on the 91st day after such deposit date and
(b) the Company delivers to the Trustee for the Subordinated Debt
Indenture an opinion of counsel to the effect that (1) the trust
funds will not be subject to any rights of holders of Senior
Indebtedness and (2) after the 91st day following the deposit, the
trust funds will not be subject to the effect of any applicable
bankruptcy, insolvency, reorganization or similar laws affecting
creditors' rights generally, except that if a court were to rule
under any such law in any case or proceeding that the trust funds
remained property of the Company, then the Trustee and the holders of
the Subordinated Debt Securities would be entitled to certain rights
as secured creditors in such trust funds.
Modification of the Indenture
Each Indenture provides that the Company and the Trustee may
enter into supplemental indentures without the consent of the holders
of Debt Securities to: (a) secure such Debt Securities, (b) evidence
the assumption by a successor entity of the obligations of the
Company, (c) add covenants for the protection of the holders of such
Debt Securities, (d) cure any ambiguity or correct any inconsistency
in the Indenture, (e) establish the form of terms of such Debt
Securities, (f) evidence the acceptance of appointment by a successor
trustee or (g) amend the Indenture in any other manner which the
Company may deem necessary or desirable and which will not adversely
affect the interests of the holders of Debt Securities issued
thereunder. (Section 8.1)
Each Indenture also contains provisions permitting the Company
and the Trustee, with the consent of the holders of not less than a
majority in principal amount of Debt Securities of any series issued
under such Indenture then outstanding and affected, to add any
provisions to, or change in any manner or eliminate any of the
provisions of, such Indenture or modify in any manner the rights of
the holders of the Debt Securities of such series; provided that the
Company and the Trustee may not, without the consent of the holder of
each outstanding Debt Security affected thereby, (a) extend the
stated maturity of the principal of any Debt Security, or reduce the
principal amount thereof or reduce the rate or extend the time of
payment of interest thereon, or reduce any amount payable on
redemption thereof or change the currency in which the principal
thereof (including any amount in respect of original issue discount)
or interest thereon is payable or reduce the amount of any original
issue discount security payable upon acceleration or provable in
bankruptcy or alter certain provisions of the Indenture relating to
the Debt Securities issued thereunder not denominated in U.S. dollars
or impair the right to institute suit for the enforcement of any
payment on any Debt Security when due or (b) reduce the aforesaid
percentage in principal amount of Debt Securities of any series
issued under such Indenture, the consent of the holders of which is
required for any such modification. (Section 8.2)
The Subordinated Debt Indenture may not be amended to alter the
subordination of any outstanding Subordinated Debt Securities without
the consent of each holder of Senior Indebtedness then outstanding
that would be adversely affected thereby. (Subordinated Debt
Indenture, Section 8.6)
<PAGE> 11
Concerning the Trustees
The Chase Manhattan Bank (National Association) and
Manufacturers Hanover Trust Company are two of a number of banks with
which the Company and FTX maintain ordinary banking relationships and
with which the Company and FTX maintain credit facilities.
DESCRIPTION OF DEBT WARRANTS
The Company may issue, together with Debt Securities or
separately, Debt Warrants for the purchase of Debt Securities. If
the Debt Warrants are issued together with any Debt Securities, they
may be attached to or separate from such Debt Securities. The
Offered Debt Warrants are to be issued under a Debt Warrant Agreement
(the "Debt Warrant Agreement") to be entered into between the Company
and a bank or trust company, as Warrant Agent (the "Debt Warrant
Agent"), and may be issued in one or more series, all as shall be set
forth in the Prospectus Supplement relating thereto. The forms of
the Debt Warrant Agreement and the certificates for the Debt Warrants
are filed as exhibits to the Registration Statement of which this
Prospectus is a part. The following summaries of certain provisions
of the Debt Warrant Agreement and the Debt Warrants do not purport to
be complete and such summaries are subject to the detailed provisions
of the Debt Warrant Agreement to which reference is hereby made for a
full description of such provisions, including the definition of
certain terms used herein, and for other information regarding the
Debt Warrants. References under this caption are to the Debt Warrant
Agreement. Wherever particular provisions of the Debt Warrant
Agreement are referred to, such provisions are incorporated by
reference as a part of the statements made, and the statements are
qualified in their entirety by such reference.
General
The Debt Warrants will be obligations solely of the Company and
neither FTX nor any other general partner or limited partner of the
Company (individually or as a partner of the Company) will have any
obligation under, or be liable in respect of, the Debt Warrants.
Reference is made to the Prospectus Supplement for the
following terms of and information relating to the Offered Debt
Warrants: (i) the price at which the Offered Debt Warrants will be
issued; (ii) the currency or composite currency for which the Offered
Debt Warrants may be purchased; (iii) the designation, aggregate
principal amount, currency or composite currency and terms of the
Debt Securities that may be purchased upon exercise of the Offered
Debt Warrants; (iv) if applicable, the designation and terms of the
Debt Securities with which the Offered Debt Warrants are issued and
the number of Offered Debt Warrants issued with each of such Debt
Securities; (v) if applicable, the date on and after which the
Offered Debt Warrants and the related Debt Securities will be
separately transferable; (vi) the principal amount of Debt Securities
purchasable upon exercise of each offered Debt Warrant and the price
at which and the currency or composite currency in which such
principal amount of Debt Securities may be purchased upon such
exercise; (vii) the date on which the right to exercise the Offered
Debt Warrants shall commence and the date (the "Debt Warrant
Expiration Date") on which such right shall expire or, if the Offered
Debt Warrants are not continuously exercisable throughout such
period, the specific date or dates on which they will be exercisable
(each, a "Debt Warrant Exercise Date," which term shall also mean,
with respect to Offered Debt Warrants continuously exercisable for a
period of time, every date during such period); (viii) whether the
Debt Warrant certificates representing the Offered Debt Warrants (the
"Debt Warrant Certificates") will be in registered form ("Registered
Warrants") or bearer form ("Bearer Warrants") or both; (ix) any
applicable United States federal income tax consequences; (x) the
identity of the Debt Warrant Agent in respect of the Offered Debt
Warrants; (xi) the proposed listing, if any, of the Offered Debt
Warrants or the Debt Securities purchasable upon exercise thereof on
any securities exchange; and (xii) other terms of the Offered Debt
Warrants.
<PAGE> 12
Registered Warrants of each series will be evidenced by Debt
Warrant Certificates in registered form and Bearer Warrants of each
series will be evidenced by a global Debt Warrant Certificate in
bearer form (the "Global Debt Warrant Certificate"). Bearer Warrants
will not be issued in definitive form. The Global Debt Warrant
Certificate will be deposited with a common depositary for Euro-clear
and CEDEL, for credit to the accounts of the purchasers of the Bearer
Warrants on the related date of issue. (Sections 1.02 and 1.03).
At the option of the holder upon request confirmed in writing,
and subject to the terms of the Debt Warrant Agreement, Registered
Warrants may be presented for exchange and for registration of
transfer (with the form of transfer endorsed thereon duly executed)
at the corporate trust office of the Debt Warrant Agent for such
series of Debt Warrants (or any other office indicated in the
Prospectus Supplement relating to such series of Debt Warrants)
without service charge and upon payment of any taxes and other
governmental charges as described in the relevant Debt Warrant
Agreement. Such transfer of exchange will be effected only if the
Debt Warrant Agent for such series of Debt Warrants is satisfied with
the documents of title and identity of the person making the request.
(Section 4.01)
Exercise of Debt Warrants
Each Offered Debt Warrant will entitle the holder to purchase
for cash such principal amount of Debt Securities at such exercise
price as shall in each case be set forth in, or be determinable as
set forth in, the Prospectus Supplement. Offered Debt Warrants may
be exercised at any time up to the close of business on the Debt
Warrant Expiration Date set forth in the Prospectus Supplement.
After the close of business on the Debt Warrant Expiration Date (or
such later date to which the Debt Warrant Expiration Date may be
extended by the Company), unexercised Debt Warrants will become void.
(Section 2.02)
Subject to any restrictions and additional requirements that
may be set forth in the Prospectus supplement, Registered Warrants
may be exercised by delivery to the Debt Warrant Agent of the Debt
Warrant Certificate evidencing such Registered Warrants properly
completed and duly executed and of payment as provided in the
Prospectus Supplement of the amount required to purchase the Debt
Securities purchasable upon such exercise. (Section 2.03) Subject
to any such restrictions and additional requirements, Bearer Warrants
may be exercised by the beneficial owner thereof delivering to Euro-
clear or CEDEL a duly completed exercise letter or tested telex, in
the form obtainable from Euro-clear or CEDEL or the Warrant Agent,
setting forth, among other things, instructions for payment as
provided in the Prospectus Supplement on the date of exercise of the
amount required to purchase the Debt Securities purchasable upon
exercise of Bearer Warrants. Purchasers of Bearer Securities to be
delivered upon exercise of the Bearer Warrants will be subject to
certification procedures and may be affected by certain limitations
under United States federal income tax laws. See "Limitations on
Issuance of Bearer Debt Securities and Bearer Debt Warrants." The
procedures to be followed in connection with the delivery of the
exercise letter will be set forth in the Prospectus Supplement. The
exercise price of Debt Warrants will be that price applicable on the
date of receipt of payment in full of the requisite amount of funds,
determined as set forth in the Prospectus Supplement. Upon receipt
of such payment (plus payment of any accrued interest on the Debt
Securities being purchased, from and including the immediately
preceding interest payment date for such Debt Securities to and
including the Debt Warrant Exercise Date (unless the Debt Warrant
Exercise Date is after the record date, if any, but on or before the
immediately succeeding interest payment date, if any, for the Debt
Securities being purchased, in which case no accrued interest is
payable in respect of Debt Securities to be issued as Registered
Securities)) and upon either (i) surrender of such Debt Warrant
Certificate at the corporate trust office of the Debt Warrant Agent
or any other office indicated in the Prospectus Supplement, in the
case of Registered Warrants, or (ii) satisfaction of the
certification procedures referred to above under "General," in the
case of Bearer Warrants, the Company will, as soon as practicable,
forward the Debt Securities purchasable upon such exercise. Only
Registered Securities will be deliverable upon exercise of Registered
Warrants. Registered Securities or, subject to the certification
procedures referred to above under "General," Bearer Securities will
be delivered upon exercise of Bearer Warrants, as may be specified in
the exercise letter. If fewer than all of the Registered Warrants
represented by a Debt Warrant Certificate are exercised, a new Debt
Warrant Certificate will be issued representing the remaining number
of Registered Warrants. (Section 2.03)
<PAGE> 13
Modifications
The Debt Warrant Agreement and the terms of the Debt Warrants
and the Debt Warrant Certificates may be amended by the Company and
the Debt Warrant Agent, without the consent of the holders, for the
purpose of curing any ambiguity, or of curing, correcting or
supplementing any defective or inconsistent provision therein or in
any other manner which the Company may deem necessary or desirable
and which will not adversely affect the interests of the holders in
any material respect. (Section 6.01)
Merger, Consolidation, Sale or Other Disposition
If at any time there shall be a merger or consolidation of the
Company or a transfer of substantially all of its assets as permitted
under the Indentures, the successor entity thereunder shall succeed
to and assume all obligations of the Company under the Debt Warrant
Agreement and the Debt Warrant Certificates. (Section 3.04) See
"Description of Debt Securities -- Certain Covenants of the Company."
Enforceability of Rights of Debt Warrantholders;
Governing Law
The Debt Warrant Agent will act solely as an agent of the
Company in connection with the Debt Warrant Certificates and will not
assume any obligation or relationship of agency or trust for or with
any holders of Debt Warrant Certificates or beneficial owners of Debt
Warrants. (Section 5.02) Any holder of Debt Warrant Certificates
evidencing Registered Warrants and any beneficial owner of Bearer
Warrants may, without the consent of the Debt Warrant Agent, any
other holder, the relevant Trustee, the holder of any Debt Securities
issued upon exercise of Debt Warrants or, if applicable, the common
depositary for Euro-clear and CEDEL, enforce by appropriate legal
action, on its own behalf, its right to exercise the Debt Warrants
evidenced by such Debt Warrant Certificates or the Global Debt
Warrant Certificates evidencing such Bearer Warrants, as the case may
be, in the manner provided therein and in the Debt Warrant Agreement.
(Section 3.03) No holder of any Debt Warrant Certificate or
beneficial owner of any Debt Warrants evidenced thereby shall be
entitled to any of the rights of a holder of the Debt Securities
purchasable upon exercise of such Debt Warrants, including, without
limitation, the right to receive the payment of principal of or
premium, if any, or interest, if any, on such Debt Securities or to
enforce any of the covenants in the Indenture. (Section 3.01) The
Debt Warrants and each Debt Warrant Agreement will be governed by,
and construed in accordance with, the laws of the State of New York.
(Section 6.04)
LIMITATIONS OF ISSUANCE OF BEARER DEBT SECURITIES AND
BEARER DEBT WARRANTS
Except as may otherwise be provided in the Prospectus
Supplement applicable thereto, in compliance with United States
federal income tax laws and regulations, Bearer Securities (including
Bearer Securities in global form) and Debt Warrants that are Bearer
Warrants will not be offered, sold, resold or delivered, directly or
indirectly, in the United States or its possessions or to United
States persons (as defined below), except as otherwise permitted by
United States Treasury Regulations Section 1.163-5(c)(2)(i)(D). Any
underwriters, agents and dealers participating in the offerings of
Bearer Securities or Bearer Warrants, directly or indirectly, must
agree that (i) they will not, in connection with the original
issuance of any Bearer Securities or during the period set forth in
the Prospectus Supplement following the original issuance of such
Bearer Securities, offer, sell, resell or deliver, directly or
indirectly, any Bearer Securities in the United States or its
possessions or to United States persons (other than as permitted by
the applicable Treasury Regulations described above) and (ii) they
will not, at any time, offer, sell, resell or directly or indirectly
any Bearer Warrants in the United States or its possessions or to
United States persons (other than as permitted by the applicable
Treasury Regulations described above). In addition, any such
underwriters, agents and dealers must have procedures reasonably
designed to ensure that its employees or agents who are directly
engaged in selling Bearer Securities or Bearer Warrants are aware of
the above restrictions on the offering, sale, resale or delivery of
Bearer Securities or Bearer Warrants. Moreover, Bearer Securities
(other than temporary global Debt Securities) and any Coupons
appertaining thereto will not be delivered in definitive form unless
the Company has received a signed certificate in writing (or an
electronic certificate described in United States Treasury
Regulations Section 1.163-5(c)(2)(i)(D)(3)(ii)) stating that on such
date (i) such Bearer Security is owned by a person that is not a
United States person or, if such person is a United States person,
that it is a financial institution (as defined in United States
Treasury Regulations Section 1.165-12(c)(1)(v)) purchasing for its
own account or the account of a customer, or (ii) such Bearer
Security is owned by a financial institution (described above) for
purposes of resale and has not been acquired for the purposes of
resale directly or indirectly within the United States or to United
States persons (other than as permitted by the applicable Treasury
regulations described above). Bearer Warrants will not be issued in
definitive form.
<PAGE> 14
Bearer Securities (other than temporary global Debt
Securities) and any Coupons appertaining thereto will bear a legend
substantially to the following effect: "Any United States person who
holds this obligation will be subject to limitations under the United
States federal income tax laws, including the limitations provided in
Sections 165(j) and 1287(a) of the United States Internal Revenue
Code." The sections referred to in such legend provide that a United
States person (other than a United States financial institution
described above or a United States person holding through such a
financial institution) who holds a Bearer Security or Coupon will not
be allowed to deduct any loss realized on the sale, exchange or
redemption of such Bearer Security and any gain (which might
otherwise be characterized as capital gain) recognized on such sale,
exchange or redemption will be treated as ordinary income.
As used herein, "United States person" means a
citizen, national or resident of the United States, a corporation,
partnership or other entity created or organized in or under the laws
of the United States or any political subdivision thereof, or an
estate or trust the income of which is subject to United States
federal income taxation regardless of its source.
PLAN OF DISTRIBUTION
The Company may sell the Securities being offered
hereby in three ways: (i) through agents, (ii) through underwriters
and (iii) through dealers.
Offers to purchase Securities may be solicited by
agents designated by the Company from time to time. Any such agent,
who may be deemed to be an underwriter as the term is defined in the
Securities Act, involved in the offer or sale of the Securities in
respect of which this Prospectus is delivered will be named, and any
commissions payable by the Company to such agent set forth, in the
Prospectus Supplement. Unless otherwise indicated in the Prospectus
Supplement, any such agent will be acting on a best efforts basis for
the period of its appointment. Agents may be entitled under
agreements which may be entered into with the Company to
indemnification by the Company against certain civil liabilities,
including liabilities under the Securities Act, and may be customers
of, engage in transactions with or perform services for the company
in the ordinary course of business.
If any underwriters are utilized in the sale of
Securities, the Company will enter into an underwriting agreement
with such underwriters at the time of such sale to them and the names
of the underwriters and the terms of the transaction will be set
forth in the Prospectus Supplement, which will be used by the
underwriters to make resales of the Securities in respect of which
this Prospectus is delivered to the public. The underwriters may be
entitled, under the relevant underwriting agreement, to
indemnification by the Company against certain liabilities, including
liabilities under the Securities Act, and may be customers of, engage
in transactions with or perform services for the Company in the
ordinary course of business.
If a dealer is utilized in the sale of the Securities
in respect of which this Prospectus is delivered, the Company will
sell such Securities to the dealer, as principal. The dealer may
then resell such Securities to the public at varying prices to be
determined by such dealer at the time of resale. Dealers may be
entitled to indemnification by the Company against certain
liabilities, including liabilities under the Securities Act, and may
be customers of, engage in transactions with or perform services for
the Company in the ordinary course of business.
<PAGE> 15
Securities may also be offered and sold, if so
indicated in the Prospectus Supplement, in connection with a
remarketing upon their purchase, in accordance with a redemption or
repayment pursuant to their terms, or otherwise, by one or more firms
("remarketing firm"), acting as principals for their own accounts or
as agents for the Company. Any remarketing firm will be identified
and the terms of this agreement, if any, with the Company and its
compensation will be described in the Prospectus Supplement.
Remarketing firms may be deemed to be underwriters in connection with
the Securities remarketed thereby. Remarketing firms may be entitled
under agreements which may be entered into with the Company to
indemnification by the Company against certain civil liabilities,
including liabilities under the Securities Act, and may be customers
of, engage in transactions with or perform services for the Company
in the ordinary course of business.
If so indicated in the Prospectus Supplement, the
Company will authorize agents and underwriters or dealers to solicit
offers by certain purchasers to purchase the relevant Offered
Securities from the Company at the public offering price set forth in
the Prospectus Supplement pursuant to delayed delivery contracts
providing for payment and delivery on a specified date in the future.
Such contracts will be subject to only those conditions set forth in
the Prospectus Supplement, and the Prospectus Supplement will set
forth the commission payable for solicitation of such offers.
LEGAL MATTERS
The validity of the Debt Securities and the Debt
Warrants will be passed upon for the Company by Davis Polk &
Wardwell.
EXPERTS
The audited financial statements and schedules of the
Company incorporated by reference in the Company's Annual Report on
Form 10-K for the year ended December 31, 1989, to the extent and for
the periods indicated in their reports, have been audited by Arthur
Andersen & Co. or Coopers & Lybrand, independent public accountants,
and are incorporated herein by reference. Such audited financial
statements and schedules are, incorporated herein in reliance upon
the authority of said firms as experts in accounting and auditing in
giving said reports. Future audited financial statements and
schedules of the Company and the reports thereon of the Company's
independent public accountants also will be incorporated by reference
in this Prospectus in reliance upon the authority of those
accountants as experts in giving those reports to the extent said
firm has audited those financial statements and consented to the use
of their reports thereon.
ERISA MATTERS
The Company and certain affiliates of the Company may
each be considered a "party in interest" within the meaning of the
Employee Retirement Income Security Act of 1974, as amended
("ERISA"), or a "disqualified person" within the meaning of the Code
with respect to many employee benefit plans. Prohibited transactions
within the meaning of ERISA or the Code may arise, for example, if
the Securities are acquired by a pension or other employee benefit
plan with respect to which FTX or any of its affiliates is a service
provider, unless such Securities are acquired pursuant to an
exemption for transactions effected on behalf of such plan by a
"qualified professional asset manager" or pursuant to any other
available exemption. Any such pension or employee benefit plan
proposing to invest in the Securities should consult with its legal
counsel.
==================================== ===================================
No dealer, salesman, or other
person has been authorized to give
any information or to make
any representation not contained in
this Prospectus Supplement or the $150,000,000
accompaning Prospectus, and, if given
or made, such information or
representation must not be relied
upon as having been authorized by the
Company or any agent or Underwriter.
This Prospectus Supplement and the [LOGO] FREEPORT-MCMORAN
Accompanying Propsectus do not
constitute an offer to sell or a RESOURCE PARTNERS,
solicitation of an offer to buy any Limited Partnership
of the securities offered hereby in
any jurisdiction to any person to whom
it is unlawful to make such offer or
solicitation in such jurisdiction. 7% Senior Notes due 2008
Neither the delivery of this
Prospectus Supplement or this
Prospectus nor any sale made
hereunder or thereunder ___________________
shall, under any circumstances, PROSPECTUS SUPPLEMENT
create any implication that there February 14, 1996
has been no change in the affairs of ___________________
the Company since the date hereof.
TABLE OF CONTENTS
Prospectus Supplement
Page
Prospectus Supplement Summary.. S-3
Use of Proceeds................ S-5
Capitalization................. S-5 LEHMAN BROTHERS
Selected Financial and
Operating Data................ S-6
Management's Discussion MERRILL LYNCH & CO.
and Analysis of Financial
Condition and Results of
Operations.................... S-8 SALOMON BROTHERS INC.
Business of the Company........ S-12
Relationship Between the
Company and the FTX Group..... S-18
Description of the Senior
Notes......................... S-19
Underwriting................... S-28
Validity of Securities......... S-28
Prospectus
Available Information.......... 2
Incorporation of Documents by
Reference..................... 2
The Company.................... 3
Use of Proceeds................ 3
Ratio of Earnings
to Fixed Charges............. 4
Description of Debt Securities. 4
Description of Debt Warrants... 11
Limitations of Issuance of
Bearer Debt Securities and
Bearer Debt Warrants.......... 13
Plan of Distribution........... 14
Legal Matters.................. 15
Experts........................ 15
ERISA Matters.................. 15
