Freeport-McMoRan 2014 Annual Report Download - page 102

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
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term of the senior notes and recorded as a reduction of interest
expense. These senior notes are redeemable in whole or in part,
at the option of FM O&G LLC, at make-whole redemption prices
prior to the dates stated below, and beginning on the dates stated
below at specified redemption prices. Upon completion of the
acquisition of PXP, FCX guaranteed these senior notes resulting in
an investment grade rating for these senior notes.
Debt Instrument Date
6.125% Senior Notes due 2019 June 15, 2016
61/2% Senior Notes due 2020 November 15, 2015
6.625% Senior Notes due 2021 May 1, 2016
6.75% Senior Notes due 2022 February 1, 2017
67/8% Senior Notes due 2023 February 15, 2018
Additionally, in connection with the acquisition of MMR, FCX
assumed MMR’s 11.875% Senior Notes due 2014, 4% Convertible
Senior Notes due 2017 and 5¼% Convertible Senior Notes due
2013 with a total stated value of $558 million, which was increased
by $62 million to reflect the acquisition-date fair market value of
these obligations. During 2013, all of the 11.875% Senior Notes due
2014 were redeemed, and holders of 4% Convertible Senior Notes
due 2017 and 5¼% Convertible Senior Notes due 2013 converted
their notes into merger consideration totaling $306 million,
including cash payments of $270 million and 21.0 million royalty
trust units with a fair value of $36 million at the acquisition date.
At December 31, 2014 and 2013, there were no outstanding
amounts in connection with MMR’s senior notes.
Early Extinguishments of Debt. A summary of debt extinguishments
during 2014 for senior notes resulting from redemptions and
tender offers follows:
Purchase
Accounting
Principal Fair Value Book (Loss)
Amount Adjustments Value Gain
1.40% Senior Notes due 2015 $ 500 $ — $ 500 $ (1)
6.125% Senior Notes due 2019 513 40 553 (2)
8.625% Senior Notes due 2019 400 41 441 24
7.625% Senior Notes due 2020 300 32 332 14
61/2% Senior Notes due 2020 883 79 962 10
6.625% Senior Notes due 2021 339 31 370 3
6.75% Senior Notes due 2022 551 57 608 8
67/8% Senior Notes due 2023 722 84 806 21
$ 4 ,208 $ 364 $ 4 , 5 7 2 $ 7 7
In addition, FCX recorded a loss on early extinguishment of debt
of $4 million associated with the modification of its revolving
credit facility in May 2014 and for fees related to the tender offers
in December 2014.
In 2013, FCX completed the following transactions that resulted
in a net loss on early extinguishment of debt of $35 million: (i) the
termination of its $9.5 billion acquisition bridge loan facility,
which was entered into in December 2012 to provide interim
financing for the acquisitions of PXP and MMR but was replaced
with other financing, that resulted in a loss of $45 million; (ii) the
repayment of the $3.9 billion outstanding under PXP’s amended
credit facility and the redemption of all of PXP’s 75/8% Senior Notes
due 2018 for $415 million, which did not result in a gain or loss;
partially offset by (iii) the redemption of MMR’s remaining
outstanding 11.875% Senior Notes due 2014 for $299 million,
which resulted in a gain of $10 million.
In 2012, FCX redeemed the remaining $3.0 billion of its
outstanding 8.375% Senior Notes due 2017 for which holders
received 104.553 percent of the principal amount together
with the accrued and unpaid interest. As a result of this
redemption, FCX recorded a loss on early extinguishment of
debt of $168 million during 2012.
Guarantees. In connection with the acquisition of PXP, FCX
guaranteed the PXP senior notes, and the guarantees by certain
PXP subsidiaries were released. Refer to Note 17 for a discussion
of FCX’s senior notes guaranteed by FM O&G LLC.
Restrictive Covenants. FCX’s Term Loan and revolving credit
facility contain customary affirmative covenants and
representations, and also contain a number of negative covenants
that, among other things, restrict, subject to certain exceptions,
the ability of FCX’s subsidiaries that are not borrowers or
guarantors to incur additional indebtedness (including guarantee
obligations) and FCX’s ability or the ability of FCX’s subsidiaries
to: create liens on assets; enter into sale and leaseback
transactions; engage in mergers, liquidations and dissolutions;
and sell all or substantially all of the assets of FCX and its
subsidiaries, taken as a whole. FCX’s Term Loan and revolving
credit facility also contain financial ratios governing maximum
total leverage and minimum interest coverage. FCX’s senior
notes contain limitations on liens that are generally typical for
investment grade companies. At December 31, 2014, FCX was
in compliance with all of its covenants.
Maturities. Maturities of debt instruments based on the principal
amounts and terms outstanding at December 31, 2014, total
$478 million in 2015, $651 million in 2016, $1.5 billion in 2017,
$3.7 billion in 2018, $662 million in 2019 and $11.8 billion thereafter.
NOTE 9. OTHER LIABILITIES, INCLUDING
EMPLOYEE BENEFITS
Information regarding other liabilities follows:
December 31, 2014 2013
Pension, postretirement, postemployment and
other employment benefits
a
$ 1,430 $ 1, 2 2 5
Reserve for uncertain tax benefits 68 87
Commodity derivative contracts — 115
Other 363 263
Total other liabilities $ 1,861 $ 1,690
a. Refer to Note 7 for current portion.