History
McMoRan sold off old assets, borrowed and issued shares to build a Gulf of Mexico shelf business, then was bought by Freeport-McMoRan in 2013 for $14.75 cash plus royalty trust units per share.
2002-2006: Selling up and starting again
The record opens with McMoRan clearing its debts. In February 2002 a subsidiary sold interests in three Gulf of Mexico fields to Halliburton Energy Services for $60 million. The money repaid a $51.7 million oil and gas credit facility, and 75% of the interests sold were due to revert to McMoRan once Halliburton had received its $60 million plus an agreed return. In June 2002 the sulphur subsidiary sold its transportation and terminaling assets for $58 million, settling litigation and ending a supply contract. McMoRan also raised about $33.5 million net from 1.4 million shares of 5% convertible preferred stock to repay the remaining sulphur credit facility. The Port Sulphur terminal was not sold and was marketed separately.
By the end of 2002 McMoRan reported net income of $17.2 million, against a $148.1 million loss in 2001. That year included a $14.1 million gain from forming a joint venture with K1 Ventures, in which McMoRan kept a one-third interest in the entity that took over its Main Pass oil assets. Drilling continued at JB Mountain, Lighthouse Point Deep and Cyprus.
In September 2004 McMoRan raised money again, selling common shares at $12.75 each and $140 million of 5¼% convertible senior notes due 2011, convertible at $16.575 per share. The offering closed on October 6, 2004, and was the first new debt since the 2002 repayments. The proceeds were meant for drilling, the Main Pass Energy Hub project and working capital. In April 2006 a subsidiary signed a $100 million secured revolving credit facility with JPMorgan Chase.
2007-2009: The Newfield deal and heavy financing
In January 2007 a subsidiary added a $100 million second-lien term loan. In June 2007 McMoRan agreed to buy substantially all of Newfield Exploration's Gulf of Mexico shelf properties for $1.1 billion in cash. The purchase closed on August 6, 2007, for about $1.08 billion. It was funded by a new $700 million secured revolver and an $800 million unsecured bridge loan, and the second-lien loan was repaid.
The bridge loan was then replaced. In November 2007 McMoRan sold 16.9 million common shares at $12.40 and 2.59 million shares of 6.75% mandatory convertible preferred at $100 each, raising about $450 million net. It then sold $300 million of 11.875% senior notes due 2014, raising about $292 million net, which fully repaid the bridge loan.
In 2008 McMoRan began paying holders to convert. In May it paid $1.7 million to induce conversion of about $40 million of its 5.25% notes into about 2.4 million shares. In September it paid $7.4 million to convert about 990,000 preferred shares into about 6.7 million common shares, leaving common shares at about 70.5 million. In June 2009 it sold common shares at $5.75 and a new 8% convertible perpetual preferred stock, adding to the share count. The filing did not say how the proceeds would be used.
2010-2012: The Plains deal and Freeport
In September 2010 McMoRan agreed to buy Plains Exploration & Production's shallow-water Gulf of Mexico shelf properties, in which it already held working interests in substantially all of the properties. The price was $75 million in cash and 51 million McMoRan shares, a total value of $818 million. The deal came with $900 million of convertible securities, including $500 million of preferred stock sold to Freeport-McMoRan Copper & Gold (FCX). Shareholders approved, and it closed on December 30, 2010. McMoRan issued the shares, $200 million of 4% convertible notes due 2017, $200 million of 5.75% Series 1 preferred and the $500 million Series 2 preferred to an FCX subsidiary. That is why shares on issue stood at 159.8 million at the end of 2010. They were 164.8 million at the end of 2012.
In June 2011 a subsidiary replaced its older bank facility with a five-year, $150 million secured revolver with JPMorgan as agent.
2012-2013: Sale to Freeport-McMoRan
On December 5, 2012, FCX agreed to acquire McMoRan for about $3.4 billion in cash, or $2.1 billion after adjusting for the 36% already owned by FCX and PXP. Each share would convert into $14.75 in cash plus 1.15 units of a royalty trust holding a 5% overriding royalty on certain ultra-deep Gulf of Mexico prospects. Approval needed a majority of all shares and a majority excluding shares held by FCX, PXP and certain insiders. A $98 million termination fee could apply under specified circumstances.
From October 2012 McMoRan sold shelf properties. The Laphroaig field went to Energy XXI Onshore in January 2013 for $80.0 million, and cash from the sales totalled $135.9 million. The proxy statement said none of the royalty prospects had reserves or production other than the onshore Lineham Creek well. A stockholder class action over the deal reached a memorandum of understanding to settle on May 6, 2013, subject to court approval.
Stockholders approved the merger on June 3, 2013, and it closed that day. McMoRan became a wholly owned subsidiary of FCX, and its stock stopped trading on the NYSE. The $150 million credit facility was repaid and terminated, FCX guaranteed the 11.875% notes, and holders could require repurchase of those notes at 101% and of the convertible notes at 100%. FCX's Series 2 preferred was cancelled with no consideration. On June 17, 2013, McMoRan terminated the registration of its securities, ending its reporting obligations.
Written from the 28 story beats below (2002 to 17 June 2013), which come from the company's own announcements and filings.