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Mining industry

Mandatory Conversion of Freeport-McMoRan's 6 3/4% Preferred Stock to Common Stock

Strategic Insights

— 1 min read

Freeport-McMoRan Copper & Gold Inc. (NYSE: FCX) announced on April 15, 2010, that the conversion rate for its 6 3/4% Mandatory Convertible Preferred Stock would be 1.3716 per $100 face amount. This means that all outstanding shares of Preferred Stock will automatically convert into approximately 38 million shares of common stock on May 1, 2010. The company will have approximately 470 million shares of common stock outstanding after the mandatory conversion. Holders of Preferred Stock on the April 15, 2010, record date will also receive a final quarterly cash dividend of $1.6875 per share, unless they have voluntarily converted their shares into common stock prior to the mandatory conversion date.

Key Takeaways:

  • The mandatory conversion of Freeport-McMoRan's 6 3/4% Mandatory Convertible Preferred Stock to common stock will occur on May 1, 2010, with a conversion rate of 1.3716 per $100 face amount.
  • The company will issue approximately 38 million shares of common stock in connection with the mandatory conversion, bringing the total number of outstanding common stock shares to approximately 470 million.
  • Holders of Preferred Stock on the April 15, 2010, record date will receive a final quarterly cash dividend of $1.6875 per share, unless they have voluntarily converted their shares into common stock prior to the mandatory conversion date.
  • The conversion of Preferred Stock into common stock is generally not considered a taxable event, and a U.S. holder's tax basis in the common stock received will generally equal the tax basis of the Preferred Stock that was converted.
  • Freeport-McMoRan operates large, long-lived, geographically diverse assets with significant proven and probable reserves of copper, gold, and molybdenum, making it a leading international mining company.

Statistics:

  • 38 million: The approximate number of shares of common stock that will be issued in connection with the mandatory conversion of Freeport-McMoRan's 6 3/4% Mandatory Convertible Preferred Stock.
  • 470 million: The approximate number of shares of common stock that will be outstanding after the mandatory conversion.
  • $1.6875: The final quarterly cash dividend to be received by holders of Preferred Stock on the April 15, 2010, record date.
  • 1.3716: The conversion rate per $100 face amount of Preferred Stock.

Sources:

  • "Freeport-McMoRan Copper & Gold Inc. (NYSE: FCX) Announces Mandatory Conversion of 6 3/4% Mandatory Convertible Preferred Stock to Common Stock." Chemicals & Chemistry, 2010.
  • VerticalNews.com.

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