On September 16, 2008 McMoRan agreed to induce conversion of about 990,000 shares of its 6.75% mandatory convertible preferred (about $99 million liquidation preference) into about 6.7 million common shares, paying $7.4 million in cash. This is about 38% of the preferred issued in November 2007; 1.6 million preferred shares ($158.9 million preference) remain and common shares total about 70.5 million. It dilutes common holders but is estimated to save about $15 million of preferred dividends through the November 2010 mandatory conversion date.
30 May 2008capital raising announcement▲ GoodMajor
From May 27 to 30, 2008 McMoRan paid $1.7 million to induce conversion of about $40 million of its 5.25% notes into about 2.4 million shares, leaving $74.8 million of those notes and about 59.3 million shares; it estimates interest savings of about $2.1 million a year. The remaining 6% notes are about $51.7 million, convertible into about 3.6 million shares, with conversion procedures to be sent to holders. A press release also announced additional pay at the Flatrock No. 3 well and a drilling update at South Timbalier Block 168, but the filing gives no details.
On April 10-11, 2008 McMoRan paid about $0.1 million to induce conversion of $7.3 million of 6% notes into about 0.5 million shares, leaving $69.1 million of those notes and about 55.6 million common shares. The filing also announces first-quarter 2008 results via a press release, but the figures are not in the filing text.
From February 20 to 26, 2008 McMoRan paid about $0.7 million to induce holders to convert roughly $23.1 million of its 6% notes into about 1.62 million common shares. $77.8 million of the 6% notes remain and common shares outstanding are about 54.9 million. Conversion reduces debt and interest cost (estimated at about $0.7 million in the first half of 2008) but adds shares.
FM Services, which provides McMoRan's executive and administrative services for a fixed fee, renewed director B. M. Rankin Jr.'s consulting agreement for January 1 to December 31, 2008, with unchanged terms. This continues the annual renewal already in the company's history.
McMoRan sold $300 million of 11.875% senior notes due 2014 to underwriters (JPMorgan, Merrill Lynch, BNP Paribas), closing November 14, 2007, with net proceeds of about $292 million. The press release title says the sale fully repays the acquisition bridge loan, completing the refinancing planned at the Newfield closing. The notes add a new fixed-rate debt obligation.
On November 1, 2007 McMoRan agreed to sell 16.9 million common shares at $12.40 each and 2.59 million shares of 6.75% mandatory convertible preferred at $100 each, including overallotment shares. Closing was November 7, raising $468 million gross and about $450 million net. This is the equity part of the bridge-loan replacement flagged earlier, and it dilutes existing common holders (inference from the new share issuance).
This amendment adds the financial statements and pro forma information for the Newfield properties that the August 10 filing said would follow. The statements show revenues of $619.3 million in 2006, $738.4 million in 2005 and $713.3 million in 2004, with revenues in excess of direct operating expenses of $466.9 million, $626.3 million and $625.2 million. These are property-level figures before overhead, interest, taxes and depletion, not company profit.
10 Aug 2007asset acquisition disposition● NeutralMajor
McMoRan's subsidiary completed the Newfield Gulf of Mexico shelf purchase on August 6, 2007 for about $1.08 billion in cash plus the assumption of reclamation obligations, effective July 1, 2007. It was funded by a new 5-year $700 million secured revolver (about $394 million drawn at closing) and an $800 million unsecured bridge loan, and the $100 million second-lien term loan was repaid. This closes the pending Newfield deal. The company says it expects to replace the bridge with long-term notes and equity or equity-linked securities (which implies dilution - inference). The purchase price remains subject to post-closing adjustments.
On June 20, 2007, McMoRan's subsidiary agreed to buy substantially all of Newfield Exploration's Gulf of Mexico shelf properties for $1.1 billion in cash, closing expected in Q3 2007 with a July 1 effective date, subject to antitrust and Minerals Management Service approvals. It has $1.6 billion in commitments from JP Morgan and Merrill Lynch, covering an $800 million secured revolver and an $800 million bridge loan, and will repay the $100 million second-lien term loan. McMoRan expects to replace the bridge with long-term notes and equity or equity-linked securities, which implies dilution (inference). Separately, the Flatrock well at South Marsh Island 212 showed a resistive section indicating potential pay at over 14,000 feet.
McMoRan announced a quarterly dividend on its 5% convertible preferred stock and called all outstanding preferred shares for redemption (the June 2002 issue). The filing gives no redemption price or date; those are in the press release. Preferred holders may redeem or convert, which affects common holders through possible conversion into shares.
Effective January 19, 2007, McMoRan's subsidiary signed a five-year, $100 million second-lien senior secured term loan maturing January 19, 2012. Interest is the base rate plus 6.0% or eurodollar rate plus 7.0%, with prepayment premiums of 3%, 2% and 1% over the first three years. The April 2006 revolver was amended and its borrowing base set at $50 million, from $70 million, and its security stays senior. This adds secured debt ahead of shareholders.
The Freeport-McMoRan services subsidiary renewed director B. M. Rankin Jr.'s consulting agreement for 2007, on unchanged terms, continuing the annual renewal.
The board made technical amendments to six stock incentive plans: participants can no longer pay excess tax withholding with shares, and shares used to pay option exercise prices are valued at the exercise date. It also raised the exercise price on replacement options for two advisory directors to market value at grant (for tax-rule compliance), and renamed and broadened an executive services program. No new money or share counts are involved.
On April 19, 2006, McMoRan's subsidiary McMoRan Oil & Gas LLC entered a four-year, $100 million senior secured revolving credit facility with JPMorgan Chase as agent. The initial borrowing base is $55 million and it can grow to $150 million, secured by oil and gas properties and guaranteed by McMoRan. It is the first bank facility since the 2002 facilities were repaid, and borrowing depends on receiving assignments of working interests from third parties.
McMoRan induced another $7.1 million of 6% notes to convert into 0.5 million shares. For Q1 2006 the 6% notes are down $29.1 million in total and the 5¼% notes by $25.0 million. It paid $4.3 million cumulatively, expects a net charge of about $4.0 million, and estimates annual interest savings of about $3.1 million. Shares outstanding are now about 28.3 million, so dilution continues.
McMoRan induced further conversions of $7.0 million of its 6% notes and $25.0 million of its 5¼% notes into 2.0 million shares. It paid $3.9 million, expects a net charge of about $3.6 million in Q1 2006, and estimates cumulative annual interest savings of about $2.6 million. Shares outstanding rise to about 27.8 million. This continues the January conversions, and the $25.0 million of 5¼% notes retired is part of the Oct 2004 issue.
McMoRan induced holders to convert $15 million of its $130 million of 6% convertible notes due 2008 into 1,052,631 shares at $14.25. It paid $0.9 million, expects a roughly $0.9 million first-quarter charge, and estimates annual interest savings of about $0.9 million. Shares outstanding rise to about 25.7 million, so existing shareholders are diluted. The 6% notes were not in the earlier context, so this is the first mention of them.
The Freeport-McMoRan services subsidiary renewed director B. M. Rankin Jr.'s consulting agreement for 2006, on unchanged terms, continuing the annual renewal. The filing also says the company temporarily moved its headquarters to Baton Rouge after Hurricane Katrina.
Shareholders approved the 2005 Stock Incentive Plan on May 5, 2005, allowing up to 3,500,000 shares for awards, because only about 2,000 shares remained under older plans. Options on 833,500 shares took effect, including 350,000 for Co-Chairman Moffett and 245,000 for Co-Chairman Adkerson, who agreed to forgo all 2005 cash pay in exchange for options. Shareholders face some dilution if the options are exercised.
A Freeport-McMoRan subsidiary that provides services to McMoRan renewed director B. M. Rankin Jr.'s consulting agreement for 2005, on unchanged terms. This continues an existing arrangement and carries no new financial figures.
7 Oct 2004capital raising announcement● NeutralMajor
McMoRan closed the private sale of $140 million of 5¼% convertible senior notes due 2011 on October 6, 2004, including $25 million from the initial purchasers' option, which completes the offering announced on October 4. The notes convert at $16.575 per share, so shareholders could be diluted on conversion. U.S. government securities are pledged for the first six interest payments, and the company must file a resale registration statement. The press release also mentions 7.1 million common shares sold, versus the 6.2 million (plus a 930,000-share option) previously reported, which is consistent with the overallotment option having been exercised (inference).
4 Oct 2004capital raising announcement● NeutralMajor
On September 30, 2004, McMoRan agreed to sell 6.2 million common shares at $12.75 each (net proceeds about $74 million, with a 930,000-share overallotment option) and $140 million of 5¼% convertible senior notes due 2011, convertible at $16.575 per share. Existing shareholders are diluted by the new shares and potentially by conversion of the notes; a portfolio of U.S. government securities will be pledged to cover the first six interest payments. Proceeds are intended for near-term drilling, the Main Pass Energy Hub project, and working capital. This is the first new debt after the 2002 debt repayments.
McMoRan furnished its fourth-quarter 2002 results: net income of $5.9 million for the quarter and $17.2 million for the year, versus a $148.1 million loss in 2001. The results include a $14.1 million gain from forming the K-Mc joint venture with K1 Ventures, in which McMoRan holds a one-third interest in the entity that took over its Main Pass oil assets; K1 USA received warrants for about 1.74 million McMoRan shares at $5.25. Drilling continues at JB Mountain (indicated significant hydrocarbon pay), Lighthouse Point Deep and Cyprus, with Mound Point Offset planned for Q1 2003; under the El Paso-linked program, the operator funds McMoRan's costs on four prospects and 50% of the program's interests revert to McMoRan after 100 Bcfe of production.
On July 10, 2002, McMoRan replaced Arthur Andersen LLP with Ernst & Young LLP as its auditor. The filing reports no disagreements with Andersen, and notes that Andersen's opinion on the 2001 financials was modified for uncertainty about McMoRan's ability to continue as a going concern. Andersen said it would stop practicing before the SEC on August 31, 2002.
28 June 2002asset acquisition disposition● NeutralMajor
On June 14, 2002, McMoRan's sulphur subsidiary sold its sulphur transportation and terminaling assets to Gulf Sulphur Services (a venture of IMC Global and Savage Industries) for $58 million, also settling litigation with IMC and ending the sulphur supply contract. McMoRan expects a roughly $2.0 million loss on the sale and a roughly $5.0 million gain from completed Caminada reclamation work, both in discontinued sulphur operations. On June 21 it also raised about $33.5 million net from 1.4 million shares of 5% convertible preferred stock ($35 million gross), used to repay the remaining sulphur credit facility; the preferred is convertible into common at about $4.81 per share and has a mandatory redemption date of June 30, 2012. The Port Sulphur terminal was not sold and is being marketed separately. This continues the exit from sulphur and follows the earlier oil and gas sale to Halliburton.
11 Mar 2002asset acquisition disposition● NeutralMajor
On February 22, 2002, McMoRan's subsidiary sold its interests in three Gulf of Mexico fields (Lombardi, Shiner, and 80% of its Raptor interest) to Halliburton Energy Services for $60 million. The proceeds repaid the $51.7 million oil and gas credit facility, which was terminated, and the rest goes to working capital; McMoRan expects a gain of about $29 million in Q1 2002. 75% of the interests sold revert to McMoRan after Halliburton has received $60 million plus an agreed return, and Halliburton's earlier right to join McMoRan's exploration successes ended with the sale.
