As filed with the United States Securities and Exchange Commission on
January 4, 2002.
Registration No. 333-72760
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
AMENDMENT NO. 1
TO
FORM S-3
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
Freeport-McMoRan Copper & Gold Inc.
FCX Investment Ltd.
(Exact name of registrant as specified in its charter)
Delaware 1615 Poydras Street 74-2480931
(State or other New Orleans, Louisiana 70112 (I.R.S. Employer
jurisdiction of incorporation (504) 582-4000 Identification Number)
or organization) (Address, including zip code,
and telephone number, including
area code, of registrant's
principal executive offices)
Richard C. Adkerson Copy to:
President and Chief Financial Officer L. R. McMillan, II
Freeport-McMoRan Copper & Gold Inc. Jones, Walker, Waechter,
1615 Poydras Street Poitevent, Carrere & Denegre, L.L.P.
New Orleans, Louisiana 70112 201 St. Charles Avenue, 51st Floor
(504) 582-4000 New Orleans, Louisiana 70112
(Name, address, including zip (504) 582-8188
code, and telephone
number, including area code,
of agent for service)
Approximate date of commencement of proposed sale to the public:
From time to time after this registration statement becomes effective.
If the only securities being registered on this Form are
being offered pursuant to dividend or interest reinvestment
plans, please check the following box. o
If any of the securities being registered on this Form are
to be offered on a delayed or continuous basis pursuant to Rule
415 under the Securities Act of 1933, other than securities
offered only in connection with dividend or interest reinvestment
plans, please check the following box. x
If this Form is filed to register additional securities for
an offering pursuant to Rule 462(b) under the Securities Act,
please check the following box and list the Securities Act
registration statement number of the earlier effective
registration statement for the same offering. o
If this Form is a post-effective amendment filed pursuant to
Rule 462(c) under the Securities Act, check the following box and
list the Securities Act registration statement number of the
earlier effective registration statement for the same offering. o
If delivery of the prospectus is expected to be made
pursuant to Rule 434, please check the following box. o
CALCULATION OF REGISTRATION FEE
Proposed Proposed
maximum maximum
Title of each Amount offering aggregate
class of securities to be price per offering Amount of
to be registered registered unit price registration fee
-----------------------------------------------------------------------------
8 1/4% Convertible
Senior Notes
due 2006 $603,750,000(1) $ 998.75(2) $602,995,313(2) $150,750*
Class A Common
Stock 42,220,280(3) $ - (5) $ - (5) $ - (5)
Class B Common
Stock 42,220,280(4) $ - (5) $ - (5) $ - (5)
Guarantees - - - - (6)
-----------------------------------------------------------------------------
* Previously paid.
(1)Equals the aggregate principal amount of notes that were
originally issued by the registrant on August 7, 2001.
(2)Estimated solely for purposes of calculating the registration
fee pursuant to Rule 457(c) under the Securities Act, based
upon the average of the bid and asked price for the
securities.
(3)The number of shares of class A common stock to be issued
upon conversion of the convertible notes based on an initial
conversion price of $14.30 per share is 42,220,280. In
addition, the amount to be registered includes an
indeterminate number of shares issuable upon conversion of
the convertible notes, as such amount may be adjusted due to
stock splits, stock dividends and anti-dilution provisions,
and otherwise in accordance with the indenture.
(4)The number of shares of class B common stock to be issued
upon conversion of the convertible notes based on an initial
conversion price of $14.30 per share is 42,220,280. In
addition, the amount to be registered includes an
indeterminate number of shares issuable upon conversion of
the convertible notes, as such amount may be adjusted due to
stock splits, stock dividends and anti-dilution provisions,
and otherwise in accordance with the indenture.
(5)No separate consideration will be received for the class A
and class B common stock issuable upon conversion of the
notes; therefore, no registration fee is required pursuant to
Rule 457(i) under the Securities Act.
(6)As co-issuers and co-obligors of the convertible notes,
Freeport-McMoRan Copper & Gold Inc. and FCX Investment Ltd.
are jointly and severally liable for the obligations under
the convertible notes and, as such, each effectively
guarantees the other's obligations. The recipients of the
convertible notes paid no additional consideration for the
guarantee of Freeport-McMoRan Copper & Gold Inc.'s
obligations by FCX Investment Ltd. and the guarantee of FCX
Investment Ltd.'s obligations by Freeport-McMoRan Copper &
Gold Inc. Pursuant to Rule 457(n) under the Securities Act,
no separate registration fee is payable with respect to the
guarantees.
________________
The registrants hereby amend this registration statement on
such date or dates as may be necessary to delay its effective
date until the registrants shall file a further amendment which
specifically states that this registration statement shall
thereafter become effective in accordance with Section 8(a) of
the Securities Act of 1933 or until this registration statement
shall become effective on such date as the Commission, acting
pursuant to Section 8(a), may determine.
The information in this prospectus is not complete and may be
changed. We may not sell these securities until the registration
statement filed with the Securities and Exchange Commission is
effective. This prospectus is not an offer to sell these
securities and does not solicit an offer to buy these securities
in any jurisdiction where the offer or sale is not permitted.
Prospectus
Subject to completion, dated January __, 2002
Freeport-McMoRan Copper & Gold Inc.
FCX Investment Ltd.
$603,750,000
8 1/4% Convertible Senior Notes due 2006
Freeport-McMoRan Copper & Gold Inc.
Class A Common Stock
Class B Common Stock
Freeport-McMoRan Copper & Gold Inc. and its wholly owned
subsidiary, FCX Investment Ltd., issued the notes at an issue
price of $1,000 per note in a private placement in August 2001.
This prospectus may be used by selling securityholders to resell
notes or shares of our common stock into which the notes are
convertible.
Freeport-McMoRan Copper & Gold Inc. and FCX Investment Ltd.
are jointly and severally liable for the obligations under the
notes. Except with respect to descriptions of the notes, the
terms "we," "us," "our" and "the company" refer only to Freeport-
McMoRan Copper & Gold Inc.
The notes are convertible at the option of the holder at any
time on or prior to maturity into, at the option of the holder,
shares of class A or class B common stock of the company. The
notes are convertible at a conversion price of $14.30 per share,
which is equal to a conversion rate of 69.9301 shares of class A
or class B common stock per $1,000 principal amount of notes,
subject to adjustment. On January 3, 2002, the closing prices of
our class A and class B common stock as reported on the New York
Stock Exchange were $12.55 and $13.18 per share, respectively.
We will pay interest on the notes on January 31 and July 31
of each year, beginning January 31, 2002. The notes will mature
on January 31, 2006. We may redeem some or all of the notes at
any time after July 31, 2004 at the redemption prices described
in this prospectus.
The notes are our unsecured (except as described below) and
unsubordinated obligations and rank on a parity in right of
payment with all our existing and future unsecured and
unsubordinated indebtedness. In addition, the notes will
effectively rank junior to our secured indebtedness and our
subsidiaries' liabilities. For further information, we refer you
to the section of the prospectus entitled "Description of the
Notes - Ranking."
FCX Investment has pledged a portfolio of U.S. government
securities as security for the first six scheduled interest
payments on the notes.
Our class A and class B common stock are traded on the New
York Stock Exchange under the symbols "FCXA" and "FCX,"
respectively.
Investing in the notes involves significant risks that are
described in the "Risk Factors" section beginning on page 10 of
this Prospectus.
Neither the Securities and Exchange Commission nor any state
securities commission has approved or disapproved these
securities or passed on the adequacy or accuracy of this
prospectus. Any representation to the contrary is a criminal
offense.
The date of this prospectus is January __, 2002.
Table of Contents
Page
Forward-Looking Statements 2
Summary 3
Selected Historical Consolidated Financial and Operating Data 8
Risk Factors 10
Refinancing Transactions 17
Use of Proceeds 20
Dividend Policy 20
Ratio of Earnings to Fixed Charges 20
Description of the Notes 21
United States Federal Income Tax Considerations for Investors 34
Description of Common Stock 37
Selling Securityholders 41
Plan of Distribution 45
Legal Matters 47
Experts 47
Where You Can Find Additional Information 48
_______________________
You should rely only on the information contained or
incorporated by reference in this prospectus. We have not, and
the initial purchaser has not, authorized any person to provide
you with different information. If anyone provides you with
different or inconsistent information, you should not rely on it.
You should assume that the information appearing in this
prospectus is accurate only as of the date on the front cover of
this prospectus. Our business, financial condition, result of
operations and prospects may have changed since that date. In
addition, we are not, and the initial purchaser is not, making an
offer to sell these securities in any jurisdiction where the
offer or sale is not permitted.
FORWARD-LOOKING STATEMENTS
This prospectus contains "forward-looking statements" within
the meaning of Section 27A of the Securities Act of 1933 and
Section 21E of the Securities Exchange Act of 1934, both as
amended. All statements other than statements of historical fact
are "forward-looking statements" for purposes of federal and
state securities laws, including statements about anticipated
sales volumes, production volumes, ore grades, capital
expenditures and debt costs; statements of the plans, strategies
and objectives of management for future operations; statements
regarding future economic conditions or performance; statements
regarding exploration activities; statements about political
uncertainties, dealings with regulatory authorities or dealings
with indigenous people; statements of belief; and statements of
assumptions underlying any of the foregoing. Forward-looking
statements may include the words "may," "will," "estimate,"
"intend," "continue," "believe," "expect," "plan" or "anticipate"
and other similar words. Such forward-looking statements may be
contained in the sections "Summary" and "Risk Factors," among
other places.
Although we believe that the expectations expressed in our
forward-looking statements are reasonable, actual results could
differ materially from those projected or assumed in our forward-
looking statements. Our future financial condition and results
of operations, as well as any forward-looking statements, are
subject to change and are subject to inherent risks and
uncertainties, such as those disclosed in this prospectus. All
forward-looking statements contained or incorporated by reference
in this prospectus are made as of the date of this prospectus.
Except for our ongoing obligations under the federal securities
laws, we do not intend, and we undertake no obligation, to update
any forward-looking statement. Currently known risk factors
include, but are not limited to, the factors described in this
prospectus in the section "Risk Factors." We urge you to review
carefully the section "Risk Factors" in this prospectus for a
more complete discussion of the risks of an investment in the
notes or the common stock into which the notes are convertible.
2
SUMMARY
The following summary is qualified by the more detailed
information appearing elsewhere in this prospectus or incorporated
by reference and may not contain all of the information that is
important to you.
Company Overview
We are one of the world's largest copper and gold mining
companies in terms of reserves and production. We believe we are
one of the lowest cost copper producers in the world, after taking
into account customary credits for related gold and silver
production.
Our principal operating subsidiary is PT Freeport Indonesia,
a limited liability company organized under the laws of the
Republic of Indonesia and domesticated in Delaware. PT Freeport
Indonesia explores for, develops, mines and processes ore
containing copper, gold and silver. Its operations are located in
the remote rugged highlands of the Sudirman Mountain Range in the
province of Irian Jaya (Papua), Indonesia, which is located on the
western half of the island of New Guinea. PT Freeport Indonesia
markets its concentrates containing copper, gold and silver
worldwide. During 2000, PT Freeport Indonesia's share of production
and sales totaled 1.4 billion pounds of copper and 1.9 million
ounces of gold. For 2001, PT Freeport Indonesia's share of
production and sales is expected to approximate 1.4 billion pounds
of copper and nearly 2.6 million ounces of gold. We have an 85.86
percent ownership interest in this subsidiary and the Government of
Indonesia has a 9.36 percent interest. PT Nusamba Mineral Industri,
an Indonesian company, has most of the remaining ownership interest
in PT Freeport Indonesia.
PT Freeport Indonesia's operations are conducted pursuant to
an agreement, called a Contract of Work, with the Government of
Indonesia. The Contract of Work allows us to conduct extensive
exploration, mining and production activities in a 24,700-acre area
that we call Block A. In 1988 we discovered our largest mine,
Grasberg, in Block A. Grasberg contains the largest single gold
reserve and one of the largest copper reserves of any mine in the
world. The Contract of Work also allows us to explore for minerals
in a 0.5 million-acre area that we call Block B. At December 31,
2000, PT Freeport Indonesia's share of proved and probable reserves
totaled 38.9 billion pounds of copper and 50.3 million ounces of
gold, all of which are located in Block A.
PT Freeport Indonesia's Contract of Work governs our rights
and obligations relating to taxes, exchange controls, royalties,
repatriation and other matters. The Contract of Work provides a 35
percent corporate income tax rate for PT Freeport Indonesia and a
withholding tax rate of 10 percent (based on the tax treaty between
Indonesia and the United States) on dividends and interest paid to
us by PT Freeport Indonesia. The Contract of Work also provides for
royalties on the metals that PT Freeport Indonesia sells.
Another of our operating subsidiaries, PT Irja Eastern
Minerals, which we refer to as Eastern Minerals, holds an
additional Contract of Work in Irian Jaya (Papua) covering
approximately 1.25 million acres and conducts exploration
activities under this Contract of Work. We have a 94.9 percent
ownership interest in Eastern Minerals.
In 1996, we established joint ventures with Rio Tinto plc, an
international mining company with headquarters in London, England.
One joint venture covers PT Freeport Indonesia's mining operations
in Block A. This joint venture gives Rio Tinto, through 2021, a 40
percent interest in certain assets and in production above
specified levels from operations in Block A and, after 2021, a 40
percent interest in all production in Block A. Under our joint
venture arrangements, Rio Tinto also has a 40 percent interest in
future development and exploration projects under PT Freeport
Indonesia's Contract of Work and Eastern Minerals' Contract of
Work. In addition, Rio Tinto has the option to participate in 40
percent of any of our other future exploration projects in Irian
Jaya (Papua).
Under another joint venture agreement, we conduct exploration
activities in an area covering approximately 0.5 million acres
contiguous to PT Freeport Indonesia's Block B and one of Eastern
Minerals' blocks. Rio Tinto has elected to participate in 40
percent of our interest and cost in the venture.
3
We also smelt and refine copper concentrates in Spain, and
market the refined copper products, through our wholly owned
subsidiary, Atlantic Copper, S.A. Atlantic Copper produced 639.1
million pounds of new copper anodes during 2000. In addition, PT
Freeport Indonesia has a 25 percent interest in PT Smelting, an
Indonesian company that operates a copper smelter and refinery in
Gresik, Indonesia. PT Smelting produced 383.2 million pounds of new
copper anodes during 2000.
For further information regarding the Contracts of Work, our
joint venture agreements, our smelting and refining operations, and
other aspects of our operations, we refer you to the section of our
annual report on Form 10-K for the fiscal year ended December 31,
2000 entitled "Business and Properties," which is incorporated by
reference into this prospectus.
Our principal executive offices are located at 1615 Poydras
Street, New Orleans, Louisiana 70112 and our telephone number is
(504) 582-4000.
FCX Investment Ltd.
FCX Investment Ltd. is a wholly owned finance subsidiary of
the company incorporated as a Cayman Islands exempted limited
liability company in June 2001. We established FCX Investment for
the purpose of co-issuing the notes and purchasing and pledging
U.S. government securities as security for the benefit of the
holders of the notes. See "Description of the Notes." FCX
Investment does not lease or own any material facilities or other
property or engage in any other material operations. FCX Investment
is restricted from issuing any capital stock to any person other
than the company and its subsidiaries. FCX Investment's registered
office is located at Harbour Centre, 4th Floor, George Town, Grand
Cayman, Cayman Islands, British West Indies.
4
Refinancing Transactions
We have amended our existing bank credit facilities to extend
the maturities and to provide a mechanism for financing any
obligations we may have under our guarantee of a $253.4 million
loan to PT Nusamba Mineral Industri, an Indonesian company
("Nusamba"), from a syndicate of commercial banks, including
JPMorgan Chase Bank as agent. We believe that these transactions,
together with our cash flows from operations, will enable us to
fund our planned capital expenditures and meet our debt maturities
over the next several years.
The following summarizes the terms of our amended credit
facilities. For a more complete description, see "Refinancing
Transactions," in this prospectus.
* aggregate commitments of $585.0 million, all of which will be
available to PT Freeport Indonesia and $265.0 million of which will
be available to the company;
* aggregate commitments will be $734.0 million if we are called
on to perform under our guarantee of the $253.4 million Nusamba
loan, which we gave for the purpose of facilitating minority
Indonesian ownership in our principal operating subsidiary, PT
Freeport Indonesia;
* required repayments from available cash and certain financing
proceeds and, subject to certain availability requirements,
reductions in commitments by those amounts;
* conversion to a term loan on December 31, 2003, except for a
$150.0 million revolver available for working capital purposes;
maturity on December 31, 2005;
* interest at LIBOR plus 4% with annual increases of 0.125%,
subject to potential reductions if our credit ratings improve;
* ability to fund our 7.20% senior notes due 2026, which we
expect to be required to repay in November 2003;
* limitations on the amount of preferred stock we may redeem
and, if by August 2003 we have not extended the maturity of a
specified amount of our redeemable preferred stock beyond 2005,
then we will not thereafter be permitted to redeem or pay dividends
on any of our preferred stock;
* financial covenants providing for maximum debt to EBITDA
levels and required debt service coverage ratios; and
* prohibitions on our ability to repurchase and pay dividends on
our common stock; limitations on investments, liens and capital
expenditures to specified budgets; and a requirement to implement
minimum hedging protection at certain copper prices.
5
The Offering
The following is a brief summary description of the material
terms of this offering. For a more complete description of the
terms of the notes, see "Description of the Notes" and for a
description of our common stock, see "Description of Common Stock."
Notes and
common stock offered Selling securityholders resale
of $603,750,000 aggregate principal
amount of 8 1/4% Convertible Senior Notes
due January 31, 2006 or shares of class
A or class B common stock issuable upon
conversion of the notes.
Maturity January 31, 2006
Interest 8 1/4% per annum on the principal
amount, payable semiannually on January
31 and July 31, beginning on January
31, 2002.
Conversion rights The notes are convertible, at the
option of the holder, at any time on or
prior to maturity into, at the option
of the holder, shares of class A or
class B common stock of the company at
a conversion price of $14.30 per share,
which is equal to a conversion rate of
approximately 69.9301 shares of class A
or class B common stock per $1,000
principal amount of notes. The
conversion rate is subject to
adjustment. See "Description of the
Notes - Conversion Rights."
Security FCX Investment has purchased and pledged to
the trustee under the indenture, as security
for the exclusive benefit of the holders of the
notes, $139.8 million of U.S. government
securities, which will be sufficient upon receipt
of scheduled principal and interest payments
thereon, to provide for the payment in full of
the first six scheduled interest payments due on
the notes. See "Description of the Notes
- Security."
Ranking The notes are unsecured (except as
described above under "Security") and
unsubordinated obligations and rank on
a parity in right of payment with all
our existing and future unsecured and
unsubordinated indebtedness. The
indenture under which the notes have
been issued does not prevent us or our
subsidiaries from incurring additional
indebtedness, which may be secured by
some or all of our assets, or other
obligations. As of September 30, 2001,
our secured indebtedness was $140.6
million and our unsecured and
unsubordinated indebtedness was $955.9
million. In addition, we are structured
as a holding company and conduct
substantially all of our business
operations through our subsidiaries.
The notes are effectively subordinated
to all existing and future indebtedness
and other liabilities and commitments
of our subsidiaries. As of September
30, 2001, our subsidiaries had
aggregate indebtedness of $1.6 billion.
Optional redemption We may redeem all or a portion of
the notes for cash at any time after
July 31, 2004 at the redemption prices
listed in this prospectus, plus accrued
and unpaid interest (including
liquidated damages, if any) to, but
excluding, the redemption date. See
"Description of the Notes - Redemption
of Notes at Our Option."
6
Change of control Upon a change of control event, each
holder of the notes may require us to
repurchase some or all of its notes at
a repurchase price equal to 100% of the
principal amount of the notes plus
accrued and unpaid interest. The
repurchase price is payable:
* in cash; or
* at our option, subject to the
satisfaction of certain conditions,
in our class A or class B (at the
option of the holder) common stock.
The number of shares of common stock
will equal the repurchase price
divided by 95% of the average of the
closing sale prices of the applicable
common stock for the five consecutive
trading days ending on and including
the third day prior to the repurchase
date.
See "Description of the Notes - Change
of Control Permits Purchase of Notes at
the Option of the Holder."
Use of proceeds The selling securityholders will
receive all of the proceeds from the
sale of the notes and common stock
under this prospectus. We will not
receive any of the proceeds from the
sales by any selling securityholders of
notes or the underlying common stock.
Trading The notes sold pursuant to this
prospectus will no longer be eligible
for trading on the PORTAL Market. Our
class A and class B common stock are
traded on the New York Stock Exchange
under the symbols "FCXA" and "FCX,"
respectively.
Risk Factors See "Risk Factors" and the other
information in this prospectus for a
discussion of factors you should
carefully consider before deciding to
invest in the notes.
7
SELECTED HISTORICAL CONSOLIDATED FINANCIAL AND OPERATING DATA
The following table sets forth our selected historical
consolidated financial data as of and for the nine months ended
September 30, 2001 and 2000, which have been derived from our
unaudited consolidated financial statements, and as of and for each
of the five fiscal years ended December 31, 2000, which have been
derived from our audited consolidated financial statements. EBITDA
and the operating data presented in the following table are
unaudited. The results of operations for the nine months ended
September 30, 2001 are not necessarily indicative of the results
for the full year. This data should be read in conjunction with
our full financial statements and notes thereto, and management's
discussion and analysis of financial condition and results of
operations incorporated by reference into this prospectus.
Nine Months Ended
September 30,
----------------------
2001 2000
---------- ----------
(Financial Data in Thousands,
Except Per Share Amounts)
Financial Data
Revenues $1,426,584 $1,338,777
Operating
income 449,856 273,291(a)
Net income
(loss)
applicable to
common stock 78,579 (18,564)(a)
Basic net
income (loss)
per common
share .55 (.12)(a)
Diluted net
income (loss)
per common share .54 (.12)(a)
Dividends paid
per common share - -
Basic average
shares
outstanding 143,944 156,597
Diluted average
shares
outstanding 144,907 156,597
At End of Period:
Property, plant
and equipment,
net 3,206,402 3,261,301
Total assets 4,035,684 3,981,173
Total debt 2,069,802 2,271,959
Redeemable
preferred stock 462,504 475,005
Stockholders'
equity 109,035 14,144
Other Financial Data:
Interest
expense, net 129,945 153,287
EBITDA(f) 599,280 423,712
Cash flow from
operating
activities(g) 475,117 304,921
Capital
expenditures 118,782 132,044
Cash flow
provided by
(used in)
financing
activities (196,239) (173,610)
PT Freeport
Indonesia
Operating
Data, Net of
Rio Tinto's
Interest
Copper
Production
(000s of
recoverable
pounds) 1,077,200 958,300
Sales (000s
of recoverable
pounds) 1,073,800 950,400
Average
realized price
(per pound) $.70 $.83
Net cash
production
cost cents 2.6 29.8
per pound
Gold
Production
(recoverable
ounces) 2,156,200 1,191,500
Sales
(recoverable
ounces) 2,144,600 1,197,400
Average
realized price
(per ounce) $268.70 $281.02
Years Ended December 31,
-------------------------------------------------------------
2000 1999 1998 1997 1996
---------- ---------- ---------- ---------- ----------
(Financial Data in Thousands,
Except Per Share Amounts)
Financial Data
Revenues $1,868,610 $1,887,328 $1,757,132 $2,000,904 $1,905,036
Operating
income 478,700(a) 568,242(b) 577,947(c) 657,738(d) 637,309(e)
Net income
(loss)
applicable to
common stock 39,500(a) 100,787(b) 118,317(c) 208,541(d) 174,680(e)
Basic net
income (loss)
per common
share .26(a) .62(b) .67(c) 1.06(d) .90(e)
Diluted net
income (loss)
per common share .26(a) .61(b) .67(c) 1.06(d) .89(e)
Dividends paid
per common share - - .20 .90 .90
Basic average
shares
outstanding 153,997 163,613 175,353 196,392 194,910
Diluted average
shares
outstanding 154,519 164,567 175,354 197,653 196,682
At End of Period:
Property, plant
and equipment,
net 3,248,710 3,381,465 3,504,221 3,558,736 3,106,042
Total assets 3,950,741 4,082,916 4,192,634 4,152,209 3,865,534
Total debt 2,190,025 2,148,259 2,456,793 2,388,982 1,562,916
Redeemable
preferred stock 475,005 487,507 500,007 500,007 500,007
Stockholders'
equity 37,931 196,880 103,416 278,892 675,379
Other Financial Data:
Interest
expense, net 205,346 194,069 205,588 151,720 117,291
EBITDA(f) 687,975 783,722 771,878 805,431 713,117
Cash flow from
operating
activities(g) 516,020 568,784 478,827 513,552 600,524
Capital
expenditures 176,676 160,822 292,083 584,912 492,238
Cash flow
provided by
(used in)
financing
activities (333,536) (407,937) (194,803) 50,906 (101,586)
PT Freeport Indonesia
Operating Data, Net of
Rio Tinto's Interest
Copper
Production
(000s of
recoverable
pounds) 1,388,100 1,428,100 1,427,300 1,166,500 1,118,800
Sales (000s
of recoverable
pounds) 1,393,700 1,441,000 1,419,500 1,188,600 1,097,000
Average
realized price
(per pound) $.82 $.75 $.73 $.94(h) $1.02(h)
Net cash
production
cost cents 23.0 9.2 11.0 22.0 16.3
per pound)
Gold
Production
(recoverable
ounces) 1,899,500 2,379,100 2,227,700 1,798,300 1,695,200
Sales
(recoverable
ounces) 1,921,400 2,423,900 2,190,300 1,888,100 1,698,900
Average
realized price
(per ounce) $276.06 $276.53 $290.57 $346.14(i) $390.96(i)
8
Nine Months Ended
September 30,
----------------------
2001 2000
---------- ----------
(Financial Data in Thousands,
Except Per Share Amounts)
PT Freeport
Indonesia, 100%
Operating Data
Ore milled
(metric tons
per day) 238,100 223,900
Average ore
grade
Copper(percent) 1.04 .99
Gold (grams
per metric ton) 1.53 .92
Gold (ounce
per metric ton) .049 .030
Recovery rates
(percent)
Copper 87.1 87.1
Gold 89.0 83.7
Copper (000s of
recoverable
pounds)
Production 1,237,200 1,112,600
Sales 1,233,600 1,103,900
Gold
(recoverable
ounces)
Production 2,816,200 1,470,800
Sales 2,798,700 1,476,100
Years Ended December 31,
-------------------------------------------------------------
2000 1999 1998 1997 1996
---------- ---------- ---------- ---------- ----------
(Financial Data in Thousands,
Except Per Share Amounts)
PT Freeport
Indonesia, 100%
Operating Data
Ore milled
(metric tons
per day) 223,500 220,700 196,400 128,600 127,400
Average ore
grade
Copper(percent) 1.07 1.12 1.30 1.37 1.35
Gold (grams
per metric ton) 1.10 1.37 1.49 1.51 1.52
Gold (ounce
per metric ton) .035 .044 .048 .049 .049
Recovery rates
(percent)
Copper 88.2 84.6 86.9 85.4 83.8
Gold 84.3 83.7 85.3 81.4 77.1
Copper (000s of
recoverable
pounds)
Production 1,636,700 1,630,700 1,721,300 1,166,500 1,118,800
Sales 1,643,500 1,647,800 1,706,700 1,188,600 1,097,000
Gold
(recoverable
ounces)
Production 2,362,600 2,993,100 2,839,700 1,798,300 1,695,200
Sales 2,387,300 3,047,100 2,774,700 1,888,100 1,698,900
_____________________
(a) Includes net charges totaling $12.4 million ($8.0 million to
net income or $0.05 per share) consisting of $6.0 million for
contribution commitments to support small business development
programs within Irian Jaya (Papua) and $7.9 million for
personnel severance costs, partly offset by a $1.5 million
gain for the reversal of stock appreciation rights and related
costs caused by the decline in our common stock price.
(b) Includes charges totaling $8.8 million ($5.7 million to net
income or $0.03 per share) consisting of $3.6 million for an
early retirement program, $1.4 million for costs of stock
appreciation rights caused by the increase in our common stock
price and $3.8 million for certain nonrecurring costs.
(c) Includes net charges totaling $9.1 million ($4.4 million to
net income or $0.03 per share) associated with the sale of
corporate aircraft.
(d) Includes a $25.3 million gain ($12.3 million to net income or
$0.06 per share) for the reversal of stock appreciation rights
and related costs caused by the decline in our common stock
price.
(e) Includes charges totaling $17.4 million ($8.0 million to net
income or $0.04 per share) consisting of $12.7 million for
costs of stock appreciation rights caused by the increase in
our common stock price, $3.0 million for costs related to a
civil disturbance and $1.7 million for an early retirement
program.
(f) EBITDA represents earnings before interest expense, income
taxes, depreciation and amortization. EBITDA does not
represent and should not be considered as an alternative to
net income or cash flow from operations as determined by
generally accepted accounting principles, and EBITDA does not
necessarily indicate whether cash flow will be sufficient for
cash requirements. EBITDA may not necessarily be comparable
to similarly titled measures reported by other companies as it
is not calculated identically by all companies.
(g) Cash flow from operating activities represents net income
before non-cash charges including depreciation and
amortization, deferred income taxes, minority interests' share
of net income, equity losses in PT Smelting and other non-cash
costs. Changes in working capital also impact cash flow from
operating activities.
(h) Amounts were $0.90 in 1997 and $0.97 in 1996 before hedging
adjustments.
(i) Amounts were $326.08 in 1997 and $382.62 in 1996 before
hedging adjustments.
9
RISK FACTORS
An investment in any security involves risks. Accordingly,
before purchasing any securities offered by this prospectus, you
should carefully consider the following factors, as well as the
other information about us and our business that is contained or
incorporated by reference in this prospectus and in any
accompanying prospectus supplement. This prospectus includes,
and any accompanying prospectus supplement may include, "forward-
looking statements" within the meaning of the federal securities
laws. Forward-looking statements are all statements other than
statements of historical facts, such as statements regarding
anticipated production volumes, sales volumes, ore grades,
commodity prices, reserve estimates, capital expenditures,
environmental reclamation and closure costs, political, economic
and social conditions in our areas of operations, and exploration
efforts and results. We caution you that these statements are
not guarantees of future performance, and our actual results may
differ materially from those projected, anticipated or assumed in
the forward-looking statements. Important factors that can cause
our actual results to differ materially from those anticipated in
the forward-looking statements include the following:
Risks Related to Our Business
The terrorist attacks in the United States on September 11, 2001,
as well as the United States-led response and the potential for
additional future terrorist acts, have created economic and
political uncertainties that could have a material adverse effect
on our business and the prices of our notes, common stock and
other securities.
The terrorist attacks that took place in the United States
on September 11, 2001, as well as the United States-led response
to such attacks and the potential for additional future terrorist
acts, have caused uncertainty in the world's financial and
insurance markets and may significantly increase political,
economic and social instability in the geographic areas in which
we operate, including the Republic of Indonesia where our primary
operating assets are located. Moreover, there have been anti-
American demonstrations in certain sections of Indonesia
reportedly led by radical Islamic activists. Radical activists
have also threatened to attack foreign assets and have called for
the expulsion of United States and British citizens and companies
from Indonesia.
It is possible that further acts of terrorism may be
directed against the United States domestically or abroad, and
such acts of terrorism could be directed against properties and
personnel of companies such as ours. The attacks and the
resulting economic and political uncertainties, including the
potential for further terrorist acts, may cause the premiums
charged for our insurance coverages to increase dramatically and
may cause some coverages to be unavailable altogether. These
developments may materially and adversely affect our business and
profitability and the prices of our securities in ways we cannot
predict at this time.
Because our primary operating assets are located in the Republic
of Indonesia, our business may be adversely affected by
Indonesian political, economic and social uncertainties beyond
our control, in addition to the usual risks associated with
conducting business in a foreign country.
Maintaining a good working relationship with the Indonesian
government is important to us because all of our mining
operations are located in Indonesia and are conducted pursuant to
Contracts of Work with the Indonesian government. For a
discussion of the risks relating to our Contracts of Work, see
the risk factor below.
Indonesia continues to face political and economic
uncertainties, including separatist movements and civil and
religious strife in a number of provinces. In particular, social,
economic and political instability in the province of Irian Jaya
(Papua), where our mining operations are located, could have a
material adverse impact on us if this instability results in
damage to our property or interruption of our activities.
With the approval of the Indonesian government, we have
temporarily suspended our field exploration activities outside of
Block A due to security issues and regulatory issues involving a
possible conflict between our mining and exploration rights under
our Contract of Work and the requirements of certain recently
enacted Indonesian forestry laws. In August 1998, we suspended
operations for three days at our Grasberg mine in response to a
wildcat work stoppage (not authorized by the workers' union) by a
group of workers, a majority of whom were
10
employees of our
contractors. The workers cited employment issues as the reasons
for their work stoppage. In March 1996, local people engaged in
acts of vandalism that caused approximately $3.0 million of
damages to our property and caused us to close the Grasberg mine
and mill for three days as a precautionary measure.
Several separatist groups are opposing Indonesian rule over
Irian Jaya (Papua) and have sought political independence for the
province. In response to the demands for political independence
from Indonesia, new regional autonomy laws became effective
January 1, 2001. However, the manner in which these new autonomy
laws will be implemented and the degree of political and economic
autonomy that is being provided to individual provinces,
including Irian Jaya (Papua), is uncertain and is a current issue
in Indonesian politics.
In Irian Jaya (Papua), there have been sporadic attacks on
civilians by separatists and sporadic but highly publicized
conflicts between separatists and the Indonesian military. For
example, on September 29, 2001, a group of separatists set fire
to facilities and took over an airfield in Ilaga, Irian Jaya
(Papua), which is approximately 50 miles northeast of our mining
operations and separated by a rugged, 14,000-foot mountain range
through which there are no roads. The separatists occupied the
airfield for three days, after which Indonesian security forces
successfully reclaimed the airfield.
In addition, we are also subject to the usual risks
associated with conducting business in a foreign country,
including the risk of expropriation, forced modification of
existing contracts, changes in the country's laws or policies,
including laws or policies relating to taxation, royalties,
imports, exports and currency, and the risk of having to submit
to the jurisdiction of a foreign court or having to enforce the
judgment of a foreign court or arbitration panel against a
sovereign nation within its own territory.
Our Contracts of Work are subject to termination if we do not
comply with our contractual obligations and, if a dispute arises,
we may have to submit to the jurisdiction of a foreign court or
panel.
PT Freeport Indonesia's and Eastern Minerals' Contracts of
Work were entered into under Indonesia's 1967 Foreign Capital
Investment Law, which provides guarantees of remittance rights
and protection against nationalization. Our Contracts of Work
can be terminated by the Government of Indonesia if we do not
satisfy our contractual obligations, which include the payment of
royalties and taxes to the government and the satisfaction of
certain mining, environmental, safety and health requirements.
Indonesian government officials have periodically raised
questions regarding our compliance with Indonesian environmental
laws and regulations and the terms of the Contracts of Work. In
order to address these questions, the Government of Indonesia
formed a fact-finding team in 2000 that reviewed our compliance
with all aspects of PT Freeport Indonesia's Contract of Work. It
is uncertain if or when the Indonesian government will release
its report on its investigation. In addition, we cannot assure
you that the Indonesian government's report, if and when
released, will conclude that we are in compliance with all of the
provisions of PT Freeport Indonesia's Contract of Work.
In addition, in recent years, certain government officials
and others in Indonesia have called into question the validity of
contracts entered into by the Government of Indonesia prior to
October 1999, including PT Freeport Indonesia's Contract of Work,
which was signed in December 1991. We cannot assure you that the
validity of, or our compliance with the terms of, the Contracts
of Work will not be challenged for political or other reasons.
PT Freeport Indonesia's and Eastern Minerals' Contracts of Work
require that disputes with the Indonesian government be submitted
to international arbitration. Notwithstanding the international
arbitration provision, if a dispute arises under the Contracts of
Work, we face the risk of having to submit to the jurisdiction of
a foreign court or having to enforce the judgment of a foreign
court or arbitration panel against Indonesia within its own
territory.
We have guaranteed an obligation of an Indonesian entity, and
have lent funds to the entity, and the entity may not be able to
pay its debts.
In 1997 we guaranteed a $253.4 million loan from a syndicate
of commercial banks, including JPMorgan Chase Bank as agent, to
PT Nusamba Mineral Industri. Nusamba, an Indonesian company, used
the loan proceeds plus $61.6 million of cash, for a total of
$315.0 million, to purchase stock in PT Indocopper Investama, a
company whose only significant asset is 9.36 percent of PT
Freeport Indonesia's stock. Nusamba owns approximately 51 percent
of PT Indocopper Investama's stock and we own approximately 49
percent. We guaranteed the Nusamba
11
loan for the purpose of
facilitating minority Indonesian ownership in our principal
operating subsidiary, PT Freeport Indonesia. Except for
Nusamba's indirect ownership of PT Freeport Indonesia stock, we
are not affiliated with Nusamba.
The loan is secured by a pledge of the PT Indocopper
Investama stock owned by Nusamba and is due in March 2002.
Nusamba has not informed us of its intention or ability to repay
the loan at maturity and we do not know whether Nusamba has the
financial capability to repay or refinance the loan at maturity.
The ability of an Indonesian borrower such as Nusamba to access
capital for a refinancing of this obligation appears limited.
Therefore, it is uncertain whether Nusamba will be able to pay
its bank debt at maturity. We also agreed to lend Nusamba any
amounts necessary to cover shortfalls between the interest
payments on the loan and dividends received by Nusamba on the PT
Indocopper Investama stock. At September 30, 2001, we had loaned
Nusamba $65.3 million, also due in March 2002, for this purpose.
The PT Indocopper Investama stock is the only significant
asset of Nusamba. The current trading price of our common stock
would indicate that the estimated current value of the PT
Indocopper Investama stock would be approximately $200 million,
which is significantly below the $318.7 million aggregate
principal amount of the commercial bank loan and our loans to
Nusamba. Other approaches to valuations, such as discounted cash
flow and financial analyses of reserves, earnings and cash flows,
might result in different valuations. If Nusamba does not pay
the commercial bank loan when due, we will be obligated to pay
the loan.
Servicing our debt will require a significant amount of cash, and
our ability to generate sufficient cash depends on many factors,
some of which are beyond our control.
Our ability to make payments on and to refinance our debt
depends on our ability to generate sufficient cash flow. This, to
a significant extent, is subject to commodity prices and general
economic, financial, regulatory, political and other factors that
are beyond our control. In addition, our ability to borrow funds
in the future to service our debt will depend on our meeting the
financial covenants in our amended bank credit facilities and
other debt agreements we may have in the future. Future
borrowings may not be available to us under our amended bank
credit facilities or otherwise in amounts sufficient to enable us
to pay our debt or to fund other liquidity needs. As a result, we
may need to refinance all or a portion of our debt on or before
maturity. Any inability to generate sufficient cash flow or
refinance our debt on favorable terms could have a material
adverse effect on our financial condition.
Political and economic conditions in Indonesia have had a
negative effect on our credit ratings. The major credit rating
agencies have generally had a policy of limiting the credit
ratings of companies with operations limited to a particular
country to the credit rating for the sovereign debt of that
country. The current sovereign credit ratings of Indonesia are B3
by Moody's Investors Service and CCC by Standard & Poor's and our
credit ratings on our senior unsecured debt are currently B3 by
Moody's Investors Service and CCC by Standard & Poor's.
Our current credit ratings have an impact on the
availability and cost of capital to us. As a result, in
connection with our amended bank credit facilities, we have
agreed to apply our future cash flows, after servicing scheduled
debt payments, funding permitted capital expenditures and paying
operating costs, to reducing amounts owed to the banks. Although
our amended credit facilities have no restrictions on our planned
exploration activities, funding any major new expansion projects
with respect to any of our properties would require new sources
of capital. The availability and cost of capital for projects in
Indonesia is uncertain because of global financial markets'
assessment of Indonesia's political and economic conditions.
Covenants in our amended credit facilities impose restrictions on
us.
Our amended bank credit facilities:
* prohibit the repurchase of, and payment of dividends on, our
common stock;
* limit, among other things, our ability to:
* redeem and pay dividends on our preferred stock in certain
circumstances;
12
* make investments;
* engage in transactions with affiliates; and
* create liens on our assets;
and
* require us to maintain specified financial ratios and
satisfy financial condition tests.
Events beyond our control, including changes in general
economic and business conditions, may affect our ability to
satisfy these covenants, which could result in a default under
our amended bank credit facilities. If an event of default under
our amended credit facilities occurs, the banks could elect to
declare all amounts outstanding thereunder, together with accrued
interest, to be immediately due and payable. An event of default
under our amended bank credit facilities may also give rise to an
event of default under our existing and future debt agreements.
Our mining operations create difficult and costly environmental
challenges, and future changes in environmental laws, or
unanticipated environmental impacts from our operations, could
require us to incur increased costs.
Mining operations on the scale of our operations in Irian
Jaya (Papua) involve significant environmental challenges. Our
primary challenge is to dispose of the large amount of crushed
and ground rock material, called tailings, that results from the
process by which we physically separate the copper, gold and
silver from the ore that we mine. Under our tailings management
plan, the river system near our mine transports the tailings to
the lowlands where deposits of the tailings and natural sediments
are controlled through a levee system for future revegetation and
reclamation. We incurred costs of $8.2 million in 2000, $11.7
million in 1999 and $8.0 million in 1998 for our tailings
management plan.
Another of our major environmental challenges is managing
overburden, which is the rock that must be moved aside in order
to reach the ore in the mining process. In the presence of air,
water and naturally occurring bacteria, some overburden can cause
acid rock drainage, or acidic water containing dissolved metals
which, if not properly managed, can have a negative impact on the
environment.
Certain Indonesian governmental officials have from time to
time raised issues with respect to our tailings management plan
and overburden management plan, including a suggestion that a
pipeline system rather than our current system be implemented for
tailings disposal. Our ongoing assessment of tailings management
has identified significant unresolved technical, environmental
and economic issues associated with a pipeline system. Based on
preliminary studies, we do not believe that a pipeline system is
practicable. We anticipate that we will continue to spend
significant financial and managerial resources on environmental
compliance. In addition, changes in Indonesian environmental
laws or unanticipated environmental impacts from our operations
could require us to incur significant additional costs.
The volume and grade of the reserves we recover and our rates of
production may be more or less than anticipated.
Our reserve amounts are determined in accordance with
established mining industry practices and standards, but are
estimates only. Our mines may not conform to standard geological
expectations. Because ore bodies do not contain uniform grades of
minerals, our metal recovery rates will vary from time to time,
which will result in variations in the volumes of minerals that
we can sell from period to period. Some of our reserves may
become unprofitable to develop if there are unfavorable long-term
market price fluctuations in copper and gold, or if there are
significant increases in our operating and capital costs. In
addition, our exploration programs may not result in the
discovery of additional mineral deposits that we can mine
profitably.
Our net income can vary significantly with fluctuations in the
market prices of copper and gold.
Our revenues are derived primarily from the sale of copper
concentrates, which also contain significant
13
amounts of gold, and
from the sale of copper cathodes, copper wire rod and copper
wire. Most of our copper concentrates are sold under long-term
contracts, but the selling price is based on world metal prices
at or near the time of shipment and delivery.
Copper and gold prices have fluctuated widely in 2001,
primarily due to the slowdown in global economic activity and the
economic and political uncertainties created by the terrorist
attacks in the United States on September 11, 2001. During 2001,
the daily closing price for copper on the London spot market
ranged from 60 cents per pound to 83 cents per pound and the
daily closing price for gold on the London spot market ranged
from $256 per ounce to $293 per ounce.
World metal prices for copper have historically fluctuated
widely and are affected by numerous factors beyond our control,
including:
* the strength of the United States economy and the economies
of other industrialized and developing nations;
* available supplies of copper from mine production and
inventories;
* sales by holders and producers of copper;
* demand for industrial products containing copper; and
* speculation.
World gold prices have also historically fluctuated widely
and are affected by numerous factors beyond our control,
including:
* the strength of the United States economy and the economies
of other industrialized and developing nations;
* global or regional political or economic crises;
* the relative strength of the United States dollar and other
currencies;
* expectations with respect to the rate of inflation;
* interest rates;
* sales of gold by central banks and other holders;
* demand for jewelry containing gold; and
* speculation.
Any material decrease in market prices of copper or gold
would have a material adverse impact on our results of operations
and financial condition.
In addition to the usual risks encountered in the mining
industry, we face additional risks because our operations are
located an difficult terrain in a very remote area of the world.
Our mining operations are located in steeply mountainous
terrain in a very remote area in Indonesia. These conditions have
required us to overcome special engineering difficulties and to
develop extensive infrastructure facilities. In addition, the
area receives considerable rainfall, which has led to periodic
floods and mud slides. The mine site is also in an active seismic
area and has experienced earth tremors from time to time. In
addition to these special risks, we are also subject to the usual
risks associated with the mining industry, such as the risk of
14
encountering unexpected geological conditions that may result in
cave-ins and flooding of mine areas. Our insurance coverages may
not be sufficient to cover an unexpected natural or operating
disaster. Our insurance policies do not provide coverage for
damages and losses caused by war. Moreover, in view of the
September 11, 2001 events, our insurance policies in the future
may exclude coverage for damages and losses caused by terrorist
acts.
Movements in foreign currency exchange rates or interest rates
could have a negative effect on our operating results.
All of our revenues are denominated in U.S. dollars.
However, some of our costs and some of our asset and liability
accounts are denominated in Indonesian rupiah, Australian dollars
or Spanish pesetas/euros. As a result, our profitability is
generally adversely affected when the U.S. dollar weakens against
these foreign currencies.
The Indonesian rupiah/U.S. dollar exchange rate has been
volatile during 2001. The rupiah/U.S. dollar daily closing
exchange rate ranged from 8,470 rupiahs per U.S. dollar to 11,980
rupiahs per U.S. dollar during 2001, and on December 31, 2001,
the closing exchange rate was 10,350 rupiahs per U.S. dollar.
The Australian dollar/U.S. dollar and euro/U.S. dollar exchange
rates have also fluctuated substantially in 2001. During 2001,
the Australian dollar/U.S. dollar daily closing exchange rate
ranged from $0.48 per Australian dollar to $0.57 per Australian
dollar and the euro/U.S. dollar daily closing exchange rate
ranged from $0.84 per euro to $0.96 per euro. On December 31,
2001, the closing exchange rates were $0.51 per Australian dollar
and $0.89 per euro.
From time to time we have in the past and may in the future
implement currency hedges intended to reduce our exposure to
changes in foreign currency exchange rates. However, our hedging
strategies may not be successful, and any of our unhedged foreign
exchange payment requirements will continue to be subject to
market fluctuations. In addition, our amended bank credit
facilities are based on fluctuating interest rates. Accordingly,
an increase in interest rates could have an adverse impact on our
results of operations and financial condition.
Because we are primarily a holding company, our ability to pay
our debts depends upon the ability of our subsidiaries to pay us
dividends and to advance us funds. In addition, our ability to
participate in any distribution of our subsidiaries' assets is
generally subject to the prior claims of the subsidiaries'
creditors.
Because we conduct business primarily through PT Freeport
Indonesia, our major subsidiary, and other subsidiaries, our
ability to pay our debts depends upon the earnings and cash flow
of PT Freeport Indonesia and our other subsidiaries and their
ability to pay us dividends and to advance us funds. Contractual
and legal restrictions applicable to our subsidiaries could also
limit our ability to obtain cash from them. Our rights to
participate in any distribution of our subsidiaries' assets upon
their liquidation, reorganization or insolvency would generally
be subject to the prior claims of the subsidiaries' creditors,
including trade creditors and preferred stockholders, if any.
Risks Related to the Notes
Our stock price has been and may continue to be volatile.
Our mining operations are conducted at a single location in
a country that is considered to have significant political risks
and, unlike more diversified mining companies, we mine only
copper, gold and silver from a single location. In addition, we
have significant debt. As a result, our stock price has
historically been more volatile than the stock prices of many
other companies in the mining industry. Moreover, the trading
price of our class A and class B common stock has been and may
continue to be subject to large fluctuations and, therefore, the
trading price of the notes may fluctuate significantly, which may
result in losses to investors. The price of our class A and class
B common stock may fluctuate in response to a number of events
and factors, including:
* current events affecting the political, economic and
social situation in Indonesia;
* trends in the mining industry and the markets in which
we operate;
15
* changes in the market price of gold and copper;
* changes in financial estimates and recommendations by
securities analysts;
* quarterly variations in operating results;
* the operating and stock price performance of other
mining companies; and
* purchases or sales of blocks of our class A or class B
common stock.
An active trading market for the notes may not develop.
Upon their original issuance, the notes became eligible for
trading on The PORTAL Market. The notes sold pursuant to this
prospectus, however, will no longer be eligible for trading on
The PORTAL Market. Although we intend to apply for listing on
the New York Stock Exchange of the notes sold pursuant to this
prospectus, we cannot assure you that an active trading market
for the notes will develop or be sustained. If an active market
for the notes fails to develop or be sustained, the notes could
trade at prices that may be lower than the initial offering price
of the notes. Whether or not the notes will trade at lower prices
depends on many factors, including:
* prevailing interest rates and the markets for similar
securities;
* the market price of our class A and class B common
stock;
* general economic conditions; and
* our financial condition, historic financial performance
and future prospects.
Political and economic conditions in Indonesia have had a
negative effect on our credit ratings and any decline in the
rating of the notes may cause their trading price to fall.
The major credit rating agencies have generally had a policy
of limiting the credit ratings of companies with operations
limited to a particular country to the credit rating for the
sovereign debt of that country. As a result of this policy,
Standard & Poor's has assigned to the notes a rating of CCC,
which is its current sovereign credit rating for Indonesia. If
Moody's Investors Service or another major credit rating agency
rates the notes, they may assign a low rating. Rating agencies
may also lower ratings on the notes in the future and, if such a
reduction is made, the trading price of the notes would likely
decline.
The notes have no sinking fund.
We will not contribute funds to a separate account, commonly
known as a sinking fund, to make interest or principal payments
on the notes, although U. S. government securities secure the
first six scheduled interest payments on the notes. See
"Description of the Notes - Security." Therefore, you will have
to rely on our cash flow from operations and our other sources of
funds for repayment. If our cash flow from operations and our
other sources of funds are not sufficient to make interest and
principal payments on the notes, then you may lose all or part of
your investment.
Investors may be adversely affected by future debt and equity
offerings.
Our amended credit facilities provide that if we raise
proceeds through future debt or equity issuances, 75% of the
proceeds from debt issuances and 50% of the proceeds from equity
issuances must be used to pay outstanding borrowings under the
amended credit facilities and the remainder may be used by us for
general corporate purposes. See "Refinancing Transactions -
Amended Credit Facilities - Mandatory Repayments and Reductions
and Commitments." Any such debt or equity issuances, if
undertaken, may increase our outstanding debt and interest costs
or dilute the value of our outstanding stock and, as a result,
may adversely affect the trading prices of the notes
16
and underlying class A and class B common stock.
REFINANCING TRANSACTIONS
We have amended our existing credit facilities to extend the
maturities and to provide a mechanism for financing any
obligations we may have resulting from our guarantee of the
commercial bank loan to PT Nusamba Mineral Industri. We believe
that our amended credit facilities together with our cash flows
from operations will enable us to fund our ongoing capital
expenditures and meet our debt maturities over the next several
years.
In addition to the amended credit facilities and note
issuance of the notes (collectively the "refinancing
transactions"), we intend to refinance or restructure our series
I gold-denominated preferred stock to extend its mandatory
redemption date. Our series I gold-denominated preferred stock,
which is represented by depositary shares each representing 0.05
shares of a share of our gold-denominated preferred stock, is
traded on the New York Stock Exchange under the symbol "FCX Pr
b." The quarterly dividend and the final redemption payment on
the underlying depositary shares are determined by the then-
current market price of gold.
Previous Credit Facilities and Maturities
Our previously existing bank credit facilities provided
total availability of $1.0 billion, subject to a borrowing base
that was redetermined annually. The facilities were scheduled to
mature in December 2002. The outstanding balance at September 30,
2001 was $214.0 million, with $336.0 million available to PT
Freeport Indonesia and $450.0 million available to the company
and PT Freeport Indonesia.
The $253.4 million bank loan to Nusamba that we guarantee
matures in March 2002. It is uncertain whether Nusamba will be
able to pay its debt at maturity. If we are required to perform
under our guarantee of Nusamba's debt, we will borrow the amount
necessary to finance our guarantee obligation through a term loan
under our amended credit facilities. Other significant
maturities through 2006 include the expected repayment of the
senior notes of $250.0 million in 2003 and $200.0 million in
2006, and the redemption of preferred stock totaling
approximately $185.4 million in 2003 and $136.0 million in 2006,
based on gold and silver prices as of September 28, 2001.
Amended Credit Facilities
The following summarizes the terms of our amended credit
facilities.
Commitments and Availability
The aggregate commitments under the amended credit
facilities total $734.0 million including $253.4 million if we
are required to perform in March 2002 under the Nusamba
guarantee, leaving $480.6 million currently available.
Nusamba indirectly owns 4.7% of PT Freeport Indonesia
through its approximate 51% ownership of PT Indocopper Investama.
To secure its commercial bank loan, Nusamba pledged its ownership
in PT Indocopper Investama. If Nusamba does not pay the loan when
due and we are required to perform under the guarantee, we would
fund the $253.4 million obligation under the amended credit
facilities and would seek to recover the PT Indocopper Investama
stock as provided by the Nusamba financing documents, which are
governed by Indonesian law.
Maturities and Term Loan Conversion
Amounts that we borrowed under our amended credit facilities
mature on December 31, 2005. On December 31, 2003, all revolving
loans will become term loans, except for a $150.0 million
revolving loan for working capital purposes. Scheduled payments
of interest and principal will not be required under these term
loans, which will be repaid instead through periodic sweeps of
our excess cash flows remaining after scheduled debt
17
payments,
permitted capital expenditures and payment of operating costs.
Any remaining balance on the term loans will be due on December
31, 2005. Any outstanding balance on the remaining $150.0
million revolving loan will be due on the earlier of December 31,
2005 or one year following repayment in full of the term loans.
We are able to use the amounts available under the amended
facilities to satisfy interest and principal requirements on our
other debt when due. We are generally required to use all
available cash flows remaining after debt service payments,
permitted capital expenditures and payment of operating costs to
reduce amounts outstanding under the amended facilities. Our
amended facilities do not restrict our planned exploration
activities and do not directly restrict our ability to use funds
for development activities. The amended credit facilities,
however, impose annual limitations on our capital expenditures,
which limit the amount of funds that we can use for development
activities.
Mandatory Repayments and Reductions in Commitments
If we raise proceeds through future offerings, 25% of the
proceeds from debt issuances and 50% of the proceeds from equity
issuances will be available to us for general corporate purposes,
provided that the balance of such financing proceeds are used to
repay borrowings and to reduce commitments under our amended
credit facilities. All other proceeds from financings and all
available cash of the company and PT Freeport Indonesia will be
used to pay outstanding borrowings under the amended credit
facilities and the commitments under the facilities will be
reduced by those amounts, except as necessary to maintain our
availability to repay $250.0 million for the 7.20% senior notes
and to preserve the $150.0 million revolving facility that will
continue to be available through December 31, 2005.
Interest Rates and Fees
Interest rates on all loans under the amended facilities,
including any amounts used to fund our obligations under the
Nusamba guarantee, are LIBOR plus 4.0% with annual increases of
0.125% on each anniversary of the closing of the amended
facilities. As of December 31, 2001, the interest rate on the
amended facilities was 5.9% based on a LIBOR rate of 1.9%.
Series I Gold-Denominated Preferred Stock Due in 2003
Under the amended credit facilities, we have limitations on
the amount of preferred stock we may redeem and, if by August
2003 we have not extended the maturity of 80% of the series I
gold-denominated preferred stock beyond 2005, we will not
thereafter be permitted to redeem or pay dividends on any of our
preferred stock. Therefore, prior to the August 2003 mandatory
redemption date of the depositary shares representing our series
I gold-denominated preferred stock, we intend to refinance or
restructure our redemption obligation as to at least 80% of the
outstanding 6.0 million depositary shares. On January 3, 2002,
the closing price of the depositary shares representing our
series I gold-denominated preferred stock as reported on the New
York Stock Exchange was $23.80 per depositary share.
Other Covenants
The covenants under the amended credit facilities include
(a) a minimum consolidated debt service coverage ratio of
1.25:1.0 through December 31, 2002, and thereafter 1.5:1.0, and
(b) a maximum ratio of consolidated debt to EBITDA equal to
4.25:1.0 through September 30, 2002, and thereafter 3.5:1.0. The
covenants also include prohibitions on common stock dividends and
common stock repurchases, prohibitions on changes in control of
the company or PT Freeport Indonesia, limitations on capital
expenditures to specified budgets, limitations on investments,
limitations on liens and limitations on transactions with
affiliates. In addition, the covenants include a requirement
that we implement minimum hedging protection for copper prices
under certain circumstances. These covenants will require us to
hedge at least 33% of our exposure to declines in copper prices
for a period of up to one year if put options providing for the
sale of copper at a floor price of at least $0.90 per pound
become available at a cost of $0.02 or less per pound of copper.
These put options would protect operating cash flow from the
impact of declines in copper prices below the floor price while
continuing to provide full participation at higher prices. The
price of copper would have to increase substantially for put
options to be
18
available at this price.
Security and Guarantees
The obligations of the company and PT Freeport Indonesia
under the amended credit facilities are secured by a first
security lien on over 80% of PT Freeport Indonesia's total assets
(the remaining assets secure other obligations) and by the
company's pledge of (1) 50.1% of the outstanding capital stock of
PT Freeport Indonesia, (2) the approximate 49% of the outstanding
capital stock of PT Indocopper Investama owned by us and (3) the
approximate 51% of the outstanding capital stock of PT Indocopper
Investama securing the original Nusamba loan, if acquired by us.
PT Freeport Indonesia's obligations continue to be secured by its
pledge of its rights under the Contract of Work. In addition, PT
Freeport Indonesia has guaranteed the company's obligations under
the amended credit facilities.
Revised Debt and Redeemable Preferred Stock Maturities
Following is a summary of our debt and redeemable preferred
stock maturities under the amended credit facilities, including
the Nusamba loan maturity, based on loan balances as of September
30, 2001, and gold and silver prices (which determine the
preferred stock redemption amounts) as of September 28, 2001:
2001 2002 2003 2004 2005 2006 Thereafter
----- ------ ------ ----- ------ -------- ------
(In Millions)
Bank credit
facilities(a) $ - $ - $ - $ - $ 214.0 $ - $ -
Infrastructure
financings and 16.4 112.5 56.9 62.3 45.6 47.7 187.1
equipment loans
7.20% Senior
Notes due 2026(b) - - 250.0 - - - -
7.50% Senior
Notes due 2006(c) - - - - - 200.0 -
8 1/4% Convertible
Senior Notes
due 2006 - - - - - 603.8 -
Atlantic Copper
facilities and
other 3.0 75.6 20.1 10.1 24.1 24.1 116.5
----- ------ ------ ----- ------ -------- ------
Total debt
maturities 19.4 188.1 327.0 72.4 283.7 875.6 303.6
Nusamba loan
guarantee(d) - - - - 253.4 - -
Redeemable
preferred
stock(e) - 10.9 185.4 10.9 10.9 136.0 -
----- ------ ------ ----- ------ -------- ------
Total
maturities $19.4 $199.0 $512.4 $83.3 $548.0 $1,011.6 $303.6
===== ====== ====== ===== ====== ======== ======
__________
(a) Reflects December 2005 maturity based on amended bank credit
facilities closed on October 19, 2001.
(b) Although due in 2026, the holders of the 7.20% senior notes may, and
are expected to, elect early repayment in November 2003.
(c) Due November 15, 2006, after the maturity of the convertible senior
notes.
(d) If we are required to perform under this guarantee in March 2002, we
intend to fund the $253.4 million obligation under our amended credit
facilities.
(e) Represents $10.9 million each year for our silver-denominated
preferred stock, $174.5 million in August 2003 for our series I gold-
denominated preferred stock, and $125.1 million in February 2006 for
our series II gold-denominated preferred stock.
Increased Cost of Debt
In connection with the amended bank credit facilities, we
incurred premiums, fees and expenses that resulted in a cash
outlay of approximately $19.0 million. This cash outlay, together
with our refinancing
19
transactions, results in an expected
approximate 125 basis-point increase in our average borrowing
cost.
20
USE OF PROCEEDS
We received $442.9 million from the initial sale of the
convertible notes, after deducting fees and amounts required to
fund an escrow reserve for interest payments. We used these
funds to reduce the amount owed under our revolving bank loans.
The selling securityholders will receive all of the proceeds
from the sale of the notes and common stock under this
prospectus. We will not receive any of the proceeds from the
sale by any selling shareholders of notes or the underlying
common stock.
DIVIDEND POLICY
In December 1998, in response to low commodity market prices
for copper and gold, our board of directors authorized the
elimination of the regular quarterly cash dividend on our common
stock. Our amended bank credit facilities prohibit the payment
of dividends on our common stock. As a result, for the
foreseeable future, we do not anticipate declaring or paying any
cash dividends on our common stock. Any future determination to
declare or pay cash dividends will be made by our board of
directors in light of our credit facilities, earnings, financial
position, capital requirements and such other factors as our
board of directors deems relevant at such time.
RATIO OF EARNINGS TO FIXED CHARGES
Our ratio of earnings to fixed charges was as follows for
the years and periods indicated.
Nine months ended
Years ended December 31, September 30,
------------------------------------ -----------------
1996 1997 1998 1999 2000 2000 2001
---- ---- ---- ---- ---- ---- ----
4.5x 3.8x 2.5x 2.9x 2.3x 1.8x 3.3x
For this calculation, earnings consist of (1) income from
continuing operations before income taxes, (2) minority interests
and (3) fixed charges. Fixed charges include interest and that
portion of rent our management believes to be representative of
interest.
21
DESCRIPTION OF THE NOTES
The notes were issued under an indenture between us and The
Bank of New York, as trustee, dated August 7, 2001. The terms of
the notes include those provided in the indenture and those
provided in the registration rights agreement, which we entered
into with the initial purchaser of the notes. As used in this
description, the words "we," "us," or "our" refers to Freeport-
McMoRan Copper & Gold Inc. and FCX Investment Ltd., as co-
obligors on the notes, and the name "Freeport-McMoRan" refers to
Freeport-McMoRan Copper & Gold Inc.
The following description of the notes is not complete and
is subject to, and qualified in its entirety by reference to, the
notes, indenture and registration rights agreement. We will
provide you with a copy of any of these documents without charge
upon your request.
General
The notes are our general unsecured (except to the extent
described under "Security" below) and unsubordinated obligations
and are convertible into class A or class B common stock of
Freeport-McMoRan, at the option of the holders, as described
under "Conversion Rights" below. The notes are limited to an
aggregate principal amount of $603,750,000 and will mature on
January 31, 2006, unless earlier redeemed by us or repurchased by
us at the option of the holder upon the occurrence of a Change of
Control (as defined below).
The notes bear interest from August 7, 2001 at the rate of 8
1/4% per year. Interest is payable semi-annually on January 31
and July 31 of each year to holders of record at the close of
business on the preceding January 15 and July 15, respectively,
beginning January 31, 2002. We may pay interest on notes
represented by certificated notes by check. However, a holder of
notes with an aggregate principal amount in excess of $5,000,000
may elect to be paid by wire transfer in immediately available
funds. Interest is computed on the basis of a 360-day year
comprised of twelve 30-day months. Interest will no longer accrue
on a note upon its maturity, conversion, redemption or purchase
by us upon a Change of Control.
Principal is payable, and the notes may be presented for
conversion, registration of transfer and exchange, without
service charge, at our office or agency in New York City, which
shall initially be the office or agency of the trustee in New
York, New York. See "Form, Denomination and Registration" below.
The indenture does not contain any financial covenants or
any restrictions on the payment of dividends, the repurchase of
our securities or the incurrence of indebtedness. The indenture
also does not contain any covenants or other provisions that
afford protection to holders of notes in the event of a highly
leveraged transaction or a Change of Control of Freeport-McMoRan,
except to the extent described under "Change of Control Permits
Purchase of Notes at the Option of the Holder" below.
Security
FCX Investment has purchased and pledged to the trustee, as
security for the exclusive benefit of the holders of the notes,
U.S. Treasury strips and bills in the aggregate amount of $139.8
million to provide for payment in full of the first six scheduled
interest payments due on the notes.
These U.S. government securities are held by the trustee in
a pledge account for the exclusive benefit of the holders of the
notes. Immediately prior to an interest payment date, the
trustee will release from the pledge account proceeds sufficient
to pay interest then due on the notes. A failure to pay interest
on the notes when due through the first six scheduled interest
payment dates will constitute an event of default under the
indenture, with no grace period.
The pledged U.S. government securities and the pledge
account also secure the repayment of the principal amount and
premium on the notes. If prior to July 31, 2004
* an event of default under the notes occurs and is
continuing and
22
* the trustee or the holders of 25% of the aggregate
principal amount of the notes accelerate the notes by
declaring the principal amount of the notes to be
immediately due and payable (by written consent, at a
meeting of note holders or otherwise), except for the
occurrence of an event of default relating to our
bankruptcy, insolvency or reorganization, upon which
the notes will be accelerated automatically,
then the proceeds from the pledged U.S. government securities
will be promptly released to note holders, subject to the
automatic stay provisions of bankruptcy law, if applicable.
Distributions from the pledge account will be applied:
* first, to any accrued and unpaid interest on the notes,
and
* second, to the extent available, to the repayment of a
portion of the principal amount of the notes.
However, if any event of default is cured prior to the
acceleration of the notes by the trustee or holders of the notes
referred to above, the trustee and the holders of the notes will
not be able to accelerate the notes as a result of that event of
default.
For example, if the first two interest payments were made
when due but the third interest payment was not made when due and
the note holders promptly exercised their right to declare the
principal amount of the notes to be immediately due and payable
then, assuming automatic stay provisions of bankruptcy law are
inapplicable and the proceeds of the pledged U.S. government
securities are promptly distributed from the pledge account,
* an amount equal to the interest payment due on the
third interest payment would be distributed from the
pledge account as accrued interest and
* the balance of the proceeds of the pledge account would
be distributed as a portion of the principal amount of
the notes.
In addition, note holders would have an unsecured claim against
the issuer for the remainder of the principal amount of their
notes.
Once we make the first six scheduled interest payments on
the notes, all of the remaining pledged U.S. government
securities, if any, will be released to FCX Investment from the
pledge account thereafter, the notes will be unsecured.
Conversion Rights
The holders of notes may, at any time prior to the close of
business on the final maturity date of the notes, convert any
outstanding notes (or portions thereof) into, at the option of
the holders, class A or class B common stock of Freeport-McMoRan,
initially at a conversion price of $14.30 per share of class A or
class B common stock. This conversion price is equal to a
conversion rate of approximately 69.9301 shares of class A or
class B common stock per $1,000 principal amount of notes. The
conversion rate is subject to adjustment upon the occurrence of
the events described below. Holders may convert notes only in
denominations of $1,000 and whole multiples of $1,000.
Except as described below, no adjustment will be made for
interest accrued on converted notes or dividends paid on any
common stock. However, if notes are converted after a record date
but prior to the next succeeding interest payment date, holders
of such notes at the close of business on the record date will
receive the interest payable on such notes on the corresponding
interest payment date. Such notes, upon surrender for conversion,
must be accompanied by funds equal to the amount of interest
payable on the principal amount of notes so converted, unless
such notes have been called for redemption on a redemption date
that occurs after a regular record date and on or prior to the
third business day after the interest payment date to which it
relates, in which case no such payment shall be required.
23
We are not required to issue fractional shares of common
stock upon conversion of notes and instead will pay a cash
adjustment based upon the market price of the common stock on the
last trading day before the date of the conversion. In the case
of notes called for redemption, conversion rights will expire at
the close of business on the business day preceding the date
fixed for redemption, unless we default in payment of the
redemption price.
A holder may exercise the right of conversion by delivering
the note to be converted to the specified office of a conversion
agent, with a completed notice of conversion and any funds that
may be required as described above. The conversion date will be
the date on which the notes, the notice of conversion and any
required funds have been so delivered. A holder delivering a note
for conversion will not be required to pay any taxes or duties
relating to the issuance or delivery of the common stock, but
will be required to pay any tax or duty which may be payable
relating to any transfer involved in the issuance or delivery of
the common stock in a name other than the holder of the note.
Certificates representing shares of common stock will be issued
or delivered only after all applicable taxes and duties have been
paid. If any note is converted prior to the expiration of the
holding period applicable for sales under Rule 144(k) under the
Securities Act (or any successive provision), the common stock
issuable upon conversion will not be issued or delivered in a
name other than that of the holder of the note unless the
applicable restrictions on transfer have been satisfied.
The initial conversion rate will be adjusted for certain
events, including:
* the issuance of Freeport-McMoRan common stock as a
dividend or distribution on Freeport-McMoRan common
stock;
* certain subdivisions and combinations of Freeport-
McMoRan common stock;
* the issuance to all holders of Freeport-McMoRan common
stock of certain rights or warrants to purchase
Freeport-McMoRan common stock (or securities
convertible into Freeport-McMoRan common stock) at less
than (or having a conversion price per share less than)
the current market price of Freeport-McMoRan common
stock;
* the dividend or other distribution to all holders of
Freeport-McMoRan common stock or shares of Freeport-
McMoRan capital stock (other than common stock) of
evidences of indebtedness or assets (including
securities, but excluding (A) those rights and warrants
referred to above, (B) dividends and distributions in
connection with a reclassification, change,
consolidation, merger, combination, sale or conveyance
resulting in a change in the conversion consideration
pursuant to the second succeeding paragraph or (C)
dividends or distributions paid exclusively in cash);
* dividends or other distributions consisting exclusively
of cash to all holders of Freeport-McMoRan common stock
to the extent that such distributions, combined
together with (A) all other such all-cash distributions
made within the preceding 12 months for which no
adjustment has been made plus (B) any cash and the fair
market value of other consideration paid for any tender
offers by Freeport-McMoRan or any of its subsidiaries
for Freeport-McMoRan common stock concluded within the
preceding 12 months for which no adjustment has been
made, exceeds 5% of our market capitalization on the
record date for such distribution; market
capitalization is the product of the then-current
market price of Freeport-McMoRan common stock times the
number of shares of Freeport-McMoRan common stock then
outstanding; and
* the purchase of Freeport-McMoRan common stock pursuant
to a tender offer made by Freeport-McMoRan or any of
its subsidiaries to the extent that the same involves
an aggregate consideration that, together with (A) any
cash and the fair market value of any other
consideration paid in any other tender offer by
Freeport-McMoRan or any of its subsidiaries for
Freeport-McMoRan common stock expiring within the 12
months preceding such tender offer for which no
adjustment has been made plus (B) the aggregate amount
of any all-cash distributions referred to in the
immediately preceding bullet above to all holders of
Freeport-McMoRan common stock within 12 months
preceding the expiration of the tender offer for which
no adjustments have been made, exceeds 5% of our market
capitalization on the expiration of the tender offer.
24
No adjustment in the conversion rate will be required unless
such adjustment would require a change of at least 1% in the
conversion rate then in effect. Any adjustment that would
otherwise be required to be made shall be carried forward and
taken into account in any subsequent adjustment. Except as stated
above, the conversion rate will not be adjusted for the issuance
of our common stock or any securities convertible into or
exchangeable for our common stock or carrying the right to
purchase any of the foregoing.
Under the Rights Agreement of Freeport-McMoRan, upon
conversion of the notes into Freeport-McMoRan common stock, to
the extent that the Rights Agreement is still in effect upon
conversion, you will receive, in addition to the Freeport-McMoRan
common stock, the rights under the Rights Agreement whether or
not the rights have separated from the Freeport-McMoRan common
stock at the time of conversion, subject to certain limited
exceptions.
In the case of:
* any reclassification or change of Freeport-McMoRan
common stock (other than changes resulting from a
subdivision or combination) or
* a consolidation, merger or combination involving
Freeport-McMoRan or a sale or conveyance to another
corporation of all or substantially all of Freeport-
McMoRan's property and assets,
in each case as a result of which holders of Freeport-McMoRan
common stock are entitled to receive stock, other securities,
other property or assets (including cash or any combination
thereof) with respect to or in exchange for Freeport-McMoRan
common stock, the holders of the notes then outstanding will be
entitled to convert those notes into the kind and amount of
shares of stock, other securities or other property or assets
(including cash or any combination thereof) which they would have
owned or been entitled to receive upon such reclassification,
change, consolidation, merger, combination, sale or conveyance
had such notes been converted into Freeport-McMoRan common stock
immediately prior to such reclassification, change,
consolidation, merger, combination, sale or conveyance. We may
not become a party to any such transaction unless its terms are
consistent with the foregoing.
If a taxable distribution to holders of Freeport-McMoRan
common stock or another transaction occurs which results in any
adjustment of the conversion price, the holders of notes may, in
certain circumstances, be deemed to have received a distribution
subject to U.S. income tax as a dividend. In certain other
circumstances, the absence of an adjustment may result in a
taxable dividend to the holders of Freeport-McMoRan common stock.
See "Certain United States Federal Income Tax Considerations."
In order to avoid or diminish any income tax to holders of
Freeport-McMoRan common stock resulting from any dividend or
distribution of stock (or rights to acquire stock) or from any
event treated as such for income tax purposes, we may from time
to time reduce the conversion price of the notes for any period
of at least 20 days. Such a reduction will be in whatever amount
and for whatever period that our board of directors deems
advisable. We will give at least 15 days notice prior to such
reduction in the conversion price. Moreover, the reduction will
be irrevocable during the period determined by our board.
Ranking
The notes are our unsecured (except to the extent described
under "Security" above) and unsubordinated obligations. The notes
rank on a parity (except to the extent described under "Security"
above) in right of payment with all of our existing and future
unsecured and unsubordinated indebtedness. However, the notes are
subordinated to our existing and future secured indebtedness as
to the assets securing such indebtedness. As of September 30,
2001, our secured indebtedness was $140.6 million and our
unsecured and unsubordinated indebtedness was $955.6 million.
In addition, the notes are subordinated to all existing and
future liabilities of our subsidiaries. Freeport-McMoRan is a
holding company and conducts business through its various
subsidiaries. As a result, Freeport-McMoRan's cash flow and
ability to meet its debt obligations primarily depend on the
earnings of its subsidiaries, and on dividends and other payments
from its subsidiaries. Under certain circumstances, contractual
and legal
25
restrictions, as well as the financial condition and
operating requirements of Freeport-McMoRan's subsidiaries, could
limit its ability to obtain cash from its subsidiaries for the
purpose of meeting debt service obligations, including the
payment of principal and interest on the notes. Any rights to
receive assets of any subsidiary upon its liquidation or
reorganization and the right of the holders of the notes to
participate in the distribution of those assets will be subject
to the claims of that subsidiary's creditors, including trade
creditors, except to the extent that Freeport-McMoRan is
recognized as a creditor of that subsidiary, in which case its
claims would still be subordinate to any security interests in
the assets of that subsidiary. As of September 30, 2001, our
subsidiaries had aggregate indebtedness of $1.6 billion.
Redemption of Notes at Our Option
The notes are not redeemable prior to July 31, 2004. At any
time on or after that date, we may redeem the notes for cash, in
whole or in part, on at least 30 but not more than 60 days'
notice, at the following prices (expressed in percentages of the
principal amount), together with accrued and unpaid interest to,
but excluding, the date fixed for redemption. However, if a
redemption date is an interest payment date, the semi-annual
payment of interest becoming due on such date shall be payable to
the holder of record as of the relevant record date and the
redemption price shall not include such interest payment.
For the Twelve Month Period Commencing July 31, ..Redemption Price
2004 102.75%
2005 and thereafter 100.92%
If we do not redeem all of the notes, the trustee will
select the notes to be redeemed in principal denomination amounts
of $1,000 or whole multiples of $1,000 by lot or on a pro rata
basis. If any notes are to be redeemed in part only, a new note
or notes in principal amount equal to the unredeemed principal
portion thereof will be issued. If a portion of a holder's notes
is selected for partial redemption and the holder converts a
portion of its notes, the converted portion will be deemed to be
taken from the portion selected for redemption. No sinking fund
is provided for the notes.
Change of Control Permits Purchase of Notes at the Option of the
Holder
If a Change of Control occurs, each holder of notes will
have the right to require us to repurchase all of that holder's
notes not previously called for redemption, or any portion of
those notes that is equal to a multiple of $1,000, on the date
that is 45 days after the date we give notice at a repurchase
price equal to 100% of the principal amount of the notes to be
repurchased, together with interest accrued and unpaid to, but
excluding, the repurchase date.
Instead of paying the repurchase price in cash, we may pay
the repurchase price in either, at the option of the holder,
class A or class B common stock of Freeport-McMoRan if we so
elect in the notice referred to below. The number of shares of
common stock a holder will receive will equal the repurchase
price divided by 95% of the average of the closing sale prices of
the applicable common stock for the five trading days immediately
preceding and including the third day prior to the repurchase
date. However, we may not pay in common stock unless we satisfy
certain conditions prior to the repurchase date as provided in
the indenture.
Within 30 days after the occurrence of a Change of Control,
we are required to give notice to all holders of notes, as
provided in the indenture, of the occurrence of the Change of
Control and of their resulting repurchase right. We must also
deliver a copy of our notice to the trustee. To exercise the
repurchase right, a holder of notes must deliver prior to or on
the repurchase date irrevocable written notice to the trustee of
the holder's exercise of its repurchase right, together with the
notes with respect to which the right is being exercised. A
"Change of Control" will be deemed to have occurred at such time
after the original issuance of the notes when the following has
occurred:
26
* any "person" or "group" (as such terms are used in
Sections 13(d) and 14(d) of the Securities Exchange Act
of 1934, as amended (the "Exchange Act")), acquires the
beneficial ownership (as defined in Rules 13d-3 and 13d-
5 under the Exchange Act, except that a person shall be
deemed to have "beneficial ownership" of all securities
that such person has the right to acquire, whether such
right is exercisable immediately or only after the
passage of time), directly or indirectly, through a
purchase, merger or other acquisition transaction, of
50% or more of the total voting power of the total
outstanding voting stock of Freeport-McMoRan other than
in an acquisition by us, any of our subsidiaries or any
of our employee benefit plans;
* Freeport-McMoRan consolidates with, or merges with or
into, another person or conveys, transfers, leases or
otherwise disposes of all or substantially all of its
assets to any person, or any person consolidates with
or merges with or into Freeport-McMoRan, other than:
* any transaction (A) that does not result in any
reclassification (excluding a reclassification
combining Freeport-McMoRan's class A and class B
common stock into one class), conversion, exchange
or cancellation of outstanding shares of Freeport-
McMoRan's capital stock and (B) pursuant to which
holders of Freeport-McMoRan's capital stock
immediately prior to the transaction have the
entitlement to exercise, directly or indirectly,
50% or more of the total voting power of all
shares of Freeport-McMoRan's capital stock
entitled to vote generally in the election of
directors of the continuing or surviving person
immediately after the transaction; or
* any merger solely for the purpose of changing
Freeport-McMoRan's jurisdiction of incorporation
and resulting in a reclassification, conversion or
exchange of outstanding shares of common stock
solely into shares of common stock of the
surviving entity;
* during any consecutive two-year period, individuals who
at the beginning of that two-year period constituted
the board of directors of Freeport-McMoRan (together
with any new directors whose election to such board of
directors, or whose nomination for election by
stockholders, was approved by a vote of a majority of
the directors then still in office who were either
directors at the beginning of such period or whose
election or nomination for election was previously so
approved) cease for any reason to constitute a majority
of the board of directors of Freeport-McMoRan then in
office; or
* Freeport-McMoRan's stockholders pass a special
resolution approving a plan of liquidation or
dissolution and no additional approvals of stockholders
are required under applicable law to cause a
liquidation or dissolution.
The definition of Change of Control includes a phrase
relating to the lease, transfer, conveyance or other disposition
of "all or substantially all" of Freeport-McMoRan's assets. There
is no precise established definition of the phrase "substantially
all" under applicable law. Accordingly, the ability of a holder
of notes to require us to repurchase such notes as a result of a
lease, transfer, conveyance or other disposition of less than all
of Freeport-McMoRan's assets may be uncertain.
Our right to pay the repurchase price in common stock is
subject to our satisfying various conditions, including:
* the registration of the common stock under the
Securities Act and the Exchange Act, if required;
and
* any necessary qualification or registration under
applicable state securities law or the
availability of an exemption from such
qualification and registration.
If such conditions are not satisfied with respect to a
holder prior to the close of business on the repurchase date, we
will pay the repurchase price of the notes to the holder entirely
in cash. We may not change the form of
27
consideration to be paid
for the notes once we have given the notice that we are required
to give to holders of notes, except as described in the first
sentence of this paragraph.
We will comply with the provisions of any tender offer rules
under the Exchange Act that may then be applicable, and will file
any schedule required under the Exchange Act in connection with
any offer by us to purchase notes upon a Change of Control. In
some circumstances, the Change of Control purchase feature of the
notes may make more difficult or discourage a takeover of us and
the removal of incumbent management. The Change of Control
purchase feature, however, is not the result of management's
knowledge of any specific effort to accumulate shares of common
stock or to obtain control of us by means of a merger, tender
offer, solicitation or otherwise, or part of a plan by management
to adopt a series of anti-takeover provisions. Instead, the
Change of Control purchase feature is the result of negotiations
between us and the initial purchaser.
We may at any time purchase the notes in the open market or
by tender at any price or by private agreement. Any note so
purchased by us may be reissued or resold or may be surrendered
to the trustee for cancellation. Any notes surrendered to the
trustee may not be reissued or resold and will be canceled
promptly.
These provisions would not necessarily protect holders of
the notes if highly leveraged or other transactions involving us
occur that may adversely affect holders. Our ability to
repurchase notes upon the occurrence of a Change of Control is
subject to important limitations. The occurrence of a Change of
Control could cause an event of default under, or be prohibited
or limited by, the terms of indebtedness that we may incur in the
future. Further, we cannot assure you that we would have the
financial resources, or would be able to arrange financing, to
pay the repurchase price for all the notes that might be
delivered by holders of notes seeking to exercise the repurchase
right. Any failure by us to repurchase the notes when required
following a Change of Control would result in an event of default
under the indenture. Any such default may, in turn, cause a
default under indebtedness that we may incur in the future.
Events of Default
Each of the following will constitute an event of default
under the indenture:
(1) our failure to pay when due the principal of or
premium, if any, on any of the notes at maturity, upon
redemption or upon exercise of a repurchase right or
otherwise;
(2) our failure to pay an installment of interest
(including liquidated damages, if any) on any of the
notes for 30 days after the date when due; provided
that a failure to make any of the first six scheduled
interest payments on the notes on the applicable
interest payment date will constitute an event of
default with no grace or cure period;
(3) failure by us to deliver shares of common stock,
together with cash instead of fractional shares, when
those shares of common stock, or cash instead of
fractional shares, are required to be delivered
following conversion of a note, and that default
continues for 10 days;
(4) failure by us to give the notice regarding a Change of
Control within 30 days of the occurrence of the Change
of Control;
(5) our failure to perform or observe any other term,
covenant or agreement contained in the notes or the
indenture for a period of 60 days after written notice
of such failure, requiring us to remedy the same, shall
have been given to us by the trustee or to us and the
trustee by the holders of at least 25% in aggregate
principal amount of the notes then outstanding;
(6) in the event of either (a) our failure or the failure
of any of our significant subsidiaries to make any
payment by the end of the applicable grace period, if
any, after the final scheduled payment date for such
payment with respect to any indebtedness for borrowed
money in an aggregate principal amount in excess of $10
million, or (b) the acceleration of indebtedness for
borrowed money of the company or any of our significant
subsidiaries in an aggregate amount in excess of
28
$10 million because of a default with respect to such
indebtedness, without such indebtedness referred to in
either (a) or (b) above having been discharged, cured,
waived, rescinded or annulled, for a period of 30 days
after written notice to us by the trustee or to us and
the trustee by holders of at least 25% in aggregate
principal amount of the notes then outstanding;
(7) certain events of bankruptcy, insolvency or
reorganization; and
(8) the failure of the pledge agreement to be in full force
and effect or to give the trustee the liens, rights
powers and privileges intended to be created thereby.
The term "significant subsidiary" means a subsidiary, including
its subsidiaries, that meets any of the following conditions:
* Freeport-McMoRan's and its other subsidiaries'
investments in and advances to the subsidiary exceed
20% of the total assets of Freeport-McMoRan and its
subsidiaries consolidated as of the end of the most
recently completed fiscal year;
* Freeport-McMoRan's and its other subsidiaries'
proportionate share of the total assets (after
intercompany eliminations) of the subsidiary exceeds
20% of the total assets of Freeport-McMoRan and its
subsidiaries consolidated as of the end of the most
recently completed fiscal year; or
* Freeport-McMoRan's and its other subsidiaries' equity
in the income from continuing operations before income
taxes, extraordinary items and cumulative effect of a
change in accounting principle of the subsidiary
exceeds 20% of such income of Freeport-McMoRan and its
subsidiaries consolidated for the most recently
completed fiscal year.
The indenture provides that the trustee shall, within 90
days of the occurrence of a default, give to the registered
holders of the notes notice of all uncured defaults known to it,
but the trustee shall be protected in withholding such notice if
it, in good faith, determines that the withholding of such notice
is in the best interest of such registered holders, except in the
case of a default in the payment of the principal of, premium on,
or interest on any of the notes when due or in the payment of any
redemption or repurchase obligation.
If an event of default specified in clause (7) above occurs
and is continuing, then the principal of all the notes and the
interest thereon shall become immediately due and payable. If an
event of default shall occur and be continuing, other than with
respect to clause (7) above (the default not having been cured or
waived as provided under "Modifications and Waiver" below), the
trustee or the holders of at least 25% in aggregate principal
amount of the notes then outstanding may declare the notes due
and payable at their principal amount together with accrued
interest, and thereupon the trustee may, at its discretion,
proceed to protect and enforce the rights of the holders of notes
by appropriate judicial proceedings. Such declaration may be
rescinded or annulled with the written consent of the holders of
a majority in aggregate principal amount of the notes then
outstanding upon the conditions provided in the indenture.
However, if an event of default is cured prior to such
declaration by the trustee or holders of the notes as discussed
above, the trustee and the holders of the notes will not be able
to make such declaration as a result of that cured event of
default. Overdue payments of interest, liquidated damages,
premium, and principal shall accrue interest at 10 1/4%.
The indenture contains a provision entitling the trustee,
subject to the duty of the trustee during default to act with the
required standard of care, to be indemnified by the holders of
notes before proceeding to exercise any right or power under the
indenture at the request of such holders. The indenture provides
that the holders of a majority in aggregate principal amount of
the notes then outstanding through their written consent may
direct the time, method and place of conducting any proceeding
for any remedy available to the trustee or exercising any trust
or power conferred upon the trustee. We are required to furnish
annually to the trustee a statement as to the fulfillment of our
obligations under the indenture.
29
Consolidation, Merger or Assumption
We may, without the consent of the holders of notes,
consolidate with, merge into or transfer all or substantially all
of our assets to any other corporation organized under the laws
of the United States or any of its political subdivisions
provided that:
* the surviving corporation assumes all our obligations
under the indenture and the notes;
* at the time of such transaction, no event of default,
and no event which, after notice or lapse of time,
would become an event of default, shall have happened
and be continuing; and
* certain other conditions are met.
Modifications and Waiver
The indenture (including the terms and conditions of the
notes) may be modified or amended by us and the trustee, without
the consent of the holder of any note, for the purposes of, among
other things:
* adding to our covenants for the benefit of the holders
of notes;
* surrendering any right or power conferred upon us;
* providing for the assumption of our obligations to the
holders of notes in the case of a merger,
consolidation, conveyance, transfer or lease;
* reducing the conversion price, provided that the
reduction will not adversely affect the interests of
holders of notes in any material respect;
* complying with the requirements of the SEC in order to
effect or maintain the qualification of the indenture
under the Trust Indenture Act of 1939, as amended;
* making any changes or modification to the indenture
necessary in connection with the registration of the
notes under the Securities Act as contemplated by the
registration rights agreement, provided that this
action does not adversely affect the interest of the
holders of the notes in any material respects;
* curing any ambiguity or correcting or supplementing any
defective provision contained in the indenture;
provided that such modification or amendment does not
adversely affect the interests of the holders of the
notes in any material respect; or
* adding or modifying any other provisions which we and
the trustee may deem necessary or desirable and which
will not adversely affect the interests of the holders
of notes in any material respect.
Modifications and amendments to the indenture or to the
terms and conditions of the notes may also be made, and past
default by us may be waived with the written consent of the
holders of at least a majority in aggregate principal amount of
the notes at the time outstanding. However, no such modification,
amendment or waiver may, without the written consent or the
affirmative vote of the holder of each note so affected:
* change the maturity of the principal of or any
installment of interest on that note (including any
payment of liquidated damages);
* reduce the principal amount of, or any premium or
interest on (including any payment of liquidated
damages), any note;
30
* change the currency of payment of such note or interest
thereon;
* impair the right to institute suit for the enforcement
of any payment on or with respect to any note;
* except as otherwise permitted or contemplated by
provisions concerning corporate reorganizations,
adversely affect the repurchase option of holders upon
a Change of Control or the conversion rights of holders
of the notes;
* modify the provisions of the indenture relating to the
pledge of securities as contemplated under "Security"
above in a manner that adversely affects the interests
of the holders of notes; or
* reduce the percentage in aggregate principal amount of
notes outstanding necessary to modify or amend the
indenture or to waive any past default.
Form, Denomination and Registration
The notes were issued without coupons and in denominations
of $1,000 principal amount and whole multiples of $1,000.
Global Notes: Book-Entry Form. The notes were offered only
to qualified institutional buyers as defined in Rule 144A under
the Securities Act ("QIBs"). Except as provided below, the
notes are evidenced by one or more global notes deposited with
the trustee as custodian for The Depository Trust Company, New
York, New York ("DTC"), and registered in the name of Cede & Co.
as DTC's nominee. The global notes and any notes issued in
exchange therefor are subject to certain restrictions on transfer
set forth in the global notes and in the indenture and bear a
restrictive legend. Record ownership of the global notes may be
transferred, in whole or in part, only to another nominee of DTC
or to a successor of DTC or its nominee, except as set forth
below. A QIB may hold its interests in a global note directly
through DTC if such QIB is a participant in DTC, or indirectly
through organizations which are direct DTC participants.
Transfers between direct DTC participants will be effected in the
ordinary way in accordance with DTC's rules and will be settled
in same-day funds. QIBs may also beneficially own interests in
the global notes held by DTC through certain banks, brokers,
dealers, trust companies and other parties that clear through or
maintain a custodial relationship with a direct DTC participant,
either directly or indirectly. So long as Cede & Co., as nominee
of DTC, is the registered owner of the global notes, Cede & Co.
for all purposes will be considered the sole holder of the global
notes. Except as provided below, owners of beneficial interests
in the global notes will not be entitled to have certificates
registered in their names, will not receive or be entitled to
receive physical delivery of certificates in definitive form, and
will not be considered holders thereof. The laws of some states
require that certain persons take physical delivery of securities
in definitive form. Consequently, the ability to transfer a
beneficial interest in the global notes to such persons may be
limited. We will wire, through the facilities of the trustee,
principal, premium, if any, and interest payments on the global
notes to Cede & Co., the nominee for DTC, as the registered owner
of the global notes. We, the trustee and any paying agent will
have no responsibility or liability for paying amounts due on the
global notes to owners of beneficial interests in the global
notes. It is DTC's current practice, upon receipt of any payment
of principal of and premium, if any, and interest on the global
notes, to credit participants' accounts on the payment date in
amounts proportionate to their respective beneficial interests in
the notes represented by the global notes, as shown on the
records of DTC, unless DTC believes that it will not receive
payment on the payment date. Payments by DTC participants to
owners of beneficial interests in notes represented by the global
notes held through DTC participants will be the responsibility of
DTC participants, as is now the case with securities held for the
accounts of customers registered in "street name."
If you would like to convert your notes into common stock
pursuant to the terms of the notes, you should contact your
broker or other direct or indirect DTC participant to obtain
information on procedures, including proper forms and cut-off
times, for submitting those requests. Because DTC can only act
on behalf of DTC participants, who in turn act on behalf of
indirect DTC participants and other banks, your ability to pledge
your interest in the notes represented by global notes to persons
or entities that do not participate in the DTC system, or
otherwise take actions in respect of such interest, may be
affected by the lack of a physical certificate. Neither we nor
the trustee (nor any registrar, paying agent or conversion agent
under the indenture) will have any responsibility
31
for the
performance by DTC or direct or indirect DTC participants of
their obligations under the rules and procedures governing their
operations. DTC has advised us that it will take any action
permitted to be taken by a holder of notes, including, without
limitation, the presentation of notes for conversion as described
below, only at the direction of one or more direct DTC
participants to whose account with DTC interests in the global
notes are credited and only for the principal amount of the notes
for which directions have been given.
DTC has advised us as follows: DTC is a limited purpose
trust company organized under the laws of the State of New York,
a member of the Federal Reserve System, a "clearing corporation"
within the meaning of the Uniform Commercial Code and a "clearing
agency" registered pursuant to the provisions of Section 17A of
the Securities Exchange Act of 1934, as amended. DTC was created
to hold securities for DTC participants and to facilitate the
clearance and settlement of securities transactions between DTC
participants through electronic book-entry changes to the
accounts of its participants, thereby eliminating the need for
physical movement of certificates. Participants include
securities brokers and dealers, banks, trust companies and
clearing corporations and may include certain other organizations
such as the initial purchaser of the notes. Certain DTC
participants or their representatives, together with other
entities, own DTC. Indirect access to the DTC system is available
to others such as banks, brokers, dealers and trust companies
that clear through, or maintain a custodial relationship with, a
participant, either directly or indirectly. Although DTC has
agreed to the foregoing procedures in order to facilitate
transfers of interests in the global notes among DTC
participants, it is under no obligation to perform or continue to
perform such procedures, and such procedures may be discontinued
at any time. If DTC is at any time unwilling or unable to
continue as depositary and a successor depositary is not
appointed by us within 90 days, we will cause notes to be issued
in definitive form in exchange for the global notes. None of us,
the trustee or any of their respective agents will have any
responsibility for the performance by DTC or direct or indirect
DTC participants of their obligations under the rules and
procedures governing their operations, including maintaining,
supervising or reviewing the records relating to, or payments
made on account of, beneficial ownership interests in global
notes. According to DTC, the foregoing information with respect
to DTC has been provided to its participants and other members of
the financial community for informational purposes only and is
not intended to serve as a representation, warranty or contract
modification of any kind.
Certificated notes may be issued in exchange for beneficial
interests in notes represented by the global notes only in the
limited circumstances set forth in the indenture.
Governing Law
The indenture and the notes are governed by, and construed
in accordance with, the law of the State of New York.
Concerning the Trustee
The Bank of New York, as trustee under the indenture, has
been appointed by us as paying agent, conversion agent, registrar
and custodian with regard to the notes. Mellon Investor Services
LLC is the transfer agent and registrar for Freeport-McMoRan's
common stock. The trustee or its affiliates may from time to time
in the future provide banking and other services to us in the
ordinary course of their business.
Registration Rights
When we issued the notes, we entered into a registration
rights agreement with the initial purchaser of the notes. As
required under that agreement, we have filed with the SEC, at our
expense, a shelf registration statement, of which this prospectus
forms a part, covering resales by holders of the notes and the
common stock issuable upon conversion of the notes. Under the
terms of the registration rights agreement, we have agreed to use
our best efforts to:
* cause the registration statement to become effective as
promptly as is practicable, but in no event later than
180 days after the earliest date of original issuance
of any of the notes; and
32
* keep the registration statement effective until such
date that the holders of the notes and the common stock
issuable upon conversion of the notes are able to sell
all such securities immediately without restriction
pursuant to the volume limitations of Rule 144 under
the Securities Act or any successor rule thereto or
otherwise.
We also agreed to provide to each registered holder copies
of the prospectus, notify each registered holder when the shelf
registration statement has become effective and take certain
other actions as are required to permit unrestricted resales of
the notes and the common stock issuable upon conversion of the
notes. A holder who sells those securities pursuant to the shelf
registration statement generally will be required to be named as
a selling stockholder in the related prospectus and to deliver a
prospectus to purchasers and will be bound by the provisions of
the registration rights agreement, which are applicable to that
holder (including certain indemnification provisions). Each
holder must notify us not later than three business days prior to
any proposed sale by that holder pursuant to the shelf
registration statement. This notice will be effective for five
business days. We may suspend the holder's use of the prospectus
for a reasonable period not to exceed 30 days in any 90-day
period, and not to exceed an aggregate of 90 days in any 12-month
period, if we, in our reasonable judgment, believe we may possess
material non-public information the disclosure of which would
have a material adverse effect on us and our subsidiaries taken
as a whole. Each holder, by its acceptance of a note, agrees to
hold any communication by us in response to a notice of a
proposed sale in confidence.
If
* on the 90th day following the earliest date of original
issuance of any of the notes, the shelf registration
statement, of which this prospectus forms a part, has
not been filed with the SEC; or
* on the 180th day following the earliest date of
original issuance of any of the notes, the shelf
registration statement has not been declared effective;
or
* the registration statement shall cease to be effective
or fail to be usable without being succeeded within
five business days by a post-effective amendment or a
report filed with the SEC pursuant to the Exchange Act
that cures the failure of the registration statement to
be effective or usable; or
* on the 30th day of any period that the prospectus has
been suspended as described in the preceding paragraph,
such suspension has not been terminated (each, a
"registration default"),
additional interest as liquidated damages will accrue on the
notes, from and including the day following the registration
default to but excluding the day on which the registration
default has been cured.
Liquidated damages will be paid semi-annually in arrears,
with the first semi-annual payment due on the first interest
payment date, as applicable, following the date on which such
liquidated damages begin to accrue, and will accrue at a rate per
year equal to:
* an additional 0.25% of the principal amount to and
including the 90th day following such registration
default; and
* an additional 0.5% of the principal amount from and
after the 91st day following such registration default.
In no event will liquidated damages accrue at a rate per
year exceeding 0.5%. If a holder has converted some or all of its
notes into common stock, the holder will be entitled to receive
equivalent amounts based on the principal amount of the notes
converted.
The summary herein of certain provisions of the registration
rights agreement between us and the initial purchaser is subject
to, and is qualified in its entirety by reference to, all the
provisions of the registration rights agreement, a copy of which
has been filed as an exhibit to the registration statement of
which this prospectus is a part or is available upon request to
the Company.
33
Upon their original issuance, the notes became eligible for
trading on The PORTAL Market. The notes sold pursuant to this
prospectus, however, will no longer be eligible for trading on
The PORTAL Market. Although we intend to apply for listing on
the New York Stock Exchange of the notes sold pursuant to this
prospectus, we cannot assure you that an active trading market
for the notes will develop or as to the liquidity or
sustainability of any such market, the ability of the holders to
sell their notes or the price at which holders of the notes will
be able to sell their notes. Future trading prices of the notes
will depend on many factors, including, among other things,
prevailing interest rates, our operating results, the price of
our common stock and the market for similar securities.
34
UNITED STATES FEDERAL INCOME TAX CONSIDERATIONS FOR INVESTORS
The following is a general discussion of material U.S.
federal income tax consequences with respect to the purchase,
ownership and disposition of the notes and the common stock
acquired upon conversion. This summary is generally limited to
holders who will hold the notes and the shares of common stock
into which the notes are convertible as "capital assets" within
the meaning of Section 1221 of the Internal Revenue Code of 1986,
as amended (the "Code") and who acquire the notes in this
offering at the initial offering price, and does not deal with
special situations including those that may apply to particular
holders such as exempt organizations, holders subject to the U.S.
federal alternative minimum tax, non-U.S. citizens and foreign
corporations or other foreign entities, dealers in securities,
commodities or foreign currencies, financial institutions,
insurance companies, regulated investment companies, holders
whose "functional currency" is not the U.S. dollar and persons
who hold the notes or shares of common stock in connection with a
"straddle," "hedging," "conversion" or other risk reduction
transaction.
The federal income tax considerations set forth below are
based upon the Code, Treasury Regulations promulgated thereunder,
court decisions, and Internal Revenue Service ("IRS") rulings now
in effect, all of which are subject to change. Prospective
investors should particularly note that any such change could
have retroactive application so as to result in federal income
tax consequences different from those discussed below. We have
not sought any ruling from the IRS with respect to statements
made and conclusions reached in this discussion and there can be
no assurance that the IRS will agree with such statements and
conclusions.
Based on currently applicable authorities, we will treat the
notes as indebtedness for U.S. federal income tax purposes.
However, since the notes have certain equity characteristics, it
is possible that the IRS will contend that the notes should be
treated as an equity interest in, rather than indebtedness of our
company. Except as otherwise noted, the remainder of this
discussion assumes that the notes will constitute indebtedness
for U.S. tax purposes.
INVESTORS CONSIDERING THE PURCHASE OF THE NOTES ARE URGED TO
CONSULT THEIR OWN TAX ADVISORS WITH RESPECT TO THE APPLICATION OF
THE U.S. FEDERAL INCOME TAX LAWS TO THEIR PARTICULAR SITUATIONS
AS WELL AS ANY TAX CONSEQUENCES ARISING UNDER THE FEDERAL ESTATE
OR GIFT TAX RULES OR UNDER THE LAWS OF ANY STATE, LOCAL OR
FOREIGN TAXING JURISDICTION OR UNDER ANY APPLICABLE TAX TREATY.
Taxation of Interest
Holders will be required to recognize as ordinary income any
interest paid or accrued on the notes, in accordance with their
regular method of tax accounting.
Conversion or Repurchase for Common Stock
A Holder will not recognize income, gain or loss upon
conversion of the notes solely into our common stock (except with
respect to any amounts attributable to accrued interest on the
notes, which will be treated as interest for federal income tax
purposes), and except with respect to cash received in lieu of
fractional shares. If we repurchase a note in exchange for common
stock pursuant to exercise of the repurchase right upon a change
of control, although the matter is not entirely clear, such
exchange should be treated in the same manner as a conversion of
the note as described in the preceding sentence. The holder's tax
basis in the common stock received on conversion or repurchase of
a note for common stock pursuant to the repurchase right will be
the same as the holder's adjusted tax basis in the notes
exchanged therefore at the time of conversion or repurchase
(reduced by any basis allocable to a fractional share), and the
holding period for the common stock received on conversion or
repurchase will include the holding period of the notes that were
converted or repurchased.
Cash received in lieu of a fractional share of common stock
upon conversion of the notes into common stock or upon a
repurchase for common stock of a note pursuant to exercise of the
repurchase right upon a change of control will generally be
treated as a payment in exchange for the fractional share of
common stock. Accordingly, the receipt of cash in lieu of a
fractional share of common stock generally will result in capital
gain or loss measured
35
by the difference between the cash received
for the fractional share and the holder's adjusted tax basis in
the fractional share.
Dividends on Common Stock
We do not anticipate paying any dividends on our common
stock in the foreseeable future. However, if we do make
distributions on our common stock, the distributions will
constitute dividends for U.S. federal income tax purposes to the
extent of our current or accumulated earnings and profits as
determined under U.S. federal income tax principles. To the
extent that a holder receives distributions on shares of common
stock that would otherwise constitute dividends for U.S. federal
income tax purposes but that exceed our current and accumulated
earnings and profits, such distributions will be treated first as
a non-taxable return of capital reducing the holder's basis in
the shares of common stock. Any such distributions in excess of
the holder's basis in the shares of common stock will generally
be treated as capital gain. Subject to applicable limitations,
dividends paid to holders that are U.S. corporations will qualify
for the dividends-received deduction so long as there are
sufficient earnings and profits.
Disposition, Redemption or Repurchase for Cash
Except as set forth above under "Conversion or Repurchase
for Common Stock," holders generally will recognize capital gain
or loss upon the sale, redemption, including a repurchase by us
for cash pursuant to the repurchase right, or other taxable
disposition of the notes or common stock in an amount equal to
the difference between:
* the holder's adjusted tax basis in the notes or common
stock (as the case may be); and
* the amount of cash and fair market value of any
property received from such disposition (other than
amounts attributable to accrued interest on the notes,
which will be treated as interest for federal income
tax purposes).
A holder's adjusted tax basis in a note generally will equal
the cost of the note to such holder. (For a discussion of the
holder's basis in shares of our common stock, see "Conversion or
Repurchase for Common Stock").
Gain or loss from the taxable disposition of the notes or
common stock generally will be long-term capital gain or loss if
the notes and/or shares of common stock were held for more than
one year at the time of the disposition. The deductibility of
capital losses is subject to limitations.
Adjustment of Conversion Price
The conversion price of the notes is subject to adjustment
under certain circumstances. Under Section 305 of the Code and
the Treasury Regulations issued thereunder, certain adjustments
to (or the failure to make such adjustments to) the conversion
price of the notes that increase the proportionate interest of a
holder in our assets or earnings and profits may result in a
taxable constructive distribution to the holders of the notes,
whether or not the holders ever convert the notes. Such
constructive distribution will be treated as a dividend,
resulting in ordinary income (and a possible dividends received
deduction in the case of corporate holders) to the extent of our
current or accumulated earnings and profits, with any excess
treated first as a tax-free return of capital which reduces the
holder's tax basis in the notes to the extent thereof and
thereafter as gain from the sale or exchange of the notes.
Generally, a holder's tax basis in a note will be increased to
the extent any such constructive distribution is treated as a
dividend. Moreover, if there is an adjustment (or a failure to
make an adjustment) to the conversion price of the notes that
increases the proportionate interest of the holders of
outstanding common stock in our assets or earnings and profits,
then such increase in the proportionate interest of the holders
of the common stock generally will be treated as a constructive
distribution to such holders, taxable as described above. As a
result, holders of notes could have taxable income as a result of
an event pursuant to which they receive no cash or property.
36
Backup Withholding and Information Reporting
We or our designated paying agent will, where required,
report to holders of notes or common stock and the IRS the amount
of any interest paid on the notes or dividends paid with respect
to the common stock (or other reportable payments) in each
calendar year and the amount of tax, if any, withheld with
respect to such payments.
Under the backup withholding provisions of the Code and the
applicable Treasury Regulations, a holder of notes or our common
stock acquired upon the conversion of a note may be subject to
backup withholding at the rate of 31% with respect to dividends
or interest paid on, or the proceeds of a sale, exchange or
redemption of, the notes or the common stock, unless:
* such holder is a corporation or comes within certain
other exempt categories and when required demonstrates
this fact; or
* provides a correct taxpayer identification number,
certifies as to no loss of exemption from backup
withholding and otherwise complies with applicable
requirements of the backup withholding rules.
The amount of any backup withholding from a payment to a
holder will be allowed as a credit against the holder's federal
income tax liability and may entitle such holder to a refund,
provided that the required information is furnished to the IRS.
THE PRECEDING DISCUSSION OF CERTAIN UNITED STATES FEDERAL
INCOME TAX CONSEQUENCES IS FOR GENERAL INFORMATION ONLY AND IS
NOT TAX ADVICE. ACCORDINGLY, YOU ARE URGED TO CONSULT YOUR OWN
TAX ADVISER AS TO PARTICULAR TAX CONSEQUENCES TO YOU OF
PURCHASING, HOLDING AND DISPOSING OF THE NOTES AND OUR COMMON
STOCK, INCLUDING THE APPLICABILITY AND EFFECT OF ANY STATE, LOCAL
OR FOREIGN TAX LAWS, AND OF ANY PROPOSED CHANGES IN APPLICABLE
LAWS.
37
DESCRIPTION OF COMMON STOCK
General
As of the date of this prospectus, our certificate of
incorporation authorized us to issue up to 211,800,000 shares of
class A common stock, par value $0.10 per share, and 211,800,000
shares of class B common stock, par value $0.10 per share. As of
December 31, 2001, 55,459,026 shares of our class A common stock
and 88,516,599 shares of our class B common stock were
outstanding. Our class A common stock and class B common stock
are listed on the New York Stock Exchange.
Voting Rights
With respect to the election of directors, holders of class
A common stock, voting together with holders of voting preferred
stock, are entitled to elect 20 percent of the authorized number
of members of our board of directors, excluding those directors
that holders of preferred stock have the exclusive right to
elect. Each share of class A common stock and each share of
voting preferred stock has one vote. Holders of class B common
stock are entitled to elect the remaining directors. Each holder
of class B common stock has one vote per share. With respect to
all other matters submitted to a vote of our shareholders, except
as required by law, the holders of the class A and class B common
stock vote together as a single class, and record holders of each
class have one vote per share.
The special voting rights of our class A common stock and
voting preferred stock may be eliminated by the vote of a
majority of the class A and class B common shares present and
voting at any annual or special meeting of stockholders. We
previously represented to the Internal Revenue Service that we
would not change the special voting rights of the class A and
class B common stock until after July 2000. While we have not
taken steps to eliminate the special voting rights or combine the
two classes into a single class of common stock, we may do so in
the future.
In addition to our annual meeting of stockholders, special
meetings of stockholders may be called by the chairman or vice
chairman of our board of directors, the president of the company,
or a majority of our board of directors. Our bylaws require that
notice of a stockholders meeting be given to each stockholder at
least 10 days but not more than 60 days before the date of the
meeting. The holders of a majority of our outstanding stock
entitled to vote at a stockholders' meeting constitutes a quorum
for the purpose of transacting business at the meeting.
Dividends
Holders of our class A and class B common stock will share
ratably in any cash dividend that may from time to time be
declared by our board of directors. Dividends consisting of
shares of class A or class B common stock also may be declared
and will be paid as follows:
* shares of class A common stock may be paid only to
holders of shares of class A common stock, and shares
of class B common stock may be paid only to holders of
shares of class B common stock; and
* shares will be paid proportionately with respect to
each outstanding class A or class B common share.
Our amended credit facilities prohibit the payment of dividends
on our common stock. See "Refinancing Transactions" and "Dividend
Policy."
Other Rights
In the case of any reorganization or consolidation or merger
of our company with another company, holders of shares of class A
or class B common stock will be entitled to receive stock, other
securities and property of the same kind and amount as that
received by the other class. However, holders of each class may
receive
38
different kinds of shares if the only difference in the
shares is the inclusion of voting rights that continue the
special voting rights regarding the election of directors
described above.
In the event of a voluntary or involuntary liquidation,
dissolution or winding up of our company, prior to any
distributions to the holders of our common stock, the holders of
preferred stock will receive any payments to which they are
entitled. Subsequent to those payments, the holders of our class
A and class B common stock will share ratably, according to the
number of shares held by them, in our remaining assets, if any.
Shares of our class A and class B common stock are not
redeemable and have no subscription, conversion or preemptive
rights. Both classes of common stock are freely transferable,
except for the common stock issuable upon conversion of the
notes.
In 1995, in connection with Rio Tinto plc's purchase of 23.9
million shares of our class A common stock, we entered into an
agreement that provided Rio Tinto with certain preemptive rights
and first offer rights if we issued common stock, including
securities convertible into common stock, in a future public or
non-public offering. In addition, the agreement provides Rio
Tinto with registration rights. Although Rio Tinto has rights
under the agreement to purchase notes in this offering, Rio Tinto
has waived its rights to purchase any of the notes.
Provisions of Our Certificate of Incorporation
Our certificate of incorporation contains provisions that
are designed in part to make it more difficult and time-consuming
for a person to obtain control of our company unless they pay a
required value to our stockholders. Some provisions also are
intended to make it more difficult for a person to obtain control
of our board of directors. These provisions reduce the
vulnerability of our company to an unsolicited takeover proposal.
On the other hand, these provisions may have an adverse effect on
the ability of stockholders to influence the governance of our
company. You should read our certificate of incorporation and
bylaws for a more complete description of the rights of holders
of our common stock.
Classified Board of Directors. Our certificate of
incorporation divides the members of our board of directors,
other than those that may be elected solely by the holders of our
preferred stock, into three classes serving three-year staggered
terms. The classification of directors has the effect of making
it more difficult for our stockholders to change the composition
of our board. At least two annual meetings of stockholders may be
required for the stockholders to change a majority of the
directors, whether or not a majority of stockholders believes
that this change would be desirable.
Supermajority Voting/Fair Price Requirements. Our
certificate of incorporation provides that the approval of the
holders of two-thirds of our outstanding common stock is required
for:
* any merger or consolidation of our company or any of
our subsidiaries with or into any person or entity, or
any affiliate of that person or entity, who was within
the two years prior to the transaction a beneficial
owner of 20 percent or more of our common stock or any
class of our common stock (an "interested party");
* any merger or consolidation of an interested party with
or into our company or any of our subsidiaries;
* any sale, lease, mortgage, pledge or other disposition
of more than 10 percent of the fair market value of the
assets of our company or any of our subsidiaries in one
or more transactions involving an interested party;
* the adoption of any plan or proposal for liquidation or
dissolution of our company proposed by or on behalf of
any interested party;
* the issuance or transfer by our company or any of our
subsidiaries of securities having a fair market value
of $10.0 million or more to any interested party; or
39
* any recapitalization, reclassification, merger or
consolidation of our company or any of our subsidiaries
that would increase an interested party's voting power
in our company or any of our subsidiaries.
However, the two-thirds voting requirement is not applicable
if:
* our board approves the transaction, or approves the
acquisition of the common stock that caused the
interested person to become an interested person, and
the vote includes the affirmative vote of a majority of
our directors who are not affiliates of the interested
party and who were members of our board prior to the
time the interested party became the interested party;
* the transaction is solely between us and any of our
wholly owned subsidiaries or between any of our wholly
owned subsidiaries; or
* the transaction is a merger or consolidation and the
consideration to be received by our common stockholders
is at least as high as the highest price per share paid
by the interested party for our common stock on the
date the common stock was last acquired by the
interested party or during a period of two years prior.
Supermajority Voting/Amendments to Certificate of
Incorporation. The affirmative vote of at least two-thirds of our
company's outstanding common stock is required to amend, alter,
change or repeal the provisions in our certificate of
incorporation providing for the fair price requirements described
above or our classified board of directors with staggered three-
year terms.
Removal of Directors; Filling Vacancies on Board of
Directors. Directors may be removed, with cause, by the vote of
the holders of all classes of stock entitled to vote at an
election of directors, voting together as a single class.
Directors may not be removed without cause by stockholders.
Vacancies in a directorship may be filled by the vote of the
class or classes of shares that had previously elected the
director creating the vacancy, or by the remaining directors or
director elected by that class. The board may increase the number
of directors and fill the newly created directorships, but
following the enlargement, 80 percent of the members of the
enlarged board must consist of directors elected by the holders
of our class B common stock.
Rights Agreement
Our Rights Agreement is designed to deter abusive takeover
tactics and to encourage prospective acquirors to negotiate with
our board rather than attempt to acquire the company in a manner
or on terms that the board deems unacceptable. Under our Rights
Agreement, each outstanding share of class A and class B common
stock includes an associated preferred stock purchase right. If
the rights become exercisable, each right will entitle its holder
to purchase one one-hundredth (1/100) of a share of our series A
participating cumulative preferred stock at an exercise price of
$60 per unit, subject to adjustment. The rights trade with all
outstanding shares of our class A and class B common stock. The
rights will separate from our common stock and become exercisable
upon the earlier of-
* the tenth day following a public announcement that a
person or group of affiliated or associated persons (other than
Rio Tinto Indonesia Limited and its affiliates or associates) has
acquired beneficial ownership of 20 percent or more of our
outstanding common stock, or 20 percent or more of either our
class A common stock or class B common stock (an "acquiring
person"); or
* the tenth business day, or any later date as determined
by our board prior to the time that any person or group becomes
an acquiring person, following the commencement of or
announcement of an intention to make a tender offer or exchange
offer that, if consummated, would result in the person or group
becoming an acquiring person.
Term of Rights. The rights will expire on May 3, 2010,
unless we extend this date or redeem or exchange the rights as
described below.
40
Exercise After Someone Becomes An Acquiring Person. After
any person or group becomes an acquiring person, each holder of a
right will be entitled to receive upon exercise that number of
shares of our class B common stock having a market value of two
times the exercise price of the right. However, this right will
not apply to an acquiring person, whose rights will be void.
Upon the occurrence of certain events after someone becomes
an acquiring person, each holder of a right, other than the
acquiring person, will be entitled to receive, upon exercise of
the right, common stock of the acquiring company having a market
value equal to two times the exercise price of the right. These
rights will arise only if after a person or group becomes an
acquiring person:
* we are acquired in a merger or other business
combination; or
* we sell or otherwise transfer 50 percent or more of our
assets or earning power.
Adjustment. The exercise price, the number of rights
outstanding, and the number of preferred shares issuable upon
exercise of the rights are subject to adjustment from time to
time to prevent certain types of dilution. We will not issue
fractional preferred stock shares. Instead, we will make a cash
adjustment based on the market price of the preferred stock prior
to the date of exercise.
Rights, Preferences, and Limitations of Rights. Preferred
stock purchasable upon exercise of the rights will not be
redeemable. Each share of preferred stock will entitle the holder
to receive a preferential quarterly dividend payment of the
greater of $1.00 or 100 times the dividend declared per share of
our common stock. In the event of liquidation, the holders of
each share of our preferred stock will be entitled to a
preferential liquidation payment of the greater of $0.10 per
share or 100 times the payment made per share of our common
stock. Each share of our preferred stock will entitle the holder
to 100 votes and will vote together with our class B common
stock, or if we no longer have separate classes of common stock,
our common stock. Finally, in the event of any merger,
consolidation or other transaction in which our common stock is
exchanged, each share of our preferred stock will entitle the
holder to receive 100 times the amount received per share of
common stock. These rights are protected by customary
antidilution provisions. Because of the nature of our preferred
stock's dividend, liquidation and voting rights, the value of
each one one-hundredth interest in a share of preferred stock
should approximate the value of one share of our class B common
stock.
Exchange and Redemption. After a person or group becomes an
acquiring person, we may exchange the rights, in whole or in
part, at an exchange ratio, subject to adjustment, of one share
of our class B common stock, or one one-hundredth of a share of
preferred stock, per right. We generally may not make an exchange
after any person or group becomes the beneficial owner of 50
percent or more of our common stock or 50 percent or more of our
class A common stock or class B common stock.
We may redeem the rights in whole, but not in part, at a
price of $0.01 per right, subject to adjustment, at any time
prior to any person or group becoming an acquiring person. The
redemption of the rights may be made effective at such time, on
such basis and with such conditions as our board of directors in
its sole discretion may establish. Once redeemed, the rights will
terminate immediately and the only right of the rights holders
will be to receive the cash redemption price.
Amendments. We may amend the terms of the rights without the
consent of the rights holders, including an amendment to lower
the thresholds described above. However, after any person or
group becomes an acquiring person, we may not amend the terms of
the rights in any way that adversely affects the interests of the
rights holders.
41
SELLING SECURITYHOLDERS
The notes originally were issued by us and sold by Merrill
Lynch & Co., Merrill Lynch, Pierce, Fenner & Smith Incorporated,
as the initial purchaser in transactions exempt from the
registration requirements of the Securities Act to persons
reasonably believed by the initial purchases to be qualified
institutional buyers. Selling securityholders, including their
transferees, pledgees or donees or their successors, may from
time to time offer and sell any or all of the notes and the
common stock into which the notes are convertible pursuant to
this prospectus. The selling securityholders may offer all, some
or none of the notes and the common stock into which the notes
are convertible.
The table below sets forth information, as of October 31,
2001, with respect to the selling securityholders and the
principal amounts of notes and amounts of common stock
beneficially owned by each selling securityholder that may be
offered under this prospectus by the selling securityholders.
The information is based on information provided by or on behalf
of the selling securityholders. The selling securityholders
identified below may have sold, transferred or otherwise disposed
of all or a portion of their notes or common stock since the date
on which they provided the information regarding their notes or
common stock in transactions exempt from the registration
requirements of the Securities Act.
Because the selling securityholders may offer all or some
portion of the notes or the common stock to be offered by them,
we cannot estimate the amount of any sales.
The initial purchaser of the notes or its affiliates have
engaged in, and may in the future engage in, investment banking
and other commercial dealings in the ordinary course of business
with us. They have received customary fees and commissions for
these transactions. The initial purchaser of the notes is an
affiliate of a lender under our bank credit facility. Such
affiliates of the initial purchaser received their proportionate
share of the repayment by us of amounts outstanding under our
bank credit facility from the sale of the notes to the initial
purchaser. To our knowledge, none of the other selling
securityholders has had any position, office or other material
relationship with us or our affiliates within the past three
years.
Principal
Amount of Percentage Number of Shares
Notes of of Common Stock
Name of Selling Owned and Notes That May be
Securityholder Offered Outstanding Sold(1)
AAM Zazove International $ 500,000 * 34,965
Convertible Fund L.P.
Absolute Return Fund Ltd. 150,000 * 10,489
Advent Convertible Master 5,190,000 * 362,937
Cayman L.P.
AIG SoundShore Holdings 7,556,000 1.25% 528,391
Ltd.
AIG SoundShore
Opportunity Holding Fund 4,354,000 * 304,475
Ltd.
AIG SoundShore Strategic
Holding Fund Ltd. 2,590,000 * 181,118
American Motorist 658,000 * 46,013
Insurance Company
American Samoa Government 27,000 * 1,888
Arapahoe County Colorado 64,000 * 4,475
Aristeia International 8,340,000 1.38% 583,216
Limited
Aristeia Trading LLC 2,660,000 * 186,013
BP Amoco PLC, Master 1,084,000 * 75,804
Trust
42
Beta Equities Inc. 6,115,000 1.01% 427,622
CALAMOS Market Neutral
Fund - CALAMOS Investment 2,000,000 * 139,860
Trust
Chrysler Corporation
Master Retirement 30,000 * 2,097
Plan
Circlet (IMA) Limited 3,000,000 * 209,790
City of New Orleans 264,000 * 18,461
City University of New 158,000 * 11,048
York
Commonfund Global Macro 842,000 * 58,881
Company
CSFB Convertible and
Quantitative 3,750,000 * 262,237
Strategies
1976 Distribution Trust
FBO A.R. 9,000 * 629
Lauder/Zinterhofer
1976 Distribution Trust 17,000 * 1,188
FBO Jane A. Lauder
Delta Air Lines Master
Trust (c/o Oaktree 10,000 * 699
Capital Management, LLC)
Delta Pilots D & S Trust 5,000 * 349
Deutsche Banc Alex Brown 31,496,000 5.22% 2,202,517
Inc.
Dredsner Kleinwort
Wasserstein-Gratchester 1,000,000 * 69,930
Inc.
Estate of James Campbell 172,000 * 12,027
Fidelity Contrafund: 19,805,000 3.28% 1,384,965
Fidelity Contrafund
Fidelity Devonshire
Trust: Fidelity Equity- 14,830,000 2.45% 1,037,062
Income Fund
Fidelity Financial Trust:
Fidelity Convertible 21,890,000 3.63% 1,530,792
Securities Fund
Fidelity Puritan Trust: 8,380,000 1.39% 586,013
Fidelity Puritan Fund
Fidelity Summer Street
Trust: Fidelity 3,713,000 * 259,650
Capital & Income Fund
Global Bermuda Limited 2,000,000 * 139,860
Partnership
GM Employees Global Grp
Pen Tr (Abs 1,500,000 * 104,895
Return Portfolio)
General Motor Welfare
Benefit Trust 3,000,000 * 209,790
(VEBA)
Goldman Sachs and Company 8,350,000 1.38% 583,916
Grady Hospital Foundation 139,000 * 9,720
Granville Capital 3,000,000 * 209,790
Corporation
HBK Master Fund L.P. 2,500,000 * 174,825
HFR Convertible Arbitrage 435,000 * 30,419
Account
HFR Zazove Master Trust 150,000 * 10,489
Highbridge International 14,500,000 2.40% 1,013,986
LLC
Hotel Union & Hotel 291,000 * 20,349
Industry of Hawaii
Independence Blue Cross 280,000 * 19,580
James Campbell 226,000 * 15,804
Corporation, The
Jefferies & Company Inc. 7,000 * 489
43
Lakeshore International, 8,250,000 1.37% 576,923
Ltd.
Lexington (IMA) Limited 80,000 * 5,594
Lipper Convertibles, L.P. 5,000,000 * 349,650
Lipper Offshore 2,500,000 * 174,825
Convertibles, L.P.
Local Initiatives Support 66,000 * 4,615
Corporation
McMahan Securities Co. 1,450,000 * 101,398
L.P.
Merced Partners Limited 4,500,000 * 314,685
Partnership
Minnesota Power and Light 285,000 * 19,930
Morgan Stanley Dean
Witter Convertible 2,250,000 * 157,342
Securities Trust
Municipal Employees 239,000 * 16,713
Nabisco Holdings 37,000 * 2,587
New Orleans Firefighters
Pension / 144,000 * 10,069
Relief Fund
Occidental Petroleum 267,000 * 18,671
Corporation
Omega Capital Investors, 761,000 * 53,216
L.P.
Omega Capital Partners, 9,407,000 1.56% 657,832
L.P.
Omega Overseas Partners, 7,875,000 1.30% 550,699
Ltd.
OCM Convertible Trust 30,000 * 2,097
Oz Master Fund, Ltd. 4,770,000 * 333,566
Partner Reinsurance 60,000 * 4,195
Company Ltd.
Peoples Benefit Life
Insurance Company 1,000,000 * 69,930
TEAMSTERS
Pioneer High Yield Fund 23,120,000 3.83% 1,616,783
Pioneer High Yield VCT 1,200,000 * 83,916
Portfolio
Pioneer Strategic Income 160,000 * 11,188
Fund
Pioneer Strategic Income 20,000 * 1,398
VCT Portfolio
Policeman and Firemen
Retirement System 693,000 * 48,461
of the City of
Detroit
Pro-mutual 780,000 * 54,545
R2 Investments, LDC 5,000,000 * 349,650
Ramius Capital Group 279,000 * 19,510
Raytheon Master Pension 219,000 * 15,314
Trust
RCG Latitude Master Fund 1,115,000 * 77,972
Ltd.
RCG Multi Strategy LP 106,000 * 7,412
RJR Reynolds 112,000 * 7,832
Retail Clerks Pension 1,500,000 * 104,895
Trust
Retail Clerks Pension 1,000,000 * 69,930
Trust #2
2000 Revocable Trust FBO
A.R. 9,000 * 629
Lauder/Zinterhofer
St. Albans Partners Ltd. 4,000,000 * 279,720
San Diego County
Employees Retirement 650,000 * 45,454
Association
SG Cowen Securities 200,000 * 13,986
Corporation
44
Shell Pension Trust 653,000 * 45,664
Stark International 4,000,000 * 279,720
State Employees'
Retirement Fund of the 10,000 * 699
State of Delaware
State of Connecticut
Combined Investment 20,000 * 1,398
Funds
State of Maryland 3,342,000 * 233,706
Retirement Agency
Susquehanna Capital Group 11,500,000 1.90% 804,195
Tamarack International, 4,750,000 * 332,167
Ltd.
TQA Master Fund Ltd. 3,000,000 * 209,790
TQA Master Plus Fund Ltd. 3,000,000 * 209,790
Tribeca Investments, 4,500,000 * 314,685
L.L.C.
Van Kampen Equity Income 17,400,000 2.88% 1,216,783
Fund
Van Kampen Harbor Fund 2,600,000 * 181,818
Vanguard Convertible 675,000 * 47,202
Securities Fund, Inc.
Variable Insurance
Products Fund: Equity- 6,790,000 1.12% 474,825
Income Fund
Variable Insurance
Products Fund II: 5,025,000 * 351,398
Contrafund Portfolio
Viacom Inc. Pension Plan 31,000 * 2,167
Master Trust
Zazove Hedged Convertible 600,000 * 41,958
Fund L.P.
Zazove Income Fund L.P. 500,000 * 34,965
Zurich Institutional 162,000 * 11,328
Benchmarks
Zurich Institutional
Benchmarks Master 600,000 * 41,958
Fund Ltd.
------------ ----- ----------
TOTAL $345,329,000 57.20% 24,148,861
============ ===== ==========
___________________
* less than 1%
(1) The notes are convertible into shares of class A or class B
common stock at a conversion price of $14.30 per share.
45
PLAN OF DISTRIBUTION
The selling securityholders and their successors, including
their transferees, pledgees or donees or their successors, may
sell the notes and our common stock into which the notes are
convertible directly to purchasers or through underwriters,
brokers-dealers or agents, who may receive compensation in the
form of discounts, concessions or commissions from the selling
securityholders or the purchasers. These discounts, concessions
or commissions as to any particular underwriter, broker-dealer or
agent may be in excess of those customary in the types of
transactions involved.
The notes and common stock issuable upon conversion of the
notes may be sold in one or more transactions at fixed prices, at
prevailing market prices at the time of sale, at prices related
to the prevailing market prices, at varying prices determined at
the time of sale, or at negotiated prices. These sales may be
effected in transactions, which may involve crosses or block
transactions:
* on any national securities exchange or U.S.
inter-dealer system of a registered national securities
association on which the notes or our common stock may
be listed or quoted at the time of sale;
* in the over-the-counter market;
* otherwise than on these exchanges or systems or in the
over-the-counter market;
* through the writing of options, whether the options are
listed on an options exchange or otherwise; or
* through the settlement of short sales.
In connection with the sale of the notes and common stock
issuable upon conversion of the notes, the selling
securityholders may enter into hedging transactions with
broker-dealers or other financial institutions, which may in turn
engage in short sales of the notes or common stock in the course
of hedging the positions they assume. The selling securityholders
also may sell the notes or common stock issuable upon conversion
of the notes, short and deliver these securities to close out
their short positions, or loan or pledge the notes or common
stock to broker-dealers that in turn may sell these securities.
The aggregate proceeds to the selling securityholders from
the sale of the notes or common stock offered by them will be the
purchase price of the notes or common stock less discounts and
commissions, if any. Each of the selling securityholders reserves
the right to accept and, together with their agents from time to
time, to reject, in whole or in part, any proposed purchase of
notes or common stock to be made directly or through agents. We
will not receive any of the proceeds from the sales by selling
securityholders.
Our class A and class B common stock are traded on the New
York Stock Exchange under the symbols "FCXA" and "FCX,"
respectively. The notes sold pursuant to this prospectus will no
longer be eligible for trading on The PORTAL Market. Although we
intend to apply for the listing of the notes on the New York
Stock Exchange, we cannot assure you that an active trading
market for the notes will develop or be sustained.
In order to comply with the securities laws of some states,
if applicable, the notes and common stock may be sold in these
jurisdictions only through registered or licensed brokers or
dealers. In addition, in some states the notes and common stock
may not be sold unless they have been registered or qualified for
sale or an exemption from registration or qualification
requirements is available and is complied with.
The selling securityholders and any underwriters,
broker-dealers or agents that participate in the sale of the
notes and common stock may be "underwriters" within the meaning
of Section 2(11) of the Securities Act of 1933. Any discounts,
commissions, concessions or profit they earn on any resale of the
shares may be underwriting discounts and commissions under the
Securities Act. Selling securityholders who are "underwriters"
within the meaning of Section 2(11) of the Securities Act of 1933
will be subject to the prospectus delivery requirements of the
Securities Act of 1933. The selling securityholders have
acknowledged that they understand their obligations to
46
comply
with the provisions of the Securities Exchange Act of 1934 and
the rules thereunder relating to stock manipulation, particularly
Regulation M.
In addition, any securities covered by this prospectus which
qualify for sale pursuant to Rule 144 or Rule 144A of the
Securities Act of 1933 may be sold under Rule 144 or Rule 144A
rather than under this prospectus. A selling securityholder may
not sell any notes or common stock described in this prospectus
and may not transfer, devise or gift these securities by other
means not described in this prospectus.
To the extent required, the specific notes or shares of our
common stock to be sold, the names of the selling
securityholders, the respective purchase prices and public
offering prices, the names of any agent, dealer or underwriter,
and any applicable commissions or discounts with respect to a
particular offer will be set forth in an accompanying prospectus
supplement or, if appropriate, a post-effective amendment to the
registration statement of which this prospectus is a part.
We entered into a registration rights agreement for the
benefit of holders of the notes to register their notes and our
common stock under applicable federal and state securities laws
under specific circumstances and at specific times. The
registration rights agreement provides for cross-indemnification
of the selling securityholders and us and our respective
directors, officers and controlling persons against specific
liabilities in connection with the offer and sale of the notes
and our common stock, including liabilities under the Securities
Act of 1933.
We have agreed to pay substantially all of the expenses of
registering the notes and common stock under the Securities Act
of 1933 and of compliance with blue sky laws, including
registration and filing fees, printing and duplicating expenses,
legal fees of our counsel, fees for one legal counsel retained by
the selling securityholders and fees of the trustee under the
indenture pursuant to which we originally issued the notes and of
the registrar and transfer agent of our common stock. If the
notes or the common stock into which the notes may be converted
are sold through underwriters or broker-dealers, the selling
securityholders will be responsible for underwriting discounts,
underwriting commissions and agent commissions.
Under the registration rights agreement, we are obligated to
use reasonable efforts to keep the registration statement
effective until, and therefore this offering will terminate on,
the earlier of: (1) the date on which all securities offered
under this prospectus have been sold pursuant to this prospectus,
and (2) the date on which all outstanding securities held by
non-affiliates of ours may be resold without registration under
the Securities Act of 1933 pursuant to Rule 144(k) under the
Securities Act of 1933.
47
LEGAL MATTERS
The validity of the securities will be passed upon for us by
Jones, Walker, Waechter, Poitevent, Carrere & Denegre, L.L.P.
EXPERTS
Our audited financial statements and schedules included in
this prospectus and incorporated by reference to our Annual
Report on Form 10-K for the year ended December 31, 2000 have
been audited by Arthur Andersen LLP, independent public
accountants as indicated in their reports contained in our Annual
Report on Form 10-K. We have relied upon their authority as
experts in accounting and auditing in giving these reports. Our
future audited financial statements and schedules and the reports
of our independent public accountants also will be incorporated
by reference in this prospectus in reliance upon the authority of
our accountants as experts in giving those reports to the extent
our auditors have audited those financial statements and
consented to the use of their reports thereon.
Our reserves as of December 31, 2000 included in this
prospectus and incorporated by reference to our Annual Report on
Form 10-K for the year ended December 31, 2000, have been
verified by Independent Mining Consultants, Inc. This reserve
information has been included in this prospectus and incorporated
by reference herein in reliance upon the authority of Independent
Mining Consultants, Inc. as experts in mining, geology and
reserve determination.
48
WHERE YOU CAN FIND ADDITIONAL INFORMATION
We are subject to the information and reporting requirements
of the Securities Exchange Act of 1934, as amended, under which
we file periodic reports, proxy statements and other information
with the SEC. Copies of these reports, proxy statements and other
information may be examined without charge at the SEC public
reference room located at 450 Fifth Street, N.W. Room 1024,
Washington, D.C. 20549. We also file information electronically
with the SEC. Our electronic filings are available from the SEC's
Internet site at http://www.sec.gov. Copies of all or a portion
of our filings may also be obtained from the Public Reference
Section of the SEC upon payment of prescribed fees. Please call
the SEC at 800-SEC-0330 for further information.
We have agreed that if, at any time that the notes or the
common stock issuable upon conversion of the notes are
"restricted securities" within the meaning of the Securities Act
of 1933 and we are not subject to the information reporting
requirements of the Securities Exchange Act of 1934, we will
furnish to holders of the notes and such common stock and to
prospective purchasers designated by them the information
required to be delivered pursuant to Rule 144A(d) (4) under the
Securities Act of 1933 to permit compliance with Rule 144A in
connection with resales of the notes and such common stock.
We are "incorporating by reference" specified documents that
we file with the SEC, which means:
* incorporated documents are considered part of this
prospectus;
* we are disclosing important information to you by
referring you to those documents, and
* information that we file in the future with the SEC
will automatically update and supersede this prospectus.
We incorporate by reference the documents listed below and
any documents that we file with the SEC under Section 13(c) or
15(d) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), after the date of this prospectus and before the
end of the offering of the notes:
* our current reports on Form 8-K, filed on January 2, 2001,
July 30, 2001, August 2, 2001, September 26, 2001 and December
13, 2001;
* our annual report on Form 10-K for the fiscal year ended
December 31, 2000 filed March 23, 2001;
* our quarterly reports on Form 10-Q for the fiscal quarters
ended March 31, 2001 filed May 7, 2001; June 30, 2001 filed July
30, 2001; and September 30, 2001 filed November 1, 2001.
At your request, we will provide you with a free copy of any
of these filings (except for exhibits, unless the exhibits are
specifically incorporated by reference into the filing). You may
request copies by writing or calling us at:
Freeport-McMoRan Copper & Gold Inc.
1615 Poydras Street
New Orleans, Louisiana 70112
Attention: Christopher D. Sammons
Investor Relations
(504) 582-4000
49
Freeport-McMoRan Copper & Gold Inc.
FCX Investment Ltd.
$603,750,000
8 1/4% Convertible Senior Notes due 2006
Freeport-McMoRan Copper & Gold Inc.
Class A Common Stock
Class B Common Stock
PROSPECTUS
January ___, 2002
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 14. Other Expenses of Issuance and Distribution.
The estimated fees and expenses payable by us in connection
with the issuance and distribution of the securities being
registered are as follows:
SEC registration fee $150,750
Printing costs 20,000*
Legal fees and expenses 70,000*
Accounting fees and expenses 30,000*
Rating agency fees 50,000*
Blue sky fees and expenses 10,000*
Trustee's and registrar's fees 20,000*
Miscellaneous 9,250*
--------
Total $360,000*
========
*All amounts listed above other than the
registration fee are estimated.
Item 15. Indemnification of Directors and Officers.
Section 145 of the General Corporation Law of Delaware
empowers us to indemnify, subject to the standards prescribed in
that Section, any person in connection with any action, suit or
proceeding brought or threatened by reason of the fact that the
person is or was our director, officer, employee or agent.
Article VIII of our Certificate of Incorporation and Article XXV
of our by-laws provides that each person who was or is made a
party to, or is threatened to be made a party to, or is otherwise
involved in, any action, suit, or proceeding by reason of the
fact that the person is or was our director, officer, employee or
agent shall be indemnified and held harmless by us to the fullest
extent authorized by the General Corporation Law of Delaware.
The indemnification covers all expenses, liability and loss
reasonably incurred by the person and includes attorneys' fees,
judgments, fines and amounts paid in settlement. The rights
conferred by Article VIII of our Certificate of Incorporation and
Article XXV of our by-laws are contractual rights and include the
right to be paid by us the expenses incurred in defending the
action, suit or proceeding in advance of its final disposition.
Article VIII of our Certificate of Incorporation provides
that our directors will not be personally liable to us or our
stockholders for monetary damages resulting from breaches of
their fiduciary duty as directors except (1) for any breach of
the duty of loyalty to us or our stockholders, (2) for acts or
omissions not in good faith or which involve intentional
misconduct or a knowing violation of law, (3) under Section 174
of the General Corporation Law of Delaware, which makes directors
liable for unlawful dividend or unlawful stock repurchases or
redemptions or (4) transactions from which directors derive
improper personal benefit.
We have an insurance policy insuring our directors and
officers against certain liabilities, including liabilities under
the Securities Act of 1933.
Item 16. Exhibits.
1.1 Purchase Agreement dated as of August 7, 2001 among the
Registrants and Merrill Lynch & Co., Merrill Lynch,
Pierce, Fenner & Smith Incorporated.*
2.1 Agreement dated as of May 2, 1995 by and between
Freeport-McMoRan Inc. (FTX) and Freeport-McMoRan Copper
& Gold Inc. (FCX) and The RTZ Corporation PLC., RTZ
Indonesia Limited, and RTZ America, Inc. (the Rio Tinto
Agreement).*
2.2 Amendment dated May 31, 1995 to the Rio Tinto
Agreement.*
II-1
2.3 Distribution Agreement dated as of July 5, 1995 between
FTX and FCX.*
3.1 Composite Copy of the Certificate of Incorporation of
FCX.*
4.1 Indenture dated as of August 7, 2001 among the
Registrants and The Bank of New York, including the form
of the notes.*
4.2 Registration Rights Agreement dated as of August 7, 2001
among the Registrants and Merrill Lynch & Co., Merrill
Lynch, Pierce, Fenner & Smith Incorporated.*
4.3 Collateral Pledge and Security Agreement dated as of
August 7, 2001 between FCX Investment Ltd. and The Bank
of New York.*
4.4 Senior Indenture dated as of November 15, 1996 from FCX
to The Chase Manhattan Bank, as Trustee.*
4.5 First Supplemental Indenture dated as of November 18,
1996 from FCX to The Chase Manhattan Bank, as Trustee,
providing for the issuance of the Senior Notes and
supplementing the Senior Indenture dated November 15,
1996 from FCX to such Trustee, providing for the
issuance of Debt Securities.*
5.1 Opinion of Jones, Walker, Waechter, Poitevent, Carrere &
Denegre, L.L.P. as to the legality of the securities.*
10.1 Contract of Work dated December 30, 1991 between the
Government of the Republic of Indonesia and PT Freeport
Indonesia.*
10.2 Contract of Work dated August 15, 1994 between the
Government of the Republic of Indonesia and PT Irja
Eastern Minerals Corporation.*
10.3 Concentrate Purchase and Sales Agreement dated
effective December 11, 1996 between PT Freeport
Indonesia and PT Smelting.*
10.4 Participation Agreement dated as of October 11, 1996
between PT Freeport Indonesia and P.T. RTZ-CRA Indonesia
with respect to a certain contract of work.*
10.5 Second Amended and Restated Joint Venture and
Shareholders' Agreement dated as of December 11, 1996
among Mitsubishi Materials Corporation, Nippon Mining
and Metals Company, Limited and PT Freeport Indonesia.*
10.6 1995 Long-Term Performance Incentive Plan of FCX.*
10.7 FCX President's Award Program.*
10.8 FCX 1995 Stock Option Plan.*
12.1 Computation of Ratio of Earnings to Fixed Charges.*
23.1 Consent of Arthur Andersen LLP.
23.2 Consent of Jones, Walker, Waechter, Poitevent,
Carrere & Denegre, L.L.P. included as part of Exhibit
5.*
23.3 Consent of Independent Mining Consultants, Inc.
II-2
24.1 Powers of Attorney.*
25.1 Form T-1; Statement of Eligibility of the Trustee under
the Trust Indenture Act.*
_____________________
* Previously filed
Item 17. Undertakings.
(1) The undersigned Registrant hereby undertakes:
(a) To file, during any period in which offers or sales
are being made, a post-effective amendment to this
registration statement:
(i) To include any prospectus required by section
10(a)(3) of the Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events
arising after the effective date of this registration
statement (or the most recent post-effective amendment
thereof) which, individually or in the aggregate,
represent a fundamental change in the information set
forth in this registration statement; notwithstanding the
foregoing, any increase or decrease in volume of
securities offered (if the total dollar value of
securities offered would not exceed that which was
registered) and any deviation from the low or high end of
the estimated maximum offering range may be reflected in
the form of prospectus filed with the SEC pursuant to
Rule 424(b) if, in the aggregate, the changes in volume
and price represent no more than a 20 percent change in
the maximum aggregate offering price set forth in the
"Calculation of Registration Fee" table in the effective
registration statement.
(iii) To include any material information with
respect to the plan of distribution not previously
disclosed in this registration statement or any material
change to such information in this registration
statement;
Provided, however, that paragraphs (a)(1)(i) and
(a)(1)(ii) do not apply if the information required to be
included in a post-effective amendment by those paragraphs
is contained in periodic reports filed by the Registrant
pursuant to Section 13 or Section 15(d) of the Securities
Exchange Act of 1934 that are incorporated by reference in
this registration statement.
(b) That, for the purpose of determining any liability
under the Securities Act of 1933, each such post-effective
amendment shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering
of such securities at that time shall be deemed to be the
initial bona fide offering thereof.
(c) To remove from registration by means of a post-
effective amendment any of the securities being registered
which remain unsold at the termination of the offering.
(2) The undersigned registrant hereby undertakes that, for
purposes of determining any liability under the
Securities Act of 1933, each filing of the registrant's
annual report pursuant to Section 13(a) or Section 15(d)
of the Securities Exchange Act of 1934 that is
incorporated by reference in the registration statement
shall be deemed to be a new registration statement
relating to the securities offered therein, and the
offering of such securities at that time shall be deemed
to be the initial bona fide offering thereof.
(3) Insofar as indemnification for liabilities arising
under the Securities Act of 1933 may be permitted to
directors, officers and controlling persons of the
Registrant pursuant to the foregoing provisions, or
otherwise, the Registrant has been advised that in the
opinion of the Securities and Exchange Commission such
indemnification is against public policy as expressed in
the Act and is, therefore, unenforceable. In the event
that a claim for indemnification against such liabilities
(other than the
II-3
payment by the Registrant of expenses
incurred or paid by a director, officer or controlling
person of the Registrant in the successful defense of any
action, suit or proceeding) is asserted by such director,
officer or controlling person in connection with the
securities being registered, the Registrant will, unless
in the opinion of its counsel the matter has been settled
by controlling precedent, submit to a court of
appropriate jurisdiction the question whether such
indemnification by it is against public policy as
expressed in the Act and will be governed by the final
adjudication of such issue.
(4) The undersigned registrant hereby undertakes to file an
application for the purpose of determining the
eligibility of the trustee to act under subsection (a) of
section 310 of the Trust Indenture Act of 1939 in
accordance with the rules and regulations prescribed by
the SEC under section 305(b)(2) of the Trust Indenture
Act.
II-4
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933,
Freeport-McMoRan Copper & Gold Inc. certifies that it has
reasonable grounds to believe that it meets all of the
requirements for filing on Form S-3 and has duly caused this
Amendment No. 1 to its registration statement to be signed on its
behalf by the undersigned, thereunto duly authorized, in New
Orleans, Louisiana, on January 4, 2002.
Freeport-McMoRan Copper & Gold Inc.
By:/s/ Richard C. Adkerson
Richard C. Adkerson
President and Chief
Financial Officer
Pursuant to the requirements of the Securities Act of 1933,
this Amendment No. 1 has been signed by the following persons in
the capacities indicated on January 4, 2002.
Signature Title
--------- -----
Chairman of the Board,
* Chief Executive
James R. Moffett Officer and Director
(Principal Executive Officer)
Vice Chairman of
* the Board
B. M. Rankin, Jr. and Director
/s/Richard C. Adkerson President and Chief Financial
Richard C. Adkerson Officer (Principal
Financial Officer)
Vice President and
Controller -
* Financial Reporting
C. Donald Whitmire, Jr. (Principal
Accounting Officer)
* Director
Robert J. Allison, Jr.
* Director
Robert W. Bruce III
* Director
R. Leigh Clifford
S-1
* Director
Robert A. Day
* Director
Gerald J. Ford
* Director
H. Devon Graham, Jr.
* Director
Steven Green
* Director
Oscar L. Groeneveld
* Director
J. Bennett Johnston
* Director
Bobby Lee Lackey
* Director
Gabrielle K. McDonald
* Director
J. Stapleton Roy
* Director
J. Taylor Wharton
*By:/s/ Richard C. Adkerson
Richard C. Adkerson
Attorney-in-Fact
S-2
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933,
FCX Investment Ltd. certifies that it has reasonable grounds to
believe that it meets all of the requirements for filing on Form
S-3 and has duly caused this Amendment No. 1 to its registration
statement to be signed on its behalf by the undersigned,
thereunto duly authorized, in New Orleans, Louisiana, on January
4, 2002.
FCX Investment Ltd.
By:/s/Richard C. Adkerson
Richard C. Adkerson
President
Pursuant to the requirements of the Securities Act of 1933,
this Amendment No. 1 has been signed by the following person in
the capacity indicated on January 4, 2002.
Signature Title
--------- -----
/s/ Richard C. Adkerson
Richard C. Adkerson President and Director
(Principal Executive,
Financial and Accounting
Officer and Authorized
Representative in the
United States)
S-3
EXHIBIT INDEX
1.1 Purchase Agreement dated as of August 7, 2001 among the
Registrants and Merrill Lynch & Co., Merrill Lynch,
Pierce, Fenner & Smith Incorporated.*
2.1 Agreement dated as of May 2, 1995 by and between
Freeport-McMoRan Inc. (FTX) and Freeport-McMoRan Copper
& Gold Inc. (FCX) and The RTZ Corporation PLC., RTZ
Indonesia Limited, and RTZ America, Inc. (the Rio Tinto
Agreement).*
2.2 Amendment dated May 31, 1995 to the Rio Tinto
Agreement.*
2.3 Distribution Agreement dated as of July 5, 1995 between
FTX and FCX.*
3.1 Composite Copy of the Certificate of Incorporation of
FCX.*
4.1 Indenture dated as of August 7, 2001 among the
Registrants and The Bank of New York, including the
form of the notes.*
4.2 Registration Rights Agreement dated as of August 7,
2001 among the Registrants and Merrill Lynch & Co.,
Merrill Lynch, Pierce, Fenner & Smith Incorporated.*
4.3 Collateral Pledge and Security Agreement dated as of
August 7, 2001 between FCX Investment Ltd. and The Bank
of New York.*
4.4 Senior Indenture dated as of November 15, 1996 from FCX
to The Chase Manhattan Bank, as Trustee.*
4.5 First Supplemental Indenture dated as of November 18,
1996 from FCX to The Chase Manhattan Bank, as Trustee,
providing for the issuance of the Senior Notes and
supplementing the Senior Indenture dated November 15,
1996 from FCX to such Trustee, providing for the
issuance of Debt Securities.*
5.1 Opinion of Jones, Walker, Waechter, Poitevent,
Carrere & Denegre, L.L.P. as to the legality of the
securities.*
10.1 Contract of Work dated December 30, 1991 between the
Government of the Republic of Indonesia and PT Freeport
Indonesia.*
10.2 Contract of Work dated August 15, 1994 between the
Government of the Republic of Indonesia and PT Irja
Eastern Minerals Corporation.*
10.3 Concentrate Purchase and Sales Agreement dated
effective December 11, 1996 between PT Freeport
Indonesia and PT Smelting.*
10.4 Participation Agreement dated as of October 11, 1996
between PT Freeport Indonesia and P.T. RTZ-CRA
Indonesia with respect to a certain contract of work.*
10.5 Second Amended and Restated Joint Venture and
Shareholders' Agreement dated as of December 11, 1996
among Mitsubishi Materials Corporation, Nippon Mining
and Metals Company, Limited and PT Freeport Indonesia.*
10.6 1995 Long-Term Performance Incentive Plan of FCX.*
10.7 FCX President's Award Program.*
E-1
10.8 FCX 1995 Stock Option Plan.*
12.1 Computation of Ratio of Earnings to Fixed Charges.*
23.1 Consent of Arthur Andersen LLP.
23.2 Consent of Jones, Walker, Waechter, Poitevent,
Carrere & Denegre, L.L.P. included as part of Exhibit
5.*
23.3 Consent of Independent Mining Consultants, Inc.
24.1 Powers of Attorney*
25.1 Form T-1; Statement of Eligibility of the Trustee under
the Trust Indenture Act.*
_____________________
* Previously filed
E-2