Freeport reduces debt

Freeport-McMoRan Copper & Gold was the biggest newsmaker south of the border during the report period ended Aug. 26, as it announced it had converted US$311 million worth of notes into 21.8 million shares. The major also paid out US$23 million from an escrowed account it had set up to cover three years’ worth of interest payments.

Freeport, which issued the notes in late 2001 and set 2006 as their maturity date, expects the early conversion to add US$25 million to net earnings and cash flow. For the moment, however, it will record a charge of an equivalent amount to third-quarter net income.

Freeport has been cleaning up its balance sheet since the year’s start, and expects to have US$2.2 billion in consolidated debt by its end. Of that, US$293 million reflects the unconverted portion of the 8.25% notes recently converted. Those notes can be recalled after July 24, at the major’s discretion.

Freeport now has 170 million shares outstanding, which, based on its closing price of US$28.44 at the period’s end, puts its market capitalization at US$4.83 billion. At presstime, this had increased to about US$5.05 billion.

Also making headlines was Stillwater Mining, which announced that 34.6 million shares, or 38.6% of the company’s outstanding float, had been tendered to Norilsk Nickel. The Russian giant, which bought 51% of the platinum miner earlier in the summer, is required to buy 4.35 million shares from minority stakeholders at US$7.50 apiece. Stillwater rose US38 to a close of US$6.39, only to rise an additional US58 by presstime.