Freeport-McMoRan 2009 Annual Report Download - page 77

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FREEPORT- McMoRan COPPER & GOLD INC. 75
2009 Annual Report
NOTE 10. Debt
The components of debt follow:
December 31, 2009 2008
Senior Credit Facility $ — $150
Senior Notes:
8.375% Senior Notes due 2017 3,340 3,500
8.25% Senior Notes due 2015 1,297 1,500
Senior Floating Rate Notes due 2015 1,000 1,000
9½% Senior Notes due 2031 198 198
61
/8% Senior Notes due 2034 115 115
71
/8% Debentures due 2027 115 115
8¾% Senior Notes due 201187 115
7% Convertible Senior Notes due 2011 11
67
/8% Senior Notes due 2014 —340
Other (including equipment capital leases
and short-term borrowings) 193 317
Total debt 6,346 7,351
Less current portion of long-term debt and
short-term borrowings (16)(67)
Long-term debt $6,330 $7,284
Senior Credit Facility. ,Q FRQQHFWLRQ ZLWK ÀQDQFLQJ )&;ҋV DFTXLVLWLRQ
of Phelps Dodge, FCX used proceeds from its borrowings under its
$11.5 billion senior credit facility.At the close of the Phelps Dodge
acquisition, the senior credit facility consisted of a $2.5 billion senior
term loan due March 2012, a $7.5 billion Tranche B term loan due
March 2014 and $1.5 billion in revolving credit facilities due March
2012, with no amounts drawn on the revolving credit facilities. The
revolving credit facilities are composed of (i) a $1.0 billion revolving
credit facility available to FCX and (ii) a $0.5 billion revolving credit
facility available to both FCX and PT Freeport Indonesia. FCX used
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to prepay the $10 billion of term loans by December 31, 2007. At
December 31, 2009, FCX had no borrowings and $39 million of
letters of credit issued under the revolving credit facilities, resulting in
availability of approximately $1.5 billion, of which $961 million could
be used for additional letters of credit.
Interest on the revolving credit facilities is based on the London
Interbank Offered Rate (LIBOR) plus 1.00 percent, subject to an
increase or decrease in the interest rate margin based on the credit
ratings assigned by Standard & Poor’s Rating Services and Moody’s
Investor Services.
The senior credit facility is guaranteed by certain wholly owned
subsidiaries of FCX and is secured by the pledge of equity in
substantially all of these subsidiary guarantors and certain other non-
guarantor subsidiaries of FCX, and intercompany indebtedness owed
to FCX. Borrowings by FCX and PT Freeport Indonesia under the
$0.5 billion revolver are also secured with a pledge of 50.1 percent of
the outstanding stock of PT Freeport Indonesia, over 90 percent of
the assets of PT Freeport Indonesia and, with respect to borrowings
by PT Freeport Indonesia, a pledge of the Contract of Work.
During 2007, FCX recorded net charges totaling $154 million ($120
million to net income attributable to FCX common stockholders or
$0.30 per diluted share) for early extinguishment of debt related to
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with the repayment of amounts under the senior credit facility.
Senior Notes.,Q 0DUFK  LQ FRQQHFWLRQ ZLWK ÀQDQFLQJ )&;ҋV
acquisition of Phelps Dodge, 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 senior notes is
payable semiannually on April 1 and October 1. Interest on the Senior
Floating Rate Notes accrues at six-month LIBOR plus 3.25 percent.
The interest rate on the Senior Floating Rate Notes was 3.88 percent
at December 31, 2009. These notes are redeemable in whole or in
part, at the option of FCX, at make-whole redemption prices prior to
the redemption dates, and afterwards at stated redemption prices.
The terms of the agreements allow for optional make-whole
redemptions prior to April 1, 2011, for the 8.25% Senior Notes; and
April 1, 2012, for the 8.375% Senior Notes. The Senior Floating Rate
Notes are redeemable at stated redemption prices. 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. These 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
$0.06 per diluted share).
The 9½% Senior Notes due June 2031 and the 8¾% Senior Notes
due June 2011bear interest payable semiannually on June 1 and
December 1. These 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 Phelps Dodge, FCX assumed these
senior notes with a stated value of $306 million, which was increased
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the acquisition date. The 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 the 9½% Senior Notes for $46 million and recorded losses
on early extinguishment of debt of $6 million ($5 million to net loss
attributable to FCX common stockholders or $0.01 per diluted share).
In fourth-quarter 2009, FCX purchased in an open-market transaction
$24 million of the 8¾% Senior Notes for $26 million and recorded
losses on early extinguishment of debt of $1 million ($1 million to net
income attributable to FCX common stockholders or less than $0.01
per diluted share). At December 31, 2009, the outstanding principal
amount of the 9½% Senior Notes was $161 million and the 8¾%
Senior Notes was $84 million.