Freeport-McMoRan to redeem gold-linked preferreds (June 30, 2003)

Freeport-McMoRan Copper & Gold (FCX-N) is proceeding with the forced redemption, on Aug. 1, of its gold-denominated preferred B stock, which trades on the New York Stock Exchange using the ticker symbol fcxprb.

There are 6 million depositary shares of preferred B stock outstanding, and each will be redeemed for a cash amount equivalent to 0.1 times the arithmetic average of the London afternoon gold fix on each of the 20 trading days ending on July 30, plus accrued and unpaid dividends scheduled to be paid on Aug. 1.

The shares have been paid a quarterly dividend equivalent to 0.000875 oz. gold, or about US$1.16 annually, for a healthy yield of 3.29% per annum.

The preferred B shares last traded at US$35.31 apiece, for a market capitalization of US$212 million.

The New Orleans-based copper and gold mining giant also has three more series of preferred shares, namely A, C and D:

— The A shares last traded at US$24.49, for a market capitalization of US$343 million based on 14 million outstanding shares. They have an indicated annual dividend of US$1.75, for a robust 7.13% dividend yield. These shares can be mandatorily redeemed at US$25 apiece in return for cash, common shares, or a combination of both, at the company’s discretion.

— The C shares are another class of gold-denominated shares, and are paid a cash quarterly dividend equal to 0.0008125 oz. gold. As a result, they generate an indicated annual dividend of US$1.07, or 2.87% annually. With 4.3 million shares outstanding, the C shares have a market cap of US$156 million, based on the recent trading price of US$36.20. The C series is mandatorily redeemable in February 2006 for a cash value of 0.1 oz. gold.

— The silver-denominated D shares are entitled to a sliding-scale quarterly dividend equivalent to less than 0.0257813 oz. silver, for an indicated annual dividend of US$0.37 (3.94% annually). The D shares last traded at US$9.38, for a market cap of US$45 million, based on 4.8 million outstanding.

Just over a year ago, Freeport combined its A and B classes of common shares into one class of common shares, of which there are now 145.4 million outstanding, for a market cap of US$3.54 billion.

In the most recent quarter, Freeport enjoyed a net income applicable to common shareholders of US$49.2 million on revenue of US$524.6 million.

The common shares hit another 52-week high of US$25.70 on June 18, and closed at US$24.40 on June 20.