Freeport-McMoRan 2011 Annual Report Download - page 84

82 | FREEPORT-McMoRan COPPER & GOLD INC.
e obligations of FCX and PT Freeport Indonesia under the
revolving credit facility are not guaranteed by any subsidiaries and are
unsecured; however, FCX may at any time designate any subsidiary
(other than PT Freeport Indonesia) as a subsidiary guarantor.
Senior Notes. In March 2007, in connection with nancing FCX’s
acquisition of FMC, FCX sold $3.5 billion of 8.375% Senior Notes
due April 2017, $1.5 billion of 8.25% Senior Notes due April 2015
and $1.0 billion of Senior Floating Rate Notes due April 2015 for
total net proceeds of $5.9 billion. Interest on the 8.375% Senior
Notes is payable semiannually on April 1 and October 1. e 8.25%
Senior Notes and the Senior Floating Rate Notes have been fully
redeemed as further discussed below. e 8.375% Senior Notes
are redeemable in whole or in part, at the option of FCX, at a
make-whole redemption price prior to the redemption date, and
aerwards at stated redemption prices initially starting at
104.188 percent for 12 months beginning on April 1, 2012.
During 2009, FCX purchased in open-market transactions
$203 million of the 8.25% Senior Notes for $218 million and
$160 million of the 8.375% Senior Notes for $172 million. ese
open-market purchases resulted in losses on early extinguishment
of debt totaling $33 million ($29 million to net income attributable
to FCX common stockholders or $0.03 per diluted share). During
2010, FCX purchased in open-market transactions $218 million of
the 8.25% Senior Notes for $237 million and $329 million of the
8.375% Senior Notes for $358 million, which resulted in losses on
early extinguishment of debt totaling $55 million ($48 million to
net income attributable to FCX common stockholders or $0.05 per
diluted share). On April 1, 2010, FCX redeemed all of its $1 billion
of outstanding Senior Floating Rates Notes for which holders
received 101 percent of the principal amount together with accrued
and unpaid interest. As a result of this redemption, FCX recorded a
loss on early extinguishment of debt totaling $22 million ($20 million
to net income attributable to FCX common stockholders or
$0.02 per diluted share) during 2010. On April1,2011, FCX redeemed
all its remaining $1.1 billion of outstanding 8.25% Senior Notes
for which holders received 104.125 percent of the principal amount
together with accrued and unpaid interest. As a result of this
redemption, FCX recorded a loss on early extinguishment of debt
totaling $55 million ($49 million to net income attributable to FCX
common stockholders or $0.05 per diluted share) during 2011.
e 9½% Senior Notes due June 2031 bear interest payable
semiannually on June 1 and December 1. ese notes are redeemable
in whole or in part, at the option of FCX, ata make-whole
redemption price. In March 2007, in connection with the acquisition
of FMC, FCX assumed these senior notes with a stated value of
$197 million, which was increased by $43 million to reect the fair
market value of these obligations at the acquisition date. e
increase in value is being amortized over the term of the notes and
recorded as a reduction of interest expense. In 2008, FCX
purchased in an open-market transaction $33 million of these
senior notes for $46 million and recorded losses on early
extinguishment of debt totaling $6 million ($5 million to net loss
attributable to FCX common stockholders or $0.01 per diluted
share). In 2010, FCX purchased in an open-market transaction
$18 million of these senior notes for $26 million and recorded
losses on early extinguishment of debt totaling $4 million
($3 million to net income attributable to FCX common stockholders
or less than $0.01 per diluted share). In 2011, FCX purchased in an
open-market transaction $35 million of these senior notes for
$49 million and recorded losses on early extinguishment of debt
totaling $6 million ($5 million to net income attributable to
FCX common stockholders or less than $0.01 per diluted share).
At December31,2011, the outstanding principal amount of these
senior notes was $107 million.
e 61/8% Senior Notes due March 2034 bear interest payable
semiannually on March 15 and September 15. ese notes are
redeemable in whole or in part, at the option of FCX, at a make-
whole redemption price. In March 2007, in connection with the
acquisition of FMC, FCX assumed these senior notes with a stated
value of $150 million, which was reduced by $11 million to reect
the fair market value of these obligations at the acquisition date.
e decrease in value is being amortized over the term of the notes
and recorded as additional interest expense. During 2007, FCX
purchased in an open-market transaction $26 million of these
notes. At December31,2011, the outstanding principal amount of
these senior notes was $124 million.
e 71/8% Debentures due November 2027 bear interest payable
semiannually on May 1 and November 1. e debentures are
redeemable in whole or in part, at the option of FCX, at a make-
whole redemption price. In March 2007, in connection with the
acquisition of FMC, FCX assumed these debentures with a stated
and fair value of $115 million. At December31,2011, the
outstanding principal amount of these debentures was $115 million.
In March 2007, in connection with the acquisition of FMC,
FCX assumed the 8¾% Senior Notes due June 2011 with a stated
value of $109 million, which was increased by $11 million to
reect the fair market value of these obligations at the acquisition
date. e increase in value was amortized over the term of the
notes and recorded as a reduction of interest expense. In 2009, FCX
purchased in an open-market transaction $24 million of these
senior notes for $26 million and recorded losses on early
NOTES TO CONSOLIDATED FINANCIAL STATEMENTSNOTES TO CONSOLIDATED FINANCIAL STATEMENTS