Freeport-McMoRan 2013 Annual Report Download - page 98

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
96 | FREEPORT-McMoRan
Revolving Credit Facility. In 2013, FCX and PT-FI entered into a
new senior unsecured $3.0 billion revolving credit facility, which
replaced FCX’s existing revolving credit facility (scheduled to
mature on March 30, 2016) upon completion of the acquisition of
PXP on May 31, 2013. In connection with the PXP acquisition,
Freeport-McMoRan Oil & Gas LLC (FM O&G LLC, a wholly owned
subsidiary of FM O&G and the successor entity of PXP) joined the
revolving credit facility as a borrower. The new revolving credit
facility is available until May 31, 2018, with $500 million available
to PT-FI. At December 31, 2013, there were no borrowings and
$46 million of letters of credit issued under the revolving credit
facility, resulting in availability of approximately $3.0 billion, of
which $1.5 billion could be used for additional letters of credit.
Interest on the new revolving credit facility (currently London
Interbank Offered Rate (LIBOR) plus 1.50 percent or the alternate
base rate (ABR) plus 0.50 percent) is determined by reference to
FCX’s credit ratings.
Lines of Credit. During third-quarter 2013, FCX entered into
uncommitted lines of credit totaling $450 million with three
financial institutions. These unsecured lines of credit allow FCX to
borrow at a spread over LIBOR or the respective financial
institution’s cost of funds with terms and pricing that are more
favorable than FCX’s revolving credit facility. As of December 31,
2013, there were no borrowings drawn on these lines of credit.
Bank Term Loan. In February 2013, FCX entered into an
agreement for a $4.0 billion unsecured term loan in connection
with the acquisitions of PXP and MMR. Upon closing the PXP
acquisition, FCX borrowed $4.0 billion under the Term Loan, and
FM O&G LLC joined the Term Loan as a borrower. The Term
Loan amortizes in equal quarterly installments during the second,
third and fourth years of the loan in annual amounts equal to
10 percent, 15 percent and 20 percent, respectively, of the original
aggregate principal amount, and the remainder will mature on
May 31, 2018. At FCX’s option, the Term Loan bears interest
at either an adjusted LIBOR or an ABR (as defined under the Term
Loan agreement) plus a spread determined by reference to FCX’s
credit ratings (currently LIBOR plus 1.50 percent or ABR plus
0.50 percent). The effective interest rate on the Term Loan was
1.67 percent at December 31, 2013.
Senior Notes issued by FCX. In March 2013, in connection with
the financing of FCX’s acquisitions of PXP and MMR, FCX issued
$6.5 billion of unsecured senior notes in four tranches. FCX sold
$1.5 billion of 2.375% Senior Notes due March 2018, $1.0 billion of
3.100% Senior Notes due March 2020, $2.0 billion of 3.875%
Senior Notes due March 2023 and $2.0 billion of 5.450% Senior
Notes due March 2043 for total net proceeds of $6.4 billion. The
2.375% Senior Notes and the 3.100% Senior Notes are redeemable
in whole or in part, at the option of FCX, at a make-whole
redemption price. The 3.875% Senior Notes are redeemable in
whole or in part, at the option of FCX, at a make-whole redemption
price prior to December 15, 2022, and thereafter at 100 percent
of principal. The 5.450% Senior Notes are redeemable in whole or
NOTE 7. ACCOUNTS PAYABLE AND ACCRUED LIABILITIES
Additional information regarding accounts payable and accrued
liabilities follows:
December 31, 2013 2012
Accounts payable $ 2,144 $ 1,568
Salaries, wages and other compensation 352 287
Commodity derivative contracts 205 11
Accrued interest
a
210 35
Oil and gas royalty and revenue payable 169 —
Pension, postretirement, postemployment and
other employee benefits
b
161 140
Other accrued taxes 142 92
Deferred revenue 115 94
Rio Tinto’s share of joint venture cash flows 33 4
Other 169 93
Total accounts payable and accrued liabilities $ 3,700 $ 2,324
a. Third-party interest paid, net of capitalized interest, was $397 million in 2013, $111 million
in 2012 and $225 million in 2011.
b. Refer to Note 9 for long-term portion.
NOTE 8. DEBT
As of December 31, 2013, debt included $653 million of fair value
adjustments related to the debt assumed in the acquisition of PXP.
The components of debt follow:
December 31, 2013 2012
Revolving credit facility $ — $ —
Lines of credit — —
Bank term loan 4,000 —
Senior notes and debentures:
Issued by FCX:
1.40% Senior Notes due 2015 500 500
2.15% Senior Notes due 2017 500 500
2.375% Senior Notes due 2018 1,500 —
3.100% Senior Notes due 2020 999 —
3.55% Senior Notes due 2022 1,996 1,995
3.875% Senior Notes due 2023 1,999 —
5.450% Senior Notes due 2043 1,991 —
Issued by FM O&G:
6.125% Senior Notes due 2019 817 —
8.625% Senior Notes due 2019 447 —
7.625% Senior Notes due 2020 336 —
61/2% Senior Notes due 2020 1,647 —
6.625% Senior Notes due 2021 659 —
6.75% Senior Notes due 2022 1,111 —
67/8% Senior Notes due 2023 1,686 —
Issued by FMC:
71/8% Debentures due 2027 115 115
91/2% Senior Notes due 2031 130 130
61/8% Senior Notes due 2034 115 115
Other (including equipment capital leases and
short-term borrowings) 158 172
Total debt 20,706 3,527
Less current portion of debt (312) (2)
Long-term debt $ 2 0 ,3 9 4 $ 3,525