Filed Pursuant to
Rule 424(b)(2)
Registration Statement File
No. 333-144496
Prospectus supplement to
prospectus dated October 5, 2007
14,500,000 shares
McMoRan Exploration
Co.
Common shares
We are offering 14,500,000 shares of our common stock.
Our common stock is listed on the New York Stock Exchange under
the symbol MMR. On June 16, 2009, the last
reported sale price of our common stock on the New York Stock
Exchange was $5.79 per share.
Concurrently with this offering of common stock, we are offering
75,000 shares of our 8% convertible perpetual preferred
stock (86,250 shares if the underwriters exercise their
over-allotment option in full). We are offering the convertible
perpetual preferred stock pursuant to a separate prospectus
supplement. This prospectus supplement is not an offer to sell
or a solicitation of an offer to buy any of our shares of
convertible perpetual preferred stock. Completion of this
offering is not conditioned upon the closing of the concurrent
offering of the convertible perpetual preferred stock.
Investing in our common stock involves certain risks. Before
buying shares of our common stock, you should read the
discussion of material risks described in Risk
factors beginning on
page S-6
of this prospectus supplement for more information.
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Per Share
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Total
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Public offering price
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$
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5.7500
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$
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83,375,000
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Underwriting discount
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$
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0.2731
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$
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3,959,950
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Proceeds, before expenses, to McMoRan Exploration Co.
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$
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5.4769
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$
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79,415,050
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We have granted the underwriters an option for a period of
30 days to purchase up to 2,175,000 additional shares of
our common stock at the public offering price less the
underwriting discount to cover over-allotments.
Delivery of the shares of common stock will be made on or about
June 22, 2009.
Neither the Securities and Exchange Commission nor any state
securities commission has approved or disapproved of these
securities or determined if this prospectus supplement or the
accompanying prospectus is truthful or complete. Any
representation to the contrary is a criminal offense.
Book-Running Manager
J.P. Morgan
Co-Managers
The date of this prospectus supplement is June 17, 2009.
Table of
contents
Prospectus
supplement
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Page
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S-ii
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S-ii
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S-iii
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S-1
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S-6
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S-10
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S-10
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S-10
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S-11
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S-12
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S-18
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S-21
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S-26
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S-26
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S-26
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S-27
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Prospectus
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Page
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About this prospectus
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1
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McMoRan Exploration Co.
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1
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Use of proceeds
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3
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Ratio of earnings to fixed charges
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4
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Description of McMoRan capital stock
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5
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Description of debt securities
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11
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Description of warrants
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20
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Description of purchase contracts
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21
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Description of units
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21
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Forms of securities
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22
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Plan of distribution
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23
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Where you can find more information
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25
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Information concerning forward-looking statements
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27
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Legal opinions
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28
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Experts
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Reserves
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You should rely solely on the information contained in this
prospectus supplement, the accompanying prospectus, or in any
related free writing prospectus issued by us and the documents
incorporated by reference herein or therein. We have not, and
the underwriters have not, authorized any other person to
provide you with different information. If anyone provides you
with different or inconsistent information, you should not rely
on it. We are not, and the underwriters are not, making an offer
to sell these securities in any jurisdiction where the offer or
sale is not permitted. You should assume that the information
contained or incorporated by reference in this prospectus
supplement, the accompanying prospectus, any related free
writing prospectus issued by us, or any document incorporated by
reference herein or therein is accurate only as of the date on
the front cover of those documents. Our business, financial
condition, results of operations and prospects may have changed
since that date.
S-i
About this
prospectus supplement
This document contains two parts. The first part is this
prospectus supplement, which describes the specific terms of
this offering and contains certain summary information regarding
our company. The second part, the accompanying prospectus,
provides more general information about us and our business,
some of which may not apply to this offering.
If the
description of the offering varies between this prospectus
supplement and the accompanying prospectus, you should rely on
the information in this prospectus supplement.
Before purchasing any securities, you should carefully read both
this prospectus supplement and the accompanying prospectus,
together with the additional information described under the
heading Where you can find more information.
Except as otherwise described herein or unless the context
otherwise requires, all references to McMoRan,
MMR, we, us, and
our in this prospectus supplement refer to McMoRan
Exploration Co. and all entities owned or controlled by McMoRan
Exploration Co.
Industry and
other information
Unless we indicate otherwise, we base the information concerning
the oil and gas industry that is presented or incorporated by
reference herein on our general knowledge of and expectations
concerning the industry. Statements regarding our market
position and market share are based on our assessment of data
available to us from various industry sources and assumptions
that we believe to be reasonable based on our knowledge of the
oil and gas industry. We have not independently verified data
obtained from industry sources and do not guarantee its accuracy
or completeness. In addition, we believe that data regarding the
oil and gas industry and our market position and market share
within such industry is inherently imprecise and therefore
should be used only as general guidance. Further, our estimates
involve risks and uncertainties and are subject to change based
on various factors, including those discussed in the Risk
factors section of this prospectus supplement and the
other information contained or incorporated by reference herein.
S-ii
Cautionary
statement regarding forward-looking statements
This prospectus supplement and the accompanying prospectus,
including the documents incorporated by reference herein and
therein, contain forward-looking statements within
the meaning of Section 27A of the Securities Act of 1933,
as amended (the Securities Act) and Section 21E
of the Securities Exchange Act of 1934, as amended (the
Exchange Act). Such forward-looking statements are
intended to be covered by the safe harbor for
forward-looking statements provided by the Private
Securities Litigation Reform Act of 1995. These statements may
be made directly in this prospectus supplement or the
accompanying prospectus or may be incorporated in this
prospectus supplement or the accompanying prospectus by
reference to other documents and may include statements for the
period following the completion of this offering. Our
representatives may also make forward-looking statements.
Forward-looking statements are all statements other than
statements of historical fact, such as statements regarding our
financial plans; our indebtedness; acquisitions; our exploration
and development plans; our ability to satisfy our reclamation,
indemnification and environmental obligations; anticipated flow
rates of producing and new wells; drilling potential and
results; reserve estimates and depletion rates; general economic
and business conditions; risks and hazards inherent in the
production of oil and natural gas; our ability to fully insure
against the inherent risks and hazards of our operations at
commercially reasonable costs; demand and potential demand for
oil and natural gas; trends in oil and natural gas prices;
amounts and timing of capital expenditures and reclamation
costs; and our ability to obtain permits necessary for new
operations. The words anticipates, may,
can, plans, feels,
believes, estimates,
expects, projects, intends,
likely, will, should,
to be and any similar expressions and any other
statements that are not historical facts, in each case as they
relate to us or our management, are intended to identify those
assertions as forward-looking statements.
When we or our representatives make any such statements, we or
the person making them believes that the assumptions underlying
the expression of such expectations are reasonable. We caution
readers that these statements are not guarantees of future
performance, and our actual results may differ materially from
those anticipated, projected or assumed in the forward-looking
statements. Important factors that could cause actual results to
differ materially from our expectations include: adverse
conditions such as high temperature and pressure that could lead
to mechanical failures or increased costs; variations in the
market prices of oil and natural gas; drilling results;
unanticipated fluctuations in flow rates of producing wells; oil
and natural gas reserves expectations; the ability to satisfy
future cash obligations and environmental costs; as well as
other general exploration and development risks and hazards; and
other factors described in more detail under the heading
Risk factors.
Accordingly, we give no assurance that any of the events
anticipated by the forward-looking statements will transpire or
occur, or if any of them do so, what impact, if any, they will
have on our results of operations or financial condition. Except
for meeting our ongoing obligations under the federal securities
laws, we do not intend and undertake no obligation to update or
revise any forward-looking statements.
S-iii
Summary
The following summary does not contain all of the information
you should consider before buying shares of our common stock and
is qualified in its entirety by reference to the more detailed
information and consolidated financial statements appearing
elsewhere or incorporated by reference in this prospectus
supplement and the accompanying prospectus, as well as the
materials filed with the Securities and Exchange Commission
(SEC) that are considered to be part of this prospectus
supplement and the accompanying prospectus. You should read this
prospectus supplement and the accompanying prospectus carefully,
including Risk factors, and the documents
incorporated by reference herein and therein before making an
investment decision.
McMoRan
Exploration Co.
Our
business
We engage in the exploration, development and production of oil
and natural gas offshore in the Gulf of Mexico and onshore in
the Gulf Coast area. We have one of the largest acreage
positions in the shallow waters of these areas, which are our
regions of focus. Our focused strategy enables us to capitalize
on our geological and technical capabilities and our more than
35 years of operating experience in this region. We also
believe that the scale of our operations in the Gulf of Mexico
allows us to realize certain operating synergies and provides a
strong platform from which to pursue our business strategy. Our
oil and gas operations are conducted through McMoRan
Oil & Gas LLC (MOXY), our principal operating
subsidiary. At December 31, 2008, our proved oil and
natural gas reserves were approximately 345 billion cubic
feet equivalent, 84 percent of which were proved developed
and 70 percent of which were natural gas.
Our scope of
operations
We conduct substantially all of our operations in the shallow
waters of the Gulf of Mexico, commonly referred to as the
shelf, and onshore in the Gulf Coast region. We
believe that we have significant exploration opportunities in
large, deep geologic structures commonly referred to as
deep gas or the deep shelf (prospects
with drilling depths between 15,000 feet to
25,000 feet) that are located beneath the shallow waters of
the Gulf of Mexico shelf. These structures often lie beneath
shallow reservoirs where significant reserves have already been
produced. Our 2007 acquisition of substantially all of the
proved oil and gas property interests and related assets of
Newfield Exploration Company located on the outer continental
shelf of the Gulf of Mexico increased our deep gas exploration
potential, provided access to new ultra-deep
exploration opportunities (prospects with total drilling depths
in excess of 25,000 feet) and established us as a
significant producer on the traditional shelf
(prospects located at drilling depths not exceeding
15,000 feet) of the Gulf of Mexico. The proximity of our
shelf prospects to existing oil and gas infrastructure generally
lowers development costs and the time needed to bring production
on-line.
Our expertise and
experience
We have significant expertise in various exploration and
production technologies, including the incorporation of
3-D
seismic
interpretation capabilities with traditional structural
geological techniques, offshore drilling to significant total
depths and horizontal drilling. As of June 12,
S-1
2009, we employed 64 oil and gas technical professionals,
including geophysicists, geologists, petroleum engineers,
production and reservoir engineers and technical professionals,
most of whom have considerable experience in their respective
fields. We also own or have rights to an extensive seismic
database, including
3-D
seismic
data on substantially all of our acreage. We leverage our
in-house expertise and advanced technological capabilities to
benefit our operations and identify high potential, high risk
drilling prospects in the Gulf of Mexico. We continue to focus
on enhancing reserve and production growth in the Gulf of Mexico
by applying these technologies.
Our experience and recognition as an industry leader in drilling
deep gas wells in the Gulf of Mexico also provides us with
opportunities to partner with other established oil and gas
companies. These partnerships, which typically involve the
exploration of our identified prospects or prospects that are
brought to us by third parties, allow us to diversify our risks
and better manage costs.
Our exploration
strategy
Our exploration strategy, which we refer to as the deeper
pool concept, involves exploring prospects in the Deep
Miocene geologic trend that lie beneath shallower intervals that
have had significant past production. We believe our techniques
for identifying reservoirs using structural geology augmented by
3-D
seismic
data will enable us to identify and exploit additional
deeper pool prospects at drilling depths exceeding
15,000 feet. We are also pursuing a strategy to test
Miocene and earlier age formations within ultra-deep
prospects on the shelf of the Gulf of Mexico that we believe
have the potential to contain significant hydrocarbons.
We use our expertise and a rigorous analytical process in
conducting our exploration and development activities. While
implementing our drilling plans, we focus on:
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allocating investment capital based on the potential risk and
reward for each exploratory and developmental opportunity;
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utilizing advanced seismic applications in combination with
traditional analysis;
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employing professionals with geophysical and geological
expertise;
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using new technology applications in drilling and completion
practices; and
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increasing the efficiency of our production practices.
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Our
plans
We intend to continue to focus on pursuing deep gas and
ultra-deep prospects on the shelf of the Gulf of Mexico that we
believe have promise based on data we have obtained from our
prior exploratory wells. We will be responsive to market
conditions by prudently managing our capital spending as we
continue to seek to build asset values through our focused
drilling program. For 2009, we have allocated approximately
30 percent of our planned capital expenditures for
development activities associated with identified completions,
recompletions and other related activities. Future capital
expenditures for development activities will be driven by our
timing of the development of our proved reserves and the success
of our exploration activities.
S-2
Recent
Developments
On April 20, 2009, we announced our first quarter 2009
financial results and provided production guidance for the
second quarter and full year 2009. We announced that we expect
average daily production for 2009 to approximate
215 MMcfe/d net to us, including 180 MMcfe/d in the
second quarter 2009. These production estimates are dependent on
the timing of restoring downstream pipelines and facilities
damaged by the September 2008 hurricanes and production
performance from existing wells and new wells being completed.
Ammazzo
. The Ammazzo deep gas exploratory prospect
on South Marsh Island Block 251 commenced drilling on
November 22, 2008 and in May 2009 was evaluated to be
nonproductive. While the well was nonproductive, we gained
important geological information from the well that supports our
belief that there are large, deep structures with the potential
to contain significant hydrocarbon reserves available on the
Shelf. The Ammazzo well has been temporarily abandoned as future
plans are considered. Our partners in the well included Plains
Exploration & Production Company (NYSE: PXP) and
Energy XXI (NASDAQ: EXXI).
Cordage and Blueberry Hill
. The Cordage deep gas
exploratory prospect located in 50 feet of water on West
Cameron Block 207 commenced drilling on March 18,
2009. The Cordage well has been drilled to 20,061 feet and
will be deepened. The well has a permitted depth of
21,500 feet. We own a 38.0 percent working interest
and a 30.5 percent net revenue interest in the well.
Mariner Energy, Inc. (NYSE: ME) is the operator of the well and
holds a 50.0 percent working interest. Upon completion of
operations at Cordage, the rig will be moved to the Sherwood
prospect on High Island Block 133 to commence exploration
drilling activities. We own a 29.3 percent working interest
and a 23.5 percent net revenue interest in the Sherwood
prospect.
On March 29, 2009, we re-entered a previously existing well
bore and commenced sidetracking operations at the Blueberry Hill
deep gas prospect located on Louisiana State Lease 340 in
10 feet of water. The Blueberry Hill sidetrack well has
been drilled to 19,600 feet and has a proposed total depth
of 24,000 feet. We believe the Operc and Gyro sands
targeted in the sidetrack could be better developed in a
down-dip position on the flank of the structure than the Operc
and Gyro sands encountered in the original Blueberry Hill well.
Blueberry Hill lies three and a half miles southeast of the
shallower Mound Point field. Based on drilling data to date, we
are encouraged by the several zones that exhibited resistivity
as indicated by a log-while-drilling tool in the Rob-L section
that correlates to the Flatrock type Miocene-age sands
discovered below the shallower Tiger Shoal field located
approximately 10 miles to the west. Drilling at the
Blueberry Hill sidetrack has now encountered the upper Operc
section located between the shallower Rob-L section and the
targeted deeper Gyro section. The original Blueberry Hill well
encountered multiple Operc sands with apparent resistivity and
multiple thin Gyro sands deemed to be gas productive which will
also be tested by the sidetrack well. Determination of
commercial hydrocarbons depends on the results from further
drilling and evaluation by wireline log analysis. We own a
42.9 percent working interest and a 29.7 percent net
revenue interest in the well.
Davy Jones and Blackbeard West
. We are currently
conducting a feasibility assessment to determine the
practicality of reentering a previously abandoned well bore to
evaluate the Davy Jones ultra-deep prospect located in
20 feet of water, northwest of Ammazzo.
S-3
In May 2009, the Minerals Management Service granted our request
for a geophysical Suspension of Operations (SOO) to extend our
leases in the Blackbeard area, including South Timbalier
Block 168. The SOO will provide time for seismic
re-processing, which will provide a clearer picture of the deep
structure, and allow us to evaluate whether to drill deeper at
Blackbeard West, drill an offset location or complete the well
to test the existing zones.
Flatrock
. Following the Flatrock discovery in OCS
310 on South Marsh Island Block 212 in July 2007, we have
drilled five additional successful wells in the field. Four
wells in the Flatrock field produced an average of approximately
220 million cubic feet of natural gas equivalents
(MMcfe/d
(41 MMcfe/d net to us) in the first quarter of 2009.
Production from these wells was temporarily shut in during the
second quarter of 2009 for previously reported planned facility
expansion, maintenance and remediation activities. Certain of
this work has been completed and production is being
reestablished. Additionally, initial production recently
commenced from the No. 6 well, and the well is
currently being ramped up to its full production level. The
remaining maintenance and remedial activities and the completion
activities at the No. 5 well are ongoing, with
production expected from these wells by mid-year 2009. Following
these activities, we expect the gross production rate from the
six wells in the field to approximate 335 MMcfe/d,
62 MMcfe/d net to us.
We are evaluating a sidetrack of the Hurricane Deep well on the
southern flank of the Flatrock structure to test the significant
Gyro sand encountered in the Hurricane Deep well on South Marsh
Island Block 217. We control approximately
150,000 gross acres in the Tiger Shoal/Mound Point area
(OCS 310/Louisiana State Lease 340) and we believe that we
have multiple additional exploration opportunities with
significant potential on this large acreage position.
Second Quarter Update
. Our second quarter 2009
results will include the impact of an approximate
$24 million charge associated with the Ammazzo prospect.
Results may also be affected by the evaluation of our
exploration wells in progress, the timing of which is dependent
upon the completion of drilling and evaluation, and our periodic
assessments of the carrying values of our oil and gas properties
which, among other things, are dependent upon the results of
published commodity forward market prices and updated reserve
estimates as of June 30, 2009.
We are in discussions regarding a two-year commitment to a new
drilling rig which is expected to be available in early 2010
that would enable us to have two rigs available for our deep
drilling activities. We expect that the net additional
commitment associated with the additional drilling rig would
exceed $100 million, a portion of which we expect to share
with partners in our exploration program.
For Additional
Information
Our principal executive offices are located at 1615 Poydras
Street, New Orleans, Louisiana 70112, and our telephone number
is
(504) 582-4000.
Our website is located at
http://www.mcmoran.com
.
The information on our website is not part of this prospectus
supplement or the accompanying prospectus.
S-4
The
offering
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Issuer
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McMoRan Exploration Co.
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Common stock offered
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14,500,000 shares.
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Over-allotment option
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2,175,000 shares.
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Common stock outstanding after this offering
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84,979,840 shares (or 87,154,840 shares if the
underwriters exercise their over-allotment option in full).
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Use of proceeds
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We intend to use the net proceeds from this offering for general
corporate purposes, including capital expenditures. See
Use of proceeds.
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Dividends
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We have not in the past paid, and do not anticipate in the
future paying, cash dividends on our common stock. See
Dividend policy.
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Risk factors
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See Risk factors beginning on
page S-6
of this prospectus supplement and other information included or
incorporated by reference in this prospectus supplement and the
accompanying prospectus for a discussion of factors you should
carefully consider before deciding to invest in our common stock.
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NYSE symbol
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MMR.
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Transfer agent and registrar
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BNY Mellon Shareowner Services.
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The number of shares of common stock outstanding after this
offering (assuming the exercise of the underwriters
over-allotment option in full) is based on
70,479,840 shares of common stock that were outstanding as
of May 31, 2009. The number of shares of common stock
outstanding does not include shares of our common stock issuable
upon conversion of our 8% convertible perpetual preferred stock
offered concurrently with this offering, our 6.75% mandatory
convertible preferred stock, our
5
1
/
4
%
convertible senior notes due 2011, or upon exercise of
outstanding stock options and restricted stock units or upon the
vesting of restricted stock awards.
S-5
Risk
factors
An investment in our common stock involves certain risks.
Before making an investment decision, you should carefully
consider the risks described below and the risks relating to
financial matters and our operations disclosed in Item 1A
of Part I of our Annual Report on
Form 10-K
for the fiscal year ended December 31, 2008 and
Item 1A of Part II of our Quarterly Report on
Form 10-Q
for the three months ended March 31, 2009, as well as the
other information included or incorporated by reference in this
prospectus supplement and the accompanying prospectus. We
caution readers that these, among other risks, may in some cases
have affected, and in the future could affect, our actual
consolidated results and could cause our actual consolidated
results in the future to differ materially from the expectations
expressed in forward-looking statements included in this
prospectus supplement and the accompanying prospectus, including
any documents incorporated herein or therein by reference. The
market or trading price of our common stock could decline due to
any of these risks or other factors, and you may lose all or
part of your investment.
Risks relating to
our common stock
The price of
our common stock may be volatile.
Historically, the trading price of our common stock has been
volatile. The price of our common stock could be subject to wide
fluctuations in the future in response to many events or
factors, many of which are outside of our control, including
those discussed in the risk factors below, as well as:
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actual or anticipated fluctuations in operating results;
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declines in the market prices of oil and natural gas;
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changes in market expectations as to our future financial
performance or buy/sell recommendations of securities analysts;
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acquisitions, strategic alliances or joint ventures involving us
or our competitors;
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actions of our current stockholders, including sales of common
stock by our directors and executive officers;
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the arrival or departure of key personnel;
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our, or a competitors, announcement of new products,
services or innovations; and
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the operating and stock price performance of other comparable
companies.
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General market conditions and domestic or international
macroeconomic factors unrelated to our performance may also
affect the price of our common stock. For these reasons,
investors should not rely on recent trends to predict future
prices of our common stock or financial results.
Future
issuances of equity or equity-linked securities by us could
depress the market price of shares of our common
stock.
As of May 31, 2009, we had 70,479,840 shares of common
stock outstanding, shares of our outstanding preferred stock and
our senior notes were convertible into 17,325,226 shares of
S-6
common stock (assuming the maximum conversion rate of
8.0645 shares for our 6.75% mandatory convertible preferred
stock), and 10,702,416 shares of common stock were
authorized for issuance upon the exercise of outstanding options
or the vesting of restricted stock units. The issuance of these
new shares, the common stock offered hereby, the concurrent
convertible perpetual preferred stock offering (including
12,605,041 shares of our common stock issuable upon
conversion of such shares (assuming exercise of the
underwriters over-allotment option in full and the initial
conversion rate of 146.1454)) and the sale of additional shares
that may become eligible for sale in the public market from time
to time upon the exercise of stock options could have the effect
of depressing the market price for shares of our common stock.
Our issuance
of preferred stock could adversely affect holders of common
stock.
Our board of directors is authorized to issue series of
preferred stock without any action on the part of holders of our
common stock. Our board of directors also has the power, without
stockholder approval, to set the terms of any such series of
preferred stock that may be issued, including voting rights,
dividend rights, preferences over our common stock with respect
to dividends or if we liquidate, dissolve or wind up our
business and other terms. If we issue preferred stock in the
future that has preference over our common stock with respect to
the payment of dividends or upon our liquidation, dissolution or
winding up, or if we issue preferred stock with voting rights
that dilute the voting power of our common stock, the rights of
holders of our common stock or the price of our common stock
could be adversely affected.
Concurrently with the shares of the common stock being offered
hereby, we are offering 75,000 shares of our 8% convertible
perpetual preferred stock (or 86,250 shares if the
underwriters exercise their over-allotment option in full). The
convertible perpetual preferred stock will have dividend and
liquidation preference over our common stock and, in certain
circumstances, will have certain voting rights that could
adversely affect the rights of holders of common stock.
Upon completion of the issuance of our 8% convertible perpetual
preferred stock, we will have two series of preferred stock
outstanding, the combined dividends of which will be
substantial. If we fail to make six or more specified dividend
payments on either our perpetual preferred stock or our
mandatory convertible preferred stock, or both, holders of our
perpetual preferred stock and convertible preferred stock,
voting together as a single class and with the shares of any
other preferred stock or securities having similar voting
rights, will be entitled to elect two directors in addition to
those directors elected by the holders of our common stock.
Our ability to
use our net operating loss carryforwards (NOLs) and
a portion of our tax basis deductions may be significantly
limited if we experience an ownership change as
defined in section 382 of the Internal Revenue Code of
1986, as amended (the Code).
As of March 31, 2009, we had approximately
$350 million of federal NOLs available to offset future
taxable income. Our ability to use our NOLs to offset future
taxable income may be significantly limited under
section 382 of the Code if we experience an ownership
change.
In general, an ownership change will occur if there is a
cumulative change in our ownership by 5%
shareholders (as defined in the Code) that exceeds
50 percent over a rolling three-year period. Shares issued
in this common stock offering and our concurrent offering of
convertible perpetual preferred stock will be included in
determining the cumulative change in our ownership for
section 382 purposes. We believe that our company would
incur an ownership
S-7
change if we sell all of the shares of common stock offered
hereby and all of the shares of convertible perpetual preferred
stock offered concurrently with this offering. If we do not
exceed the threshold triggering an ownership change in
connection with these offerings, future stock transactions that
may not be within our control may also cause us to experience an
ownership change.
If we experience an ownership change, the use of our NOLs will
be subject to limitations under section 382. We could also
be limited in our ability to use a portion of our tax basis
deductions. These limitations will depend on various factors,
including the market value of our company at the time of the
ownership change. As a result, our future period tax liability
could increase and, accordingly, adversely impact our future
period cash flows. Limitations pertaining to the use of our NOLs
could also result in the statutory expiration of a portion of
our NOLs prior to use.
Anti-takeover
provisions in our charter documents and Delaware law may make an
acquisition of us more difficult.
Anti-takeover provisions in our charter documents and Delaware
law may make an acquisition of us more difficult. These
provisions:
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authorize our board of directors to issue preferred stock
without stockholder approval and to designate the rights,
preferences and privileges of each class; if issued, such
preferred stock would increase the number of outstanding shares
of our capital stock and could include terms that may deter an
acquisition of us;
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require a supermajority vote of stockholders in order to
consummate a merger or other business combination transaction;
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establish advance notice requirements for nominations to the
board of directors or for proposals that can be acted on at
stockholder meetings; and
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limit who may call stockholder meetings.
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These provisions may discourage potential takeover attempts,
discourage bids for our common stock at a premium over market
price or adversely affect the market price of, and the voting
and other rights of the holders of, our common stock. These
provisions could also discourage proxy contests and make it more
difficult for stockholders to elect directors other than the
candidates nominated by our board of directors.
In addition, as a Delaware corporation, we are governed by the
provisions of Section 203 of the Delaware General
Corporation Law, which may prohibit large stockholders from
consummating a merger with, or acquisition of, us for three
years following the date that they acquired their stock position.
These provisions may deter an acquisition of us that might
otherwise be attractive to stockholders.
We have no
plans to pay regular dividends on our common
stock.
We have not in the past paid, and do not anticipate in the
future paying, cash dividends on our common stock. Subject to
Delaware law, our board of directors will determine the payment
of future dividends on our common stock, if any, and the amount
of any dividends in light of any applicable contractual
restrictions limiting our ability to pay dividends, our earnings
and cash
S-8
flows, our capital requirements, our financial condition, and
other factors our board of directors deems relevant. The amended
and restated credit agreement of MOXY, of which we are a
guarantor, restricts our payment of cash dividends or other
distributions on our common stock.
We may not be
able to pay cash dividends on our common stock.
Under the amended and restated credit agreement of MOXY, of
which we are a guarantor, we are prohibited from paying cash
dividends on our common stock. Additionally, our indenture
related to our 11.875% Senior Notes restricts the payment
of dividends and certain other payments, subject to an
incurrence test and availability under a basket. In the event
that the provisions of any future indentures or other financing
agreements we enter into prohibit or restrict our ability to pay
cash dividends on our common stock, we will be unable to pay
cash dividends on our common stock unless we can refinance
amounts outstanding under those agreements.
Under Delaware law, cash dividends on capital stock may be paid
only from surplus or, if there is no
surplus, from the corporations net profits for
the then current or the preceding fiscal year. Our ability to
pay cash dividends on our common stock would require the
availability of adequate surplus, which is defined
as the excess, if any, of our net assets (total assets less
total liabilities) over our capital. Further, even if adequate
surplus is available to pay cash dividends on our common stock,
we may not have sufficient cash to pay dividends on our common
stock.
Our holding
company structure may impact your ability to receive
dividends.
We are a holding company with no material assets other than the
capital stock of our subsidiaries. As a result, our ability to
repay our indebtedness and pay dividends is dependent on the
generation of cash flow by our subsidiaries and their ability to
make such cash available to us, by dividend, loan, debt
repayment or otherwise. Except with respect to certain
subsidiary guarantees of our 11.875% Senior Notes, our
subsidiaries do not have any obligation to make funds available
to us to repay our indebtedness or pay dividends. Dividends from
subsidiaries that are not wholly owned are shared with other
equity owners.
In addition, our subsidiaries may not be able to, or be
permitted to, make distributions to enable us to repay our
indebtedness or pay dividends. Each of our subsidiaries is a
distinct legal entity and, under certain circumstances, legal
and contractual restrictions, as well as the financial condition
and operating requirements of our subsidiaries, may limit our
ability to obtain cash from our subsidiaries. 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 any trade creditors and
preferred stockholders.
S-9
Use of
proceeds
We intend to use the net proceeds from this offering, together
with the net proceeds from our concurrent offering of
75,000 shares of our 8% convertible perpetual preferred
stock for general corporate purposes, including capital
expenditures.
Price range of
common stock
Our common stock is listed and traded on the New York Stock
Exchange under the symbol MMR. The following table
sets forth, for the periods indicated, the high and low sales
prices per share of our common stock on the New York Stock
Exchange.
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High
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Low
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Fiscal Year 2007
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First Quarter
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$
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15.53
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$
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11.01
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Second Quarter
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15.73
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12.51
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Third Quarter
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17.93
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12.94
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Fourth Quarter
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15.81
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10.70
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Fiscal Year 2008
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First Quarter
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18.62
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12.50
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Second Quarter
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35.52
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17.01
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Third Quarter
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29.88
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19.55
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Fourth Quarter
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23.26
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7.39
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Fiscal Year 2009
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First Quarter
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12.35
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3.14
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Second Quarter (through June 16, 2009)
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7.71
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4.26
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On June 16, 2009, there were 7,383 holders of record
of our common stock and the last reported sale price of our
common stock on the New York Stock Exchange was $5.79 per share.
Dividend
policy
We have not in the past paid, and do not anticipate in the
future paying, cash dividends on our common stock. In addition,
our credit agreement currently prohibits our payment of
dividends on our common stock. At such time, if ever, that such
restrictions are lifted, the board of directors has the sole
discretion as to the timing and amount of any cash dividends.
S-10
Capitalization
The following table sets forth our consolidated cash and cash
equivalents and our consolidated capitalization as of
March 31, 2009 on an (i) actual basis and (ii) as
adjusted to reflect (a) our issuance and sale of
14,500,000 shares of common stock in this offering,
assuming no exercise of the underwriters over-allotment
option and (b) our concurrent issuance and sale of
75,000 shares of 8% convertible perpetual preferred stock,
assuming no exercise of the underwriters over-allotment
option.
This table is derived from, should be read together with, and is
qualified in its entirety by reference to (i) our unaudited
consolidated financial statements and the accompanying notes and
(ii) Managements Discussion and Analysis of
Financial Condition and Results of Operations, each
included in our Quarterly Report on
Form 10-Q
for the three months ended March 31, 2009, which is
incorporated herein by reference.
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As of March 31, 2009
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(in thousands)
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Actual
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As adjusted
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Cash and cash equivalents
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$
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95,435
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$
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246,963
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Long-term debt (including current portion):
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Senior secured revolving credit facility
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11.875% senior notes
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300,000
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300,000
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5
1
/
4
%
convertible senior notes
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74,720
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74,720
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Total long-term debt
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$
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374,720
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$
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374,720
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Stockholders equity:
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Common stock, par value $0.01 per share(a)
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730
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875
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Preferred stock(b)
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158,934
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233,934
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Capital in excess of par value of common stock
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975,642
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1,052,025
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Accumulated deficit
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(836,712
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(836,712
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Accumulated other comprehensive loss
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(32
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(32
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Common stock held in treasury(c)
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(46,443
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(46,443
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Total stockholders equity
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$
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252,119
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$
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403,647
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Total capitalization
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$
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626,839
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$
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778,367
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(a)
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150,000,000 shares authorized;
70,475,267 shares issued and outstanding at March 31,
2009; 84,975,267 shares issued and outstanding as adjusted
for our common stock offering. Excludes shares of our common
stock issuable upon conversion of our 8% convertible perpetual
preferred stock offered concurrently with this offering, our
6.75% mandatory convertible preferred stock, our
5
1
/
4
%
convertible senior notes due 2011, and upon exercise of
outstanding stock options and restricted stock units or upon the
vesting of restricted stock awards.
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(b)
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50,000,000 shares authorized;
1,589,340 shares of our 6.75% mandatory convertible
preferred stock issued and outstanding as of March 31,
2009. As adjusted reflects our concurrent offering of
75,000 shares of 8% convertible perpetual preferred stock
recorded at the aggregate liquidation preference.
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(c)
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2,508,660 shares held in
treasury at an average price of $18.51 per share.
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S-11
Description of
capital stock
The following summary of the terms of our capital stock is not
meant to be complete and is qualified by reference to the
relevant provisions of the General Corporation Law of the State
of Delaware and our amended and restated certificate of
incorporation, as amended, which we refer to as our certificate
of incorporation, and our amended and restated by-laws, which we
refer to as our by-laws. Copies of our certificate of
incorporation and by-laws are incorporated herein by reference
and will be sent to you at no charge upon request. See
Where you can find more information.
Authorized
capital stock
Under our certificate of incorporation, our authorized capital
stock consists of 150,000,000 shares of common stock,
$0.01 par value per share, and 50,000,000 shares of
preferred stock, $0.01 par value per share. As of
May 31, 2009, there were issued and outstanding:
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70,479,840 shares of common stock (not including
2,508,660 shares held in treasury); and
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1,589,340 shares of 6.75% mandatory convertible preferred
stock.
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As of May 31, 2009, shares of our outstanding 6.75%
mandatory convertible preferred stock were convertible into
12,817,232 shares of common stock (assuming the maximum
conversion rate of 8.0645 shares); our outstanding
5
1
/
4
%
convertible senior notes due October 6, 2011 were
convertible into 4,507,994 shares of common stock at a
conversion price of $16.575 per share; an aggregate of
10,634,750 shares of our common stock were authorized for
issuance upon the exercise of outstanding stock options at an
average exercise price of $13.54 per share; and an
aggregate of 67,666 shares of our common stock were
issuable upon vesting of restricted stock units.
Description of
common stock
Common stock outstanding.
The issued and outstanding
shares of common stock are, and the shares of common stock that
we may issue in the future will be, validly issued, fully paid
and nonassessable.
Voting rights.
Holders of common stock are entitled
to elect all of the members of the board of directors, except
that holders of our 6.75% mandatory convertible preferred stock
and our 8% convertible perpetual preferred stock, voting as a
single class with the shares of any other preferred stock or
securities having similar voting rights, will be entitled to
elect two directors in addition to those directors elected by
the holders of our common stock if we fail to make specified
dividend payments. See Description of preferred
stock for additional information relating to the voting
rights of our preferred stock. Each share of common stock has
one vote. With respect to all other matters submitted to a vote
of stockholders, except as required by law, the holders of the
common stock vote together as a single class, and record holders
have one vote per share.
Dividend rights; rights upon liquidation.
Subject to
any preferences accorded to the holders of preferred stock, if
and when issued by the board of directors, holders are entitled
to dividends at such times and in such amounts as the board of
directors may determine. In the event of a voluntary or
involuntary liquidation, dissolution or winding up of our
company, prior to any distributions to the holders of the common
stock, the holders of our convertible perpetual
S-12
preferred stock and mandatory convertible preferred stock will
receive any payments to which they are entitled. Subsequent to
those payments, the holders of the common stock will share
ratably, according to the number of shares held by them, in our
remaining assets, if any.
Other rights.
Shares of common stock are not
redeemable and have no subscription, conversion or preemptive
rights.
Transfer agent.
The transfer agent and registrar for
the common stock is BNY Mellon Shareowner Services.
NYSE.
Our common stock is listed on the New York
Stock Exchange under the symbol MMR.
Certain
provisions of our certificate of incorporation and
by-laws
Supermajority voting/fair price requirements.
Our
certificate of incorporation provides that the approval of the
holders of not less than 80% of our common stock voting together
as a single class, and not less than 75% of our common stock
excluding common stock beneficially owned by the interested
stockholder (described below) voting as a separate class, is
required for:
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any merger, consolidation or share exchange of our company or
any of our subsidiaries with or into an interested stockholder
(an interested stockholder is any person or entity, or any
associate or affiliate of that person or entity, who (i) is
the beneficial owner of 15% or more of our common stock, or
(ii) is an affiliate or associate of our company and was
within the two years prior to the transaction a beneficial
owner, directly or indirectly, of 15% or more of our common
stock, which we refer to as an interested stockholder);
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any sale, lease, transfer, exchange, mortgage, pledge, loan,
advance or similar disposition of 5% or more of the lesser of
the total market value of our outstanding stock or our
companys net worth in one or more transactions involving
an interested stockholder or an associate or affiliate of an
interested stockholder;
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the adoption of any plan or proposal for liquidation or
dissolution of our company or any subsidiary;
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the issuance or transfer by us or any of our subsidiaries of
equity securities having a fair market value of $1 million
or more in one or more transactions in any twelve-month period
to any interested stockholder or affiliate or associate of an
interested stockholder except pursuant to warrants or rights to
purchase securities offered pro rata to all holders of common
stock or by other means such that each holder of common stock is
given substantially proportionate treatment;
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any reclassification or recapitalization of securities of our
company, including any reverse stock split, any merger,
consolidation or share exchange of our company with any
subsidiary, or any other transaction (whether or not involving
an interested stockholder) that would increase, by 5% or more,
an interested stockholders, or any associate or affiliate
of an interested stockholders, voting power or
proportionate amount of shares of any class or series of equity
securities of our company or any subsidiary;
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any loans, advances, guarantees, pledges or other financial
assistance or tax advantages provided by our company or any of
our subsidiaries to an interested stockholder or any affiliate
or associate of an interested stockholder except proportionately
as a stockholder; or
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S-13
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any agreement, contract or other arrangement providing directly
or indirectly for any of the foregoing.
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However, the supermajority voting requirement is not applicable
if:
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our board approved the transaction before the interested
stockholder became an interested stockholder by a majority vote
of the members of our board and the transaction is approved by a
majority vote of the continuing directors (a continuing director
is any member of the board of directors who is not an interested
stockholder or an affiliate of an interested stockholder and
(i) was a director prior to the time the interested
stockholder became an interested stockholder or (ii) was
recommended or elected by a majority of the continuing directors
at a meeting at which a quorum consisting of a majority of the
continuing directors was present; in the absence of an
interested stockholder, the continuing directors means all the
directors then in office); or
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all of the following conditions have been met: (i) the
aggregate amount of consideration received per share by the
holders meet certain fair price criteria,
(ii) prior to the consummation of the transaction
(a) there has been no failure to declare or pay dividends
on any outstanding preferred stock, (b) there has been no
reduction in the annual rate of dividends paid on common stock
except to reflect a subdivision of the common stock and no
failure to increase the annual rate of dividends as necessary to
reflect a decrease in the number of outstanding shares of common
stock, and (c) the interested stockholder has not become
the beneficial owner of any additional shares of common stock
except as part of the transaction that resulted in such
interested stockholder becoming an interested stockholder or as
a result of a pro rata stock dividend, and (iii) the
interested stockholder has not received the benefits (except
proportionately as a stockholder) of any loans, advances or
other financial assistance or tax advantages provided by our
company.
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Amendment of Certain Provisions of our Certificate of
Incorporation.
Under Delaware law, unless the
certificate of incorporation specifies otherwise, a
corporations certificate of incorporation may be amended
by the affirmative vote of the majority of the stockholders. Our
certificate of incorporation requires the affirmative vote of
80% of the voting stock to amend, alter or repeal certain of its
provisions regarding (i) stockholder unanimous written
consents, (ii) the classification, filling of vacancies and
removal of members of the board of directors, (iii) the
limitation of liability of directors, (iv) business
combinations and (v) amendments to our certificate of
incorporation and our by-laws.
Effects of authorized but unissued common stock and blank
check preferred stock.
One of the effects of the
existence of authorized but unissued common stock and
undesignated preferred stock may be to enable our board of
directors to make more difficult or to discourage an attempt to
obtain control of our company by means of a merger, tender
offer, proxy contest or otherwise, and thereby to protect the
continuity of management. If, in the due exercise of its
fiduciary obligations, the board of directors were to determine
that a takeover proposal was not in our best interest, such
shares could be issued by the board of directors without
stockholder approval in one or more transactions that might
prevent or render more difficult or costly the completion of the
takeover transaction by diluting the voting or other rights of
the proposed acquirer or insurgent stockholder group, by putting
a substantial voting block in institutional or other hands that
might undertake to support the position of the incumbent board
of directors, by effecting an acquisition that might complicate
or preclude the takeover, or otherwise.
S-14
In addition, our certificate of incorporation grants our board
of directors broad power to establish the rights and preferences
of authorized and unissued shares of preferred stock. The
issuance of shares of preferred stock could decrease the amount
of earnings and assets available for distribution to holders of
shares of common stock. The issuance also may adversely affect
the rights and powers, including voting rights, of those holders
and may have the effect of delaying, deterring or preventing a
change in control of our company.
Advance notice of intention to nominate a
director.
Our certificate of incorporation and by-laws
permit a stockholder to nominate a person for election as a
director only if written notice of such stockholders
intent to make a nomination has been delivered to our Secretary
not later than the close of business on the 120th day nor
earlier than the close of business on the 210th day prior
to the first anniversary of the preceding years annual
meeting. This provision also requires that the notice set forth,
among other things, a description of all arrangements or
understandings between the nominee and the stockholder pursuant
to which the nomination is to be made or the nominee is to be
elected and such other information regarding the nominee as
would be required to be included in a proxy statement filed
pursuant to the proxy rules promulgated under the Securities
Exchange Act of 1934, as amended, had the nominee been nominated
by our board. Any nomination that fails to comply with these
requirements may be disqualified.
Advance notice of stockholder proposals.
Our by-laws
permit a stockholder proposal to be presented at a
stockholders meeting only if prior written notice of the
proposal is provided to us within the time periods and in the
manner specified in the by-laws.
No ability of stockholders to call special
meetings.
Our certificate of incorporation and by-laws
deny stockholders the right to call a special meeting of
stockholders, except to the extent that holders of preferred
stock have the right to call a special meeting in some
circumstances. Our by-laws provide that special meetings of
stockholders may be called only by the chairman or either
co-chairman of the board, the vice chairman of the board or the
president and chief executive officer or upon a vote of the
majority of the board of directors.
No action by written consent.
Our certificate of
incorporation prohibits our stockholders from taking any action
except at an annual or special meeting of stockholders.
Removal of directors; filling vacancies on board of
directors.
Our certificate of incorporation provides
that any director may be removed, for cause involving fraud or a
violation of the duty of loyalty as determined by a court of
law, by a vote of the holders of 80% of the voting stock. Any
vacancies on the board of directors resulting by the death,
resignation or removal of a director may be filled only by a
vote of both a majority of the directors then in office and a
majority of continuing directors voting as a separate group.
Amendment of by-laws.
Our certificate of
incorporation and by-laws provide that our by-laws may be
altered, amended, changed or repealed by vote of the holders of
80% of the voting stock, or upon the affirmative vote of both a
majority of the board of directors then in office and a majority
of all continuing directors voting as a separate group.
Limitation of liability of directors and
officers.
As permitted by the Delaware General
Corporation Law, our certificate of incorporation includes a
provision that eliminates the personal liability of our
directors for monetary damages for breach of fiduciary duty as a
director, except for liability (1) for any breach of the
directors duty of loyalty to our company or its
stockholders, (2) for acts or omissions not in good faith
or that involve intentional misconduct or a
S-15
knowing violation of law, (3) under section 174 of the
Delaware General Corporation Law or (4) for any transaction
from which the director derived an improper personal benefit.
The effect of this provision is to eliminate our rights and our
stockholders rights to recover monetary damages against a
director or officer for breach of a fiduciary duty of care. The
provision does not eliminate or limit our right, or the right of
a stockholder, to seek non-monetary relief, such as an
injunction or rescission. The Securities and Exchange Commission
has taken the position that this provision will have no effect
on claims arising under the federal securities laws.
In addition, our certificate of incorporation provides for
mandatory indemnification rights, subject to limited exceptions,
to any director or executive officer who (because of the fact
that he or she is our director or officer) is involved in a
legal proceeding of any nature. These indemnification rights
include reimbursement for expenses incurred by the director or
officer in advance of the final disposition of a proceeding
according to applicable law.
Description of
preferred stock
Our 6.75% mandatory convertible preferred stock has a
liquidation preference of $100 per share and will automatically
convert on November 15, 2010 into shares of common stock.
The preferred stock is convertible into between 6.7204 and
8.0645 shares of our common stock, depending on the
applicable market value of our common stock. The conversion rate
is adjustable upon the occurrence of certain events, including
the payment in any quarter of common stock dividends; however,
adjustments required as a result of dividends that do not exceed
1% are carried forward and must be made no later than February
15 of each year. Holders may elect to convert at any time prior
to November 15, 2010 at a conversion rate equal to
6.7204 shares of common stock, or an aggregate of
approximately 11 million shares. In the event of a
cash acquisition of our company as defined in the
certificate of designations, holders of the preferred stock have
the right to convert their shares into common stock at the
cash acquisition conversion rate determined as set
forth in the certificate of designations. In addition, in
connection with a cash acquisition, we would pay converting
holders additional amounts in cash or common stock, as set forth
in the certificate of designations. Dividends are cumulative and
are payable quarterly on February 15, May 15, August
15 and November 15. We may elect to pay dividends in cash,
by delivery of shares of common stock, or through any
combination of cash and common stock, in the manner set forth in
the certificate of designations. Generally, we cannot pay
dividends on or repurchase our common stock unless all accrued,
cumulated and unpaid dividends on the 6.75% mandatory
convertible preferred stock for all prior dividend periods have
been paid in full.
Concurrently with this offering, we are offering
75,000 shares of 8% convertible perpetual preferred stock.
Our 8% convertible perpetual preferred stock has a liquidation
preference of $1,000 per share. Each share will be initially
convertible into 146.1454 shares of our common stock. The
conversion rate is adjustable upon the occurrence of certain
events. Beginning June 15, 2014, we may redeem shares of
the 8% convertible perpetual preferred stock by paying cash, our
common stock or any combination thereof for $1,000 per share
plus accumulated and unpaid dividends, but only if our common
stock has exceeded 130% of the conversion price for at least 20
trading days within a period of 30 consecutive trading days
ending on the trading day before the date we give the redemption
notice. Dividends are cumulative and are payable quarterly on
February 15, May 15, August 15 and November 15 of each
year, commencing August 15, 2009. Generally, we cannot pay
dividends on or repurchase our common stock unless all accrued,
cumulated and unpaid dividends on the 8% convertible perpetual
preferred stock for all prior dividend periods have been paid in
full.
S-16
Holders of our 6.75% mandatory convertible preferred stock and
our 8% convertible perpetual preferred stock generally have no
voting rights, except as required by law. If dividends payable
on the preferred stock are in arrears for six or more quarterly
periods (whether or not consecutive), the holders of the
preferred stock, voting as a single class with the shares of any
other preferred stock or securities having similar voting rights
(the voting rights class), will be entitled at the
next meeting of our stockholders to elect two directors in
addition to those directors elected by the holders of our common
stock. These voting rights and the terms of the directors so
elected will continue until such time as the dividend arrearage
on the preferred stock has been paid in full. We may not amend
our certificate of incorporation if the amendment would
adversely affect the holders of our 6.75% mandatory convertible
preferred stock or 8% convertible perpetual preferred stock,
unless we obtain the consent of holders of at least two-thirds
the outstanding shares of the voting rights class, voting as a
single class.
We may issue shares of preferred stock in series and may, at the
time of issuance, determine the rights, preferences and
limitations of each series. Satisfaction of any dividend
preferences of outstanding shares of preferred stock would
reduce the amount of funds available for the payment of
dividends on shares of common stock. Holders of shares of
preferred stock may be entitled to receive a preference payment
in the event of any liquidation, dissolution or
winding-up
of our company before any payment is made to the holders of
shares of common stock. In some circumstances, the issuance of
shares of preferred stock may render more difficult or tend to
discourage a merger, tender offer or proxy contest, the
assumption of control by a holder of a large block of our
securities or the removal of incumbent management. Upon the
affirmative vote of a majority of the total number of directors
then in office, our board of directors, without stockholder
approval, may issue shares of preferred stock with voting and
conversion rights which could adversely affect the holders of
shares of common stock. The issuance of any shares of preferred
stock in the future could adversely affect the rights of the
holders of common stock.
Description of
convertible notes
As of May 31, 2009, we had outstanding $74.7 million
principal amount of our
5
1
/
4
%
convertible senior notes due October 6, 2011. Interest on
the convertible notes is payable semiannually on April 6 and
October 6. The notes are convertible, at the option of the
holder, at any time on or prior to maturity into shares of
common stock at a conversion price of $16.575 per share, which
is equal to a conversion rate of approximately 60.33 shares
of common stock per $1,000 principal amount of notes. The
conversion rate is adjustable upon the occurrence of certain
events. For additional information about our
5
1
/
4
%
convertible senior notes due October 2011, you should refer to
the indenture for the notes, which is an exhibit to our
Form 10-K.
S-17
Material U.S.
federal tax considerations for
non-U.S.
holders of common stock
The following is a general discussion of the material
U.S. federal income and estate tax consequences of the
ownership and disposition of common stock by a beneficial owner
that is a
non-U.S. holder,
other than a
non-U.S. holder
that owns, or has owned, actually or constructively, more than
5% of our common stock. A
non-U.S. holder
is a person or entity that, for U.S. federal income tax
purposes, is a:
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non-resident alien individual, other than certain former
citizens and residents of the United States subject to tax as
expatriates,
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foreign corporation or
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foreign estate or trust.
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A
non-U.S. holder
does not include an individual who is present in the United
States for 183 days or more in the taxable year of
disposition and is not otherwise a resident of the United States
for U.S. federal income tax purposes. Such an individual is
urged to consult his or her own tax advisor regarding the
U.S. federal income tax consequences of the sale, exchange
or other disposition of common stock.
If an entity that is classified as a partnership for
U.S. federal income tax purposes holds our common stock,
the U.S. federal income tax treatment of a partner will
generally depend on the status of the partner and the activities
of the partnership. Partnerships holding our common stock and
partners in such partnerships are urged to consult their tax
advisors as to the particular U.S. federal income tax
consequences of holding and disposing of our common stock.
This discussion is based on the Internal Revenue Code of 1986,
as amended (the Code), and administrative
pronouncements, judicial decisions and final, temporary and
proposed Treasury Regulations in effect as of the date hereof,
changes to any of which subsequent to the date of this
prospectus supplement may affect the tax consequences described
herein. This discussion does not address all aspects of
U.S. federal income and estate taxation that may be
relevant to
non-U.S. holders
in light of their particular circumstances and does not address
any tax consequences arising under the laws of any state, local
or foreign jurisdiction. Prospective holders are urged to
consult their tax advisors with respect to the particular tax
consequences to them of owning and disposing of common stock,
including the consequences under the laws of any state, local or
foreign jurisdiction.
Dividends
As discussed under Dividend policy, we have not in
the past paid, and do not anticipate in the future paying,
distributions on our common stock. In the event we do pay
distributions, distributions made to a
non-U.S. holder
of common stock that constitute dividends generally will be
subject to withholding tax at a 30% rate or a reduced rate
specified by an applicable income tax treaty (except in
circumstances described in the following paragraphs). A
distribution will constitute a dividend to the extent of our
current or accumulated earnings and profits as determined for
U.S. federal income tax purposes. Any distribution not
constituting a dividend will be treated first as reducing the
adjusted basis in the
non-U.S. holders
shares of common stock and then, to the extent it exceeds the
adjusted basis in the
non-U.S. holders
shares of common stock, as gain from the sale or exchange of
such stock. In order to obtain a reduced
S-18
rate of withholding, a
non-U.S. holder
will be required to provide an Internal Revenue Service
Form W-8BEN
certifying its entitlement to benefits under a treaty.
Withholding does not apply to dividends paid to a
non-U.S. holder
who provides an Internal Revenue Service
Form W-8ECI,
certifying that the dividends are effectively connected with the
non-U.S. holders
conduct of a trade or business within the United States.
Instead, the effectively connected dividends will be subject to
regular U.S. income tax as if the
non-U.S. holder
were a U.S. person, subject to an applicable income tax
treaty providing otherwise. A foreign corporation receiving
effectively connected dividends may also be subject to an
additional branch profits tax imposed at a rate of
30% (or a lower treaty rate).
Gain on
disposition of common stock
A
non-U.S. holder
generally will not be subject to U.S. federal income tax on
gain realized on a sale or other disposition of common stock
unless:
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the gain is effectively connected with a trade or business of
the
non-U.S. holder
in the United States, subject to an applicable treaty providing
otherwise; or
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we are or have been a U.S. real property holding
corporation, as described below, at any time within the
five-year period preceding the disposition or the
non-U.S. holders
holding period, whichever period is shorter, and either our
common stock has ceased to be traded on an established
securities market prior to the beginning of the calendar year in
which the sale or disposition occurs or the
non-U.S. holder
owns or has owned a threshold amount of common stock, as
described below.
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Generally, a corporation is a U.S. real property holding
corporation if the fair market value of its U.S. real
property interests, as defined in the Code and applicable
regulations, equals or exceeds 50% of the aggregate fair market
value of its worldwide real property interests and its other
assets used or held for use in a trade or business. We believe
that we are a U.S. real property holding corporation.
Assuming that is and remains the case, as long as our common
stock continues to be regularly traded on an established
securities market, a
non-U.S. holder
nonetheless will not be subject to U.S. federal income tax
on a sale or other disposition of the common stock unless the
non-U.S. holder
has owned or is deemed to have owned more than 5% of our common
stock during a specified period prior to the disposition of any
of our common stock. A
non-U.S. holder
who meets this threshold could be subject to U.S. federal
income tax with respect to any gains on the disposition of our
common stock, in which case the holder would be required to file
a U.S. tax return with respect to that gain.
Non-U.S. holders
should consult their tax advisors regarding the possible
application of these rules.
If a
non-U.S. holder
is engaged in a trade or business in the United States and gain
recognized by the
non-U.S. holder
on a sale or other disposition of common stock is effectively
connected with the conduct of such trade or business, the
non-U.S. holder
will generally be taxed in the same manner as a
U.S. person, subject to an applicable income tax treaty
providing otherwise.
Non-U.S. holders
whose gain from dispositions of common stock may be effectively
connected with the conduct of a trade or business in the United
States are urged to consult their own tax advisors with respect
to the U.S. tax consequences of the ownership and
disposition of common stock, including the possible imposition
of a branch profits tax.
S-19
Information
reporting and backup withholding
Information returns will be filed with the Internal Revenue
Service in connection with payments of dividends and may be
filed in connection with payments of proceeds from a sale or
other disposition of common stock. A
non-U.S. holder
may have to comply with certification procedures to establish
that it is not a United States person in order to avoid backup
withholding. The certification procedures described above
required to claim a reduced rate of withholding under a treaty
will satisfy the certification requirements necessary to avoid
backup withholding as well. The amount of any backup withholding
from a payment to a
non-U.S. holder
will be allowed as a credit against such holders
U.S. federal income tax liability and may entitle such
holder to a refund, provided that the required information is
timely furnished to the Internal Revenue Service.
Federal estate
tax
An individual
non-U.S. holder
who is treated as the owner of, or has made certain lifetime
transfers of, an interest in the common stock will be required
to include the value of the stock in his or her gross estate for
U.S. federal estate tax purposes, and may be subject to
U.S. federal estate tax unless an applicable estate tax
treaty provides otherwise.
S-20
Underwriting
We are offering the shares of common stock described in this
prospectus through a number of underwriters. J.P. Morgan
Securities Inc. is acting as book-running manager of the
offering and as representative of the underwriters. We have
entered into an underwriting agreement with the underwriters.
Subject to the terms and conditions of the underwriting
agreement, we have agreed to sell to the underwriters, and each
underwriter has severally agreed to purchase, at the public
offering price less the underwriting discounts and commissions
set forth on the cover page of this prospectus, the number of
shares of common stock listed next to its name in the following
table:
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Name
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Number of shares
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J.P. Morgan Securities Inc.
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8,917,500
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Dahlman Rose & Company, LLC
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1,957,500
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BNP Paribas Securities Corp
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725,000
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Capital One SouthCoast, Inc.
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725,000
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Howard Weil Incorporated
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725,000
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TD Securities (USA) LLC
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725,000
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ING Financial Markets LLC
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362,500
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Piper Jaffray & Co
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362,500
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Total
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14,500,000
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The underwriters are committed to purchase all the common shares
offered by us if they purchase any shares. The underwriting
agreement also provides that if an underwriter defaults, the
purchase commitments of non-defaulting underwriters may also be
increased or the offering may be terminated.
Pursuant to our written instructions, the underwriters allocated
a certain number of shares of common stock to certain
individuals, including 870,000 shares to James R. Moffett,
our Co-Chairman of the Board and 87,000 shares to Richard
C. Adkerson, our Co-Chairman of the Board.
The underwriters propose to offer the common shares directly to
the public at the initial public offering price set forth on the
cover page of this prospectus and to certain dealers at that
price less a concession not in excess of $0.1640 per share.
After the initial public offering of the shares, the offering
price and other selling terms may be changed by the
underwriters. Sales of shares made outside of the United States
may be made by affiliates of the underwriters.
The underwriters have an option to buy up to 2,175,000
additional shares of common stock from us to cover sales of
shares by the underwriters which exceed the number of shares
specified in the table above. The underwriters have 30 days
from the date of this prospectus to exercise this over-allotment
option. If any shares are purchased with this over-allotment
option, the underwriters will purchase shares in approximately
the same proportion as shown in the table above. If any
additional shares of common stock are purchased, the
underwriters will offer the additional shares on the same terms
as those on which the shares are being offered.
The underwriting fee is equal to the public offering price per
share of common stock less the amount paid by the underwriters
to us per share of common stock. The underwriting fee is $0.2731
per share. The following table shows the per share and total
underwriting discounts
S-21
and commissions to be paid to the underwriters assuming both no
exercise and full exercise of the underwriters option to
purchase additional shares.
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Without over-
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With full over-
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allotment exercise
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allotment exercise
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Per Share
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$
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0.2731
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$
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0.2731
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Total
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$
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3,959,950
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$
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4,553,943
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We estimate that the total expenses of this offering payable by
us, excluding the underwriting discounts and commissions, will
be approximately $225,000, including approximately $62,500 for
accounting fees and expenses, $85,000 for legal fees and
expenses, $65,000 for printing fees and expenses and $12,500 for
miscellaneous other fees and expenses.
A prospectus in electronic format may be made available on the
web sites maintained by one or more underwriters, or selling
group members, if any, participating in the offering. The
underwriters may agree to allocate a number of shares to
underwriters and selling group members for sale to their online
brokerage account holders. Internet distributions will be
allocated by the representatives to underwriters and selling
group members that may make Internet distributions on the same
basis as other allocations.
We have agreed that we will not (i) offer, pledge, announce
the intention to sell, sell, contract to sell, sell any option
or contract to purchase, purchase any option or contract to
sell, grant any option, right or warrant to purchase or
otherwise transfer or dispose of, directly or indirectly, any
shares of common stock or any securities convertible into or
exercisable or exchangeable for common stock or (ii) enter
into any swap or other agreement that transfers, in whole or in
part, any of the economic consequences of ownership of common
stock, whether any such transaction described in clause (i)
or (ii) above is to be settled by delivery of common stock
or such other securities, in cash or otherwise, without the
prior written consent of the J.P. Morgan Securities Inc.,
other than (A) the shares of common stock to be sold in
connection with this prospectus supplement, (B) any shares
of our common stock issued upon the exercise of options granted
under existing employee stock option plans and (C) any
shares of our 8% convertible perpetual preferred stock to be
sold to the underwriters therefor in our concurrent offering of
the convertible perpetual preferred stock.
Our executive officers, including our co-chairmen of the board,
have entered into
lock-up
agreements with the underwriters prior to the commencement of
this offering pursuant to which we and each of these persons,
with limited exceptions, for a period of 90 days after the
date of this prospectus supplement, may not, without the prior
written consent of J.P. Morgan Securities Inc.,
(1) offer, pledge, announce the intention to sell, contract
to sell, sell any option or contract to purchase, purchase any
option or contract to sell, grant any option, right or warrant
to purchase, or otherwise transfer or dispose of, directly or
indirectly, any shares of our common stock or convertible
perpetual preferred stock or any securities convertible into or
exercisable or exchangeable for our common stock (including
without limitation, common stock or convertible perpetual
preferred stock which may be deemed to be beneficially owned by
the undersigned in accordance with the rules and regulations of
the SEC and securities which may be issued upon exercise of a
stock option or warrant) or (2) enter into any swap or
other agreement that transfers, in whole or in part, any of the
economic consequences of ownership of the common stock or
convertible perpetual preferred stock, whether any such
transaction described in clause (1) or (2) above is to
be settled by delivery of common stock or convertible perpetual
preferred stock or such other securities, in cash or otherwise.
The foregoing
S-22
restrictions will not apply to (a) transfers of shares of
our common stock or options to purchase our common stock made as
a bona fide gift or gifts, provided that the donee or donees
thereof agree to be bound by the restrictions set forth herein,
(b) transfers of shares of our common stock or options to
purchase our common stock made to any trust for the direct or
indirect benefit of the undersigned or the immediate family of
the undersigned, provided that the trustee of the trust agrees
to be bound by the restrictions set forth herein, and provided
further that any such transfer shall not involve a disposition
for value or (c) transfers of shares of our common stock to
us in satisfaction of any tax withholding obligation of the
undersigned or in payment of the exercise price for any stock
option exercised by the undersigned; provided, however, that in
the case of any transfer clause (a), (b), or (c) of the
prior sentence, neither the party subject to the
lock-up
agreement nor the recipient shall be required to, or
voluntarily, file a report under Section 16 of the Exchange
Act of 1934, as amended reporting a reduction in beneficial
ownership of our common stock during the
lock-up
period.
We have agreed to indemnify the underwriters against certain
liabilities, including liabilities under the Securities Act of
1933.
Our common stock is listed on New York Stock Exchange under the
symbol MMR.
In connection with this offering, the underwriters may engage in
stabilizing transactions, which involves making bids for,
purchasing and selling shares of common stock in the open market
for the purpose of preventing or retarding a decline in the
market price of the common stock while this offering is in
progress. These stabilizing transactions may include making
short sales of the common stock, which involves the sale by the
underwriters of a greater number of shares of common stock than
they are required to purchase in this offering, and purchasing
shares of common stock on the open market to cover positions
created by short sales. Short sales may be covered
shorts, which are short positions in an amount not greater than
the underwriters over-allotment option referred to above,
or may be naked shorts, which are short positions in
excess of that amount. The underwriters may close out any
covered short position either by exercising their over-allotment
option, in whole or in part, or by purchasing shares in the open
market. In making this determination, the underwriters will
consider, among other things, the price of shares available for
purchase in the open market compared to the price at which the
underwriters may purchase shares through the over-allotment
option. A naked short position is more likely to be created if
the underwriters are concerned that there may be downward
pressure on the price of the common stock in the open market
that could adversely affect investors who purchase in this
offering. To the extent that the underwriters create a naked
short position, they will purchase shares in the open market to
cover the position.
The underwriters have advised us that, pursuant to
Regulation M of the Securities Act of 1933, they may also
engage in other activities that stabilize, maintain or otherwise
affect the price of the common stock, including the imposition
of penalty bids. This means that if the representatives of the
underwriters purchase common stock in the open market in
stabilizing transactions or to cover short sales, the
representatives can require the underwriters that sold those
shares as part of this offering to repay the underwriting
discount received by them.
These activities may have the effect of raising or maintaining
the market price of the common stock or preventing or retarding
a decline in the market price of the common stock, and, as a
result, the price of the common stock may be higher than the
price that otherwise might exist in the open market. If the
underwriters commence these activities, they may discontinue
them at any time. The underwriters may carry out these
transactions on the New York Stock Exchange in the
over-the-counter market or otherwise.
S-23
Other than in the United States, no action has been taken by us
or the underwriters that would permit a public offering of the
securities offered by this prospectus in any jurisdiction where
action for that purpose is required. The securities offered by
this prospectus may not be offered or sold, directly or
indirectly, nor may this prospectus or any other offering
material or advertisements in connection with the offer and sale
of any such securities be distributed or published in any
jurisdiction, except under circumstances that will result in
compliance with the applicable rules and regulations of that
jurisdiction. Persons into whose possession this prospectus
comes are advised to inform themselves about and to observe any
restrictions relating to the offering and the distribution of
this prospectus. This prospectus does not constitute an offer to
sell or a solicitation of an offer to buy any securities offered
by this prospectus in any jurisdiction in which such an offer or
a solicitation is unlawful.
This document is only being distributed to and is only directed
at (i) persons who are outside the United Kingdom or
(ii) to investment professionals falling within
Article 19(5) of the Financial Services and Markets Act
2000 (Financial Promotion) Order 2005 (the Order) or
(iii) high net worth entities, and other persons to whom it
may lawfully be communicated, falling with Article 49(2)(a)
to (d) of the Order (all such persons together being
referred to as relevant persons). The securities are
only available to, and any invitation, offer or agreement to
subscribe, purchase or otherwise acquire such securities will be
engaged in only with, relevant persons. Any person who is not a
relevant person should not act or rely on this document or any
of its contents.
In relation to each Member State of the European Economic Area
which has implemented the Prospectus Directive (each, a
Relevant Member State), from and including the date
on which the European Union Prospectus Directive (the EU
Prospectus Directive) is implemented in that Relevant
Member State (the Relevant Implementation Date) an
offer of securities described in this prospectus may not be made
to the public in that Relevant Member State prior to the
publication of a prospectus in relation to the shares which has
been approved by the competent authority in that Relevant Member
State or, where appropriate, approved in another Relevant Member
State and notified to the competent authority in that Relevant
Member State, all in accordance with the EU Prospectus
Directive, except that it may, with effect from and including
the Relevant Implementation Date, make an offer of shares to the
public in that Relevant Member State at any time:
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to legal entities which are authorized or regulated to operate
in the financial markets or, if not so authorized or regulated,
whose corporate purpose is solely to invest in securities;
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to any legal entity which has two or more of (1) an average
of at least 250 employees during the last financial year;
(2) a total balance sheet of more than 43,000,000 and
(3) an annual net turnover of more than 50,000,000,
as shown in its last annual or consolidated accounts;
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to fewer than 100 natural or legal persons (other than qualified
investors as defined in the EU Prospectus Directive) subject to
obtaining the prior consent of the book-running manager for any
such offer; or
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in any other circumstances which do not require the publication
by the Issuer of a prospectus pursuant to Article 3 of the
Prospectus Directive.
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For the purposes of this provision, the expression an
offer of securities to the public in relation to any
securities in any Relevant Member State means the communication
in any form
S-24
and by any means of sufficient information on the terms of the
offer and the securities to be offered so as to enable an
investor to decide to purchase or subscribe for the securities,
as the same may be varied in that Member State by any measure
implementing the EU Prospectus Directive in that Member State
and the expression EU Prospectus Directive means Directive
2003/71/EC
and includes any relevant implementing measure in each Relevant
Member State.
Certain of the underwriters and their affiliates have provided
in the past to us and our affiliates and may provide from time
to time in the future certain commercial banking, financial
advisory, investment banking and other services for us and such
affiliates in the ordinary course of their business, for which
they have received and may continue to receive customary fees
and commissions. Under our senior secured credit agreement,
effective August 6, 2007, JPMorgan Chase Bank N.A., is
administrative agent, and J.P. Morgan Securities Inc. is a
joint bookrunner and joint lead arranger. In addition, from time
to time, certain of the underwriters and their affiliates may
effect transactions for their own account or the account of
customers, and hold on behalf of themselves or their customers,
long or short positions in our debt or equity securities or
loans, and may do so in the future. In addition,
J.P. Morgan Securities Inc. acted as financial advisors to
us in connection with our 2007 acquisition of certain oil and
natural gas properties from Newfield Exploration Company, and is
currently acting as an underwriter in connection with our
concurrent offering of our 8% convertible perpetual preferred
stock.
S-25
Legal
matters
The validity of the shares of our common stock being offered by
us has been passed upon by Jones, Walker, Waechter, Poitevent,
Carrère & Denègre, L.L.P., New Orleans,
Louisiana and certain legal matters will be passed upon for the
underwriters by Davis Polk & Wardwell, New York, New
York.
Experts
Our consolidated financial statements appearing in our Annual
Report on
Form 10-K
for the year ended December 31, 2008 and the effectiveness
of our internal control over financial reporting as of
December 31, 2008 included therein, have been audited by
Ernst & Young LLP, independent registered public
accounting firm, as set forth in their reports thereon included
therein, and incorporated herein by reference. Such consolidated
financial statements are, and audited financial statements to be
included in subsequently filed documents will be, incorporated
herein in reliance upon the reports of Ernst & Young
LLP pertaining to such financial statements and the
effectiveness of our internal control over financial reporting
as of the respective dates (to the extent covered by consents
filed with the SEC) given on the authority of such firm as
experts in accounting and auditing.
With respect to our unaudited condensed consolidated interim
financial information as of March 31, 2009 and for the
three-month periods ended March 31, 2009 and 2008
incorporated by reference in this prospectus supplement,
Ernst & Young LLP reported that they have applied
limited procedures in accordance with professional standards for
a review of such information. However, their separate report
dated May 5, 2009, included in our Quarterly Report on
Form 10-Q
for the quarter ended March 31, 2009, which report is
incorporated by reference herein, states that they did not audit
and they do not express an opinion on that interim financial
information. Accordingly, the degree of reliance on their report
on such information should be restricted in light of the limited
nature of the review procedures applied. Ernst & Young
LLP is not subject to the liability provisions of
Section 11 of the Securities Act of 1933 (the
Securities Act) for their report on the unaudited
interim financial information because that report is not a
report or a part of the Registration
Statement prepared or certified by Ernst & Young LLP
within the meaning of Sections 7 and 11 of the Securities
Act.
Reserves
The information regarding our proved oil and gas reserves as of
December 31, 2008, 2007 and 2006 that is included or
incorporated by reference herein, has been reviewed and verified
by Ryder Scott Company, L.P. (Ryder Scott). This
reserve information has been included or incorporated by
reference herein upon the authority of Ryder Scott, as experts
in petroleum engineering and oil and gas reserve determination.
S-26
Where you can
find more information
We file annual, quarterly and current reports, proxy statements
and other information with the SEC. These SEC filings are
available to the public over the Internet at the SECs
website at
http://www.sec.gov
and our website at
http://www.mcmoran.com
.
You may also read and copy any document we file with the SEC at
the SECs public reference room at 100 F Street,
N.E., Washington, D.C. 20549. Please call the SEC at
1-800-SEC-0330
for further information on the public reference room.
We are incorporating by reference into this
prospectus supplement specific documents that we filed with the
SEC, which means that we can disclose important information to
you by referring you to those documents that are considered part
of this prospectus supplement and accompanying prospectus.
Information that we file subsequently with the SEC will
automatically update and supersede this information. We
incorporate by reference the documents listed below, and any
future documents that we file with the SEC under
Section 13(a), 13(c), 14 or 15(d) of the Securities
Exchange Act of 1934, as amended (the Exchange Act),
until the termination of the offerings of all of the securities
covered by this prospectus supplement and accompanying
prospectus. This prospectus supplement and accompanying
prospectus are part of a registration statement filed with the
SEC.
We are incorporating by reference into this
prospectus supplement the following documents filed with the SEC
(excluding any portions of such documents that have been
furnished but not filed for purposes of
the Exchange Act):
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Our Annual Report on
Form 10-K
for the fiscal year ended December 31, 2008;
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Our Quarterly Report on
Form 10-Q
for the quarter ended March 31, 2009;
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The portions of our definitive Proxy Statement filed on
April 22, 2009 incorporated by reference in our Annual
Report on
Form 10-K
for the year ended December 31, 2008; and
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Registration Statement on
Form 8-A,
as amended, for a description of our capital stock, par value
$0.01 per share, filed on June 15, 2009, including any
amendments or reports filed for the purpose of updating such
description, which is also incorporated by reference herein.
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We will provide to each person, including any beneficial owner,
to whom a prospectus supplement and accompanying prospectus is
delivered, upon written or oral request and without charge, a
copy of the documents referred to above that we have
incorporated by reference. You can request copies of such
documents if you call or write us at the following address or
telephone number: McMoRan Exploration Co., 1615 Poydras Street,
New Orleans, Louisiana 70112,
(504) 582-4000.
This prospectus supplement and any accompanying prospectus or
information incorporated by reference herein or therein,
contains summaries of certain agreements that we have filed as
exhibits to various SEC filings, as well as certain agreements
that we will enter into in connection with the offering of
securities covered by this prospectus supplement. The
descriptions of these agreements contained in this prospectus
supplement and accompanying prospectus or information
incorporated by reference herein or therein do not purport to be
complete and are subject to, or qualified in their entirety by
reference to, the definitive agreements. Copies of the
definitive agreements will be made available without charge to
you by making a written or oral request to us.
S-27
You should rely only upon the information contained in this
prospectus supplement, the accompanying prospectus or
incorporated by reference in this prospectus supplement and the
accompanying prospectus. We have not authorized anyone to
provide you with different information. You should not assume
that the information in this document is accurate as of any date
other than that on the front cover of this prospectus supplement.
Any statement contained herein or in a document incorporated or
deemed to be incorporated by reference herein shall be deemed to
be modified or superseded for purposes of this prospectus
supplement to the extent that a statement contained herein, in
any other subsequently filed document which also is or is deemed
to be incorporated by reference herein modifies or supersedes
such statement. Any such statement so modified or superseded
shall not be deemed, except as so modified and superseded, to
constitute a part of this prospectus supplement.
S-28
PROSPECTUS
$1,500,000,000
McMoRan Exploration
Co.
Common stock, preferred
stock, debt securities,
warrants, purchase contracts
and units
We may from time to time sell any combination of common stock,
preferred stock, debt securities, warrants, purchase contracts
and units described in this prospectus in one or more offerings.
The aggregate initial offering price of all securities sold
under this prospectus will not exceed $1,500,000,000. The
preferred stock, debt securities, warrants and units described
in this prospectus may be convertible into or exercisable or
exchangeable for common stock or preferred stock or other
securities. The securities offered by this prospectus may be
sold separately or sold as units with other securities offered
hereby.
This prospectus provides a general description of the securities
we may offer. Each time we sell securities, we will provide
specific amounts, prices and terms of the securities offered in
a supplement to this prospectus. The prospectus supplement may
also add, update or change information contained in this
prospectus. You should read carefully this prospectus and the
applicable prospectus supplement, together with the additional
information described below, before you invest in any securities.
We may sell these securities directly to our stockholders or to
purchasers or through underwriters, dealers or other agents as
designated from time to time. If any underwriters or dealers are
involved in the sale of any securities offered by this
prospectus and any prospectus supplement, the prospectus
supplement will set forth their names and any applicable fees,
commissions or discounts.
Our common stock is listed on the New York Stock Exchange under
the trading symbol MMR.
Investing in these securities involves certain risks. See
Risk Factors in the applicable Prospectus Supplement
and in our annual report on
Form 10-K
for the year ended December 31, 2006, and in our subsequent
quarterly reports, which are incorporated by reference
herein.
Neither the Securities and Exchange Commission nor any state
securities commission has approved or disapproved of these
securities, or determined if this prospectus is truthful or
complete. Any representation to the contrary is a criminal
offense.
This prospectus may not be used to sell securities unless
accompanied by a prospectus supplement.
The date of this prospectus is
October 5, 2007
You should rely only on the information contained in or
incorporated by reference in this prospectus. We have not
authorized anyone to provide you with different information. We
are not making an offer of these securities in any state where
the offer is not permitted. You should not assume that the
information contained in or incorporated by reference in this
prospectus is accurate as of any date other than the date on the
front of this prospectus. The terms McMoRan,
MMR, we, us, and
our refer to McMoRan Exploration Co. and all
entities owned or controlled by McMoRan Exploration Co.
Table of
contents
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i
About this
prospectus
This prospectus is part of a registration statement that we
filed with the Securities and Exchange Commission, or the SEC,
utilizing a shelf registration process. Under this
shelf process, we may sell any combination of the securities
described in this prospectus in one or more offerings. This
prospectus provides you with a general description of the
securities we may offer. Each time we sell securities, we will
provide a prospectus supplement that will contain specific
information about the amounts, prices and terms of the
securities offered. The prospectus supplement may also add,
update or change information contained in this prospectus. You
should read both this prospectus and any prospectus supplement
together with additional information described under the heading
Where You Can Find More Information.
We have filed or incorporated by reference exhibits to the
registration statement of which this prospectus forms a part.
You should read the exhibits carefully for provisions that may
be important to you.
McMoRan
Exploration Co.
We engage in the exploration, development and production of oil
and natural gas offshore in the Gulf of Mexico and onshore in
the Gulf Coast area. We have one of the largest acreage
positions in the shallow waters of the Gulf of Mexico and Gulf
coast areas, which are our regions of focus. Our oil and gas
operations are conducted through McMoRan Oil & Gas LLC
(MOXY), our principal operating subsidiary. Since 2004, we have
participated in 17 discoveries on 31 prospects that have been
drilled and evaluated, including four discoveries announced in
2007. We recently announced a potentially significant discovery
called Flatrock on OCS Block 310 at South Marsh Island
Block 212. Four additional prospects are either in progress
or not fully evaluated.
On August 6, 2007, we completed our acquisition of
substantially all of the proved property interests and related
assets of Newfield Exploration Company (Newfield) on
the outer continental shelf of the Gulf of Mexico for total cash
consideration of approximately $1.08 billion and the
assumption of the related reclamation obligations. This
acquisition had an effective date of July 1, 2007.
We conduct substantially all of our operations in the shallow
waters of the Gulf of Mexico, commonly referred to as the
shelf, and onshore in the Gulf coast region. We
believe that we have significant exploration opportunities in
large, deep geologic structures located beneath the shallow
waters of the Gulf of Mexico shelf and often lying below shallow
reservoirs where significant reserves have been produced,
commonly referred to as deep gas or the deep
shelf (from below 15,000 feet to 25,000 feet).
Our acquisition of the Newfield properties significantly
enhances our portfolio of shelf opportunities by increasing our
gross acreage position, increasing our deep gas exploration
potential, providing access to new ultra deep
opportunities (below 25,000 feet) and establishing us as
one of the largest producers in the traditional
shelf (above 15,000 feet) of the Gulf of Mexico.
Further, our shelf prospects are in proximity to existing oil
and gas infrastructure, which generally allows production to be
brought on line quickly and at lower development costs.
In addition to our oil and gas operations, we are pursuing the
development of the Main Pass Energy
Hub
TM
(MPEH
TM
)
project for the development of an LNG regasification and storage
facility through our other wholly-owned subsidiary,
Freeport-McMoRan Energy LLC (Freeport
1
Energy). The
MPEH
TM
project is located at our Main Pass facilities located offshore
in the Gulf of Mexico, 38 miles east of Venice, Louisiana.
Following an extensive review, the Maritime Administration
(MARAD) approved our license application for the
MPEH
TM
project in January 2007. The
MPEH
TM
facility is approved with a capacity of regasifying LNG at a
peak rate of 1.6 Bcf per day, storing 28 Bcf of
natural gas in salt caverns and delivering 3.1 Bcf of
natural gas per day, including gas from storage, to the
U.S. market.
Our principal executive offices are located at 1615 Poydras
Street, New Orleans, Louisiana 70112, and our telephone number
is
(504) 582-4000.
Our website is located at
www.mcmoran.com
. The
information on our website is not part of this prospectus.
2
Use of
proceeds
Unless otherwise indicated in the applicable prospectus
supplement, the net proceeds from the sale of the securities
will be used for general corporate purposes, including working
capital, acquisitions, retirement of debt and other business
opportunities.
3
Ratio of earnings
to fixed charges
The following table sets forth our ratio of earnings to fixed
charges for the periods indicated.
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Six months ended
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June 30,
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Years ended December 31,
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2007
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2006
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2005
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2004
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2003
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2002
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Ratio of earnings to fixed charges
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(a
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(a
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(a
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(a
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(a
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20.2x
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Ratio of earnings to fixed
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charges and preferred stock
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dividends
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(b
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(b
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(b
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(b
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(b
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10.3x
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(a)
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We sustained a net loss from
continuing operations of $21.1 million in the six months
ended June 30, 2007, $44.7 million in 2006,
$31.5 million in 2005, $52.0 million in 2004 and
$41.8 million in 2003. We did not have any earnings from
continuing operations to cover our fixed charges of
$7.2 million for the six-month period ended June 30,
2007, $15.5 million in 2006, $17.5 million in 2005,
$11.2 million in 2004 and $4.7 million in 2003.
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(b)
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We did not have any earnings from
continuing operations to cover our charges and preferred stock
dividends of $7.2 million for the six months ended
June 30, 2007, $17.0 million in 2006,
$19.0 million in 2005, $12.7 million in 2004 and
$6.3 million in 2003.
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For the ratio of earnings to fixed charges calculation, earnings
consist of income (loss) from continuing operations and fixed
charges. Fixed charges include interest and that portion of rent
deemed representative of interest. For the ratio of earnings to
fixed charges and preferred stock dividends calculation, we
assumed that our preferred stock dividend requirements were
equal to the earnings that would be required to cover those
dividend requirements.
4
Description of
McMoRan
capital
stock
This section describes the general terms and provisions of the
capital stock offered by this prospectus. The applicable
prospectus supplement will describe the specific terms of the
capital stock offered under that applicable prospectus
supplement and any general terms outlined in this section that
will not apply to the capital stock.
The following summary of the terms of our capital stock is not
meant to be complete and is qualified by reference to the
relevant provisions of the General Corporation Law of the State
of Delaware, or the DGCL, and our amended and restated
certificate of incorporation and our amended and restated
bylaws. Copies of our amended and restated certificate of
incorporation and our amended and restated bylaws are
incorporated herein by reference and will be sent to you at no
charge upon request. See Where You Can Find More
Information below.
Authorized
capital stock
As of the date of this prospectus, our amended and restated
certificate of incorporation authorizes us to issue up to
150,000,000 shares of common stock, par value
$0.01 per share, and up to 50,000,000 shares of
preferred stock, par value $0.01 per share. As of
August 31, 2007, 34.7 million shares of our common
stock were issued and outstanding (not including the
2.5 million shares held in treasury).
In addition, as of August 31, 2007, we had options
exercisable for an aggregate 7.9 million shares of our
common stock outstanding at an average exercise price of
$15.01 per share. Moreover, as of August 31, 2007, our
outstanding 6% Convertible Senior Notes were convertible
into approximately 7.1 million shares of our common stock
at a conversion price of $14.25 per share, and our
outstanding
5
1
/
4
% Convertible
Senior Notes were convertible into approximately
6.9 million shares of our common stock at a conversion
price of $16.575 per share. Furthermore, we have warrants
outstanding to purchase approximately 2.5 million shares of
our common stock at an exercise price of $5.25 per share
with 1.74 million of these warrants scheduled to expire in
December 2007 and the remainder scheduled to expire in September
2008.
Common
stock
Common stock outstanding.
The issued and outstanding
shares of common stock are, and the shares of common stock that
we may issue in the future will be, validly issued, fully paid
and nonassessable, and not subject to any preemptive or other
similar right.
Voting rights.
Each holder of our common stock is
entitled to one vote for each share of common stock held of
record on all matters as to which stockholders are entitled to
vote. Holders of our common stock may not cumulate votes for the
election of directors.
Dividend rights; rights upon liquidations.
Subject
to the preferences accorded to the holders of any series of
preferred stock if and when issued by the board of directors,
holders of our common stock are entitled to dividends at such
times and amounts as the board of directors may determine. We
have not in the past paid, and do not anticipate paying in the
foreseeable future, cash dividends on our common stock. 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, our creditors will receive any
payments to which they are entitled. Subsequent to those
payments, the holders of our common stock will share ratably,
according to the number of shares held by them, in our remaining
assets, if any.
5
Other rights.
Shares of our common stock are not
redeemable or subject to any sinking fund provisions, and have
no subscription, conversion or preemptive rights.
Transfer agent.
The transfer agent and registrar for
the common stock is Mellon Investor Services LLC.
NYSE.
Our common stock is listed on the New York
Stock Exchange under the symbol MMR.
Preferred
stock
General.
No shares of our preferred stock are
currently outstanding. Our board of directors is authorized,
subject to the limits imposed by the DGCL to issue one or more
series of preferred stock, to fix the number of shares to be
included in each series of preferred stock, and to determine the
designation of any series of preferred stock. Our board of
directors is also authorized to determine the powers, rights,
preferences and privileges and the qualifications, limitations
and restrictions granted to or imposed upon any wholly unissued
series of preferred stock.
Our board of directors may authorize the issuance of preferred
stock with voting or conversion rights that adversely affect the
voting power or other rights of our common stockholders. The
issuance of preferred stock, while providing flexibility in
connection with possible acquisitions, financings and other
corporate purposes, could have the effect of delaying, deferring
or preventing our change in control and may cause the market
price of our common stock to decline or impair the voting and
other rights of the holders of our common stock.
Prior to the issuance of shares of preferred stock of each
series, we are required to file a certificate of designation
with the Secretary of State of the State of Delaware. The
certificate of designation fixes for each class or series the
designations, powers, preferences, rights, qualifications,
limitations and restrictions, including, but not limited to, the
following:
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the number of shares constituting each class or series;
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voting rights;
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rights and terms of redemption (including sinking fund
provisions);
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dividend rights and rates;
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dissolution;
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terms concerning the distribution of assets;
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conversion or exchange terms;
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redemption prices; and
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liquidation preferences.
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All shares of preferred stock offered hereby will, when issued,
be fully paid and non-assessable and will not have any
preemptive or similar rights. We will set forth in a prospectus
supplement relating to the class or series of preferred stock
being offered the following terms:
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the title or series and stated value of the preferred stock;
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the number of shares of the preferred stock offered, the
liquidation preference per share and the offering price of the
preferred stock;
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the dividend rate(s), period(s)
and/or
payment date(s) or method(s) of calculation applicable to the
preferred stock;
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whether dividends are cumulative or non-cumulative and, if
cumulative, the date from which dividends on the preferred stock
will accumulate;
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the procedures for any auction and remarketing, if any, for the
preferred stock;
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the provisions for a sinking fund, if any, for the preferred
stock;
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the provision for redemption or repurchase, if applicable, of
the preferred stock;
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any listing of the preferred stock on any securities exchange;
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the terms and conditions, if applicable, upon which the
preferred stock will be convertible into common stock, including
the conversion price (or manner of calculation) and conversion
period;
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voting rights, if any, of the preferred stock;
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whether interests in the preferred stock will be represented by
depositary shares;
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a discussion of any material
and/or
special United States Federal income tax considerations
applicable to the preferred stock;
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the relative ranking and preferences of the preferred stock as
to dividend rights and rights upon the liquidation, dissolution
or winding up of our affairs;
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any limitations on issuance of any class or series of preferred
stock ranking senior to or on a parity with the class or series
of preferred stock as to dividend rights and rights upon
liquidation, dissolution or winding up of our affairs; and
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any other specific terms, preferences, rights, limitations or
restrictions of the preferred stock.
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Rank.
Unless we specify otherwise in the applicable
prospectus supplement, the preferred stock will rank, with
respect to dividends and upon our liquidation, dissolution or
winding up:
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senior to all classes or series of our common stock and to all
of our equity securities ranking junior to the preferred stock;
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on a parity with all of our equity securities the terms of which
specifically provide that the equity securities rank on a parity
with the preferred stock; and
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junior to all of our equity securities the terms of which
specifically provide that the equity securities rank senior to
the preferred stock.
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The term equity securities does not include
convertible debt securities.
Anti-takeover
effects of provisions of our amended and restated certificate of
incorporation and amended and restated bylaws
General.
Provisions of our amended and restated
certificate of incorporation and amended and restated bylaws may
have the effect of making it more difficult for a third party to
acquire, or
7
discourage a third party from attempting to acquire, control of
our company by means of a tender offer, a proxy contest or
otherwise. These provisions may also make the removal of
incumbent officers and directors more difficult. These
provisions are intended to discourage certain types of coercive
takeover practices and inadequate takeover bids and to encourage
persons seeking to acquire control of us to first negotiate with
us. For a complete description of these provisions, please refer
to our amended and restated certificate of incorporation and our
amended and restated bylaws, which are incorporated herein by
reference.
Specifically, our amended and restated certificate of
incorporation and amended and restated bylaws provide for the
following:
No written consent of stockholders.
Any action to be
taken by our stockholders must be effected at a duly called
annual or special meeting and may not be effected by written
consent.
Special meetings of stockholders.
Special meetings
of our stockholders may be called only by the chairman,
co-chairman, or any vice-chairman of the board of directors, or
by our president and chief executive officer, or by a majority
of the members of the board of directors.
Advance notice requirement.
Stockholder proposals to
be brought before an annual meeting or a special meeting of our
stockholders must comply with advance notice procedures. These
advance notice procedures require timely notice and apply in
several situations, including stockholder proposals relating to
the nominations of persons for election to the board of
directors.
Supermajority voting/fair price requirements.
Our
amended and restated certificate of incorporation provides that
a supermajority vote of our stockholders and the approval of our
directors is required in connection with certain transactions
that would result in a change of control of our company.
Amendment.
The affirmative vote of at least 80% of
our companys outstanding common stock is required to
amend, alter, change or repeal by stockholder action the
provisions in our amended and restated certificate of
incorporation providing for the following: the fair price
requirements described above; the restriction on shareholder
action by written consent; limitation of liability and
indemnification for officers and directors; and the
supermajority vote required to amend our certificate of
incorporation. The affirmative vote of at least 80% of our
companys outstanding common stock is also required to
amend our amended and restated bylaws by stockholder action.
Anti-takeover
effects of certain provisions of Delaware law
We are subject to Section 203 of the Delaware General
Corporation Law, an anti-takeover law. In general,
Section 203 prohibits a Delaware corporation from engaging
in any business combination with any
interested stockholder for a period of three years
following the date that the stockholder became an interested
stockholder, unless:
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prior to that date, the board of directors of the corporation
approved either the business combination or the transaction that
resulted in the stockholder becoming an interested stockholder;
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upon consummation of the transaction that resulted in the
stockholder becoming an interested stockholder, the interested
stockholder owned at least 85% of the voting stock of the
corporation outstanding at the time the transaction commenced,
excluding for purposes of
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determining the number of shares of voting stock outstanding
(but not the voting stock owned by the interested stockholder)
those shares owned by persons who are directors and also
officers and by excluding employee stock plans in which employee
participants do not have the right to determine confidentially
whether shares held subject to the plan will be tendered in a
tender or exchange offer; or
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on or subsequent to that date, the business combination is
approved by the board of directors of the corporation and
authorized at an annual or special meeting of stockholders, and
not by written consent, by the affirmative vote of at least
66
2
/
3
%
of the outstanding voting stock that is not owned by the
interested stockholder.
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Section 203 defines business combination to
include the following:
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any merger or consolidation involving the corporation and the
interested stockholder;
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any sale, transfer, pledge or other disposition of 10% or more
of the assets of the corporation involving the interested
stockholder;
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subject to certain exceptions, any transaction that results in
the issuance or transfer by the corporation of any stock of the
corporation to the interested stockholder;
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any transaction involving the corporation that has the effect of
increasing the proportionate share of the stock of any class or
series of the corporation beneficially owned by the interested
stockholder; or
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the receipt by the interested stockholder of the benefit of any
loans, advances, guarantees, pledges or other financial benefits
provided by or through the corporation.
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In general, Section 203 defines an interested
stockholder as any entity or person beneficially owning
15% or more of the outstanding voting stock of the corporation,
or who beneficially owns 15% or more of the outstanding voting
stock of the corporation at anytime within a three year period
immediately prior to the date of determining whether such person
is an interested stockholder, and any entity or person
affiliated with or controlling or controlled by any of these
entities or persons.
Shareholder
rights agreement
Our board of directors adopted a shareholder rights plan in
November 1998 and amended the plan in December 1998. Our rights
plan is designed to deter abusive takeover tactics and to
encourage prospective acquirors to negotiate with our board of
directors rather than attempt to acquire the company in a manner
or on terms that the board deems unacceptable. Under the rights
plan, we distributed one preferred stock purchase right to each
holder of record of our common stock at the close of business on
November 13, 1998. Once exercisable, each right will
entitle stockholders to buy one one-hundredth of a share of our
Series A participating cumulative preferred stock, par
value $0.01 per share, at a purchase price of $80 per one
one-hundredth of a share of Series A participating
cumulative preferred stock. Prior to the time the rights become
exercisable, the rights will be transferred with our common
stock.
The rights do not become exercisable until a person or group
acquires 25% or more of our common stock or announces a tender
offer which would result in that person or group owning 25% or
more of our common stock. However, if the person or group that
acquires 25% or more of our common stock agrees to
standstill arrangements described in the rights
plan, the rights
9
will not become exercisable until the person or group acquires
35% or more of our common stock.
Once a person or group acquires 25% or more (or 35% or more
under the conditions described above) of our common stock, each
right will entitle its holder (other than the acquirer) to
purchase, for the $80 purchase price, the number of shares of
common stock having a market value of twice the purchase price.
The rights will also entitle holders to purchase shares of an
acquirers common stock under specified circumstances. In
addition, the board may exchange rights (other than the
acquirers) for shares of our common stock.
Prior to the time a person or group acquires 25% or more (or 35%
or more under the conditions described above) of our common
stock, the rights may be redeemed by our board of directors at a
price of $0.01 per right. As long as the rights are redeemable,
our board of directors may amend the rights agreement in any
respect. The terms of the rights are set forth in a rights
agreement between us and Mellon Investor Services LLC, as rights
agent. The rights expire on November 13, 2008 (unless
extended).
The rights may cause substantial dilution to a person that
attempts to acquire our company, unless the person demands as a
condition to the offer that the rights be redeemed or declared
invalid. The rights should not interfere with any merger or
other business combination approved by our board of directors
because our board may redeem the rights as described above. The
rights are intended to encourage any person desiring to acquire
a controlling interest in our company to do so through a
transaction negotiated with our board of directors rather than
through a hostile takeover attempt. The rights are intended to
assure that any acquisition of control of our company will be
subject to review by our board to take into account, among other
things, the interests of all of our stockholders.
For a complete description of the foregoing, please refer to our
shareholder rights agreement, which is incorporated herein by
reference.
10
Description of
debt securities
We may issue debt securities from time to time in one or more
distinct series. This section summarizes the terms of the debt
securities that are common to all series. All of the financial
terms and other specific terms of any series of debt securities
that we offer will be described in a prospectus supplement
relating to that series of debt securities. Since the terms of
specific debt securities may differ from the general information
we have provided below, you should rely on information in the
applicable prospectus supplement that may modify or replace any
information below. If there are differences between the
applicable prospectus supplement and this prospectus, the
prospectus supplement will control.
We may issue senior debt securities under a senior indenture
that we will enter into with a trustee named in the senior
indenture. We may issue subordinated debt securities under a
subordinated indenture that we will enter into with a trustee
named in the subordinated indenture. Except as we may otherwise
indicate, the terms of the senior indenture and the subordinated
indenture are identical. We have filed forms of these documents
as exhibits to the registration statement which includes this
prospectus. We use the term indentures in this
prospectus to refer to both the senior indenture and the
subordinated indenture.
The indentures will be qualified under the Trust Indenture
Act of 1939, or the Trust Indenture Act. We use the term
trustee to refer to either the senior trustee or the
subordinated trustee, as applicable.
The following are summaries of the anticipated material
provisions of the senior debt securities, the subordinated debt
securities and the indentures and are subject to, and qualified
in their entirety by reference to, all the provisions of the
indenture applicable to a particular series of debt securities.
There may also be provisions in the indentures which are
important to you. We urge you to read the indenture applicable
to a particular series of debt securities because it, and not
this description, defines your rights as a holder of such debt
securities.
General
We may issue debt securities in distinct series. The prospectus
supplement relating to any series of debt securities will set
forth:
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whether the debt securities will be senior or subordinated;
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the offering price;
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the title;
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any limit on the aggregate principal amount that may be issued;
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the maturity date(s);
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the interest rate(s), which may be fixed or variable, or the
method for determining the interest rate(s), the date(s)
interest will accrue, the interest payment date(s) and the
regular record date(s) or the method for determining such
date(s);
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the person who shall be entitled to receive interest, if other
than the record holder on the record date;
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the place(s) where payments may be made;
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any mandatory or optional redemption provisions;
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our right, if any, to defer payment of interest and the maximum
length of any such deferral period;
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if applicable, the method for determining how the principal,
premium, if any, or interest will be calculated by reference to
an index or formula;
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if other than U.S. currency, the currency or currency units
in which principal, premium, if any, or interest will be payable
and whether we or the holder may elect payment to be made in a
different currency;
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the portion of the principal amount that will be payable upon
acceleration of stated maturity, if other than the entire
principal amount;
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if the principal amount payable at stated maturity will not be
determinable as of any date prior to stated maturity, the amount
which will be deemed to be the principal amount;
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any defeasance provisions if different from those described
below under Satisfaction and Discharge;
Defeasance;
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any conversion or exchange provisions;
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the terms and conditions, if any, pursuant to which the notes
are secured;
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any obligation to redeem or purchase the debt securities
pursuant to a sinking fund;
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whether the debt securities will be issuable in the form of a
global security and the identity of the depositary for the
global securities, if different then described below under
FORMS OF SECURITIES;
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any subordination provisions, if different from those described
below under Subordinated Debt Securities;
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any deletions of, or changes or additions to, the events of
default or covenants;
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any provisions granting special rights to holders when a
specified event occur; and
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any other specific terms of such debt securities which are not
inconsistent with the provisions of the indentures.
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Unless otherwise specified in the prospectus supplement, the
debt securities will be registered debt securities.
Security
Our obligations under any debt securities issued may be secured
by some or all of our assets or by guarantees of one or more of
our subsidiaries. The terms and conditions pursuant to which our
debt securities may be secured will be described in the
applicable prospectus supplement.
In addition, as security for any debt securities issued, we may
use the net proceeds from an offering to acquire
U.S. government securities and pledge those securities to a
trustee for the exclusive benefit of the holders of the debt
securities (and not for the benefit of other creditors). The
amount of U.S. government securities acquired will be
sufficient upon receipt of scheduled interest and principal
payments of such securities to provide for payment in full of a
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certain number of scheduled interest payments due on the debt
securities. The amount of net proceeds from an offering used to
acquire U.S. government securities and the number of
scheduled interest payments to be secured for a particular
offering of debt securities will be described in the applicable
prospectus supplement. In addition, the terms and conditions
pursuant to which we would pledge the U.S. government
securities for the benefit of the holders of the debt securities
will be described in the applicable prospectus supplement.
Special terms of
the debt securities
The debt securities may be issued as original issue discount
securities. An original issue discount security is a debt
security, including any zero-coupon note, which:
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is issued at a price lower than the amount payable upon its
state maturity; and
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provides that upon redemption or acceleration of the maturity,
an amount less than the amount payable upon the stated maturity
shall become due and payable.
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The material United Stated federal income tax consequences
applicable to debt securities sold at an original issue discount
will be described in the applicable prospectus supplement.
The debt securities of any series may be convertible into or
exchangeable for our common stock or other securities. If so, we
will describe the specific terms on which the debt securities
may be converted or exchanged in the applicable prospectus
supplement. The conversion or exchange may be mandatory, at the
holders option, or at our option. The applicable
prospectus supplement will describe the manner in which the
shares of our common stock or other securities the holder would
receive would be converted or exchanged.
Exchange and
transfer
Except as may be described in the applicable prospectus
supplement, debt securities of any series will be exchangeable
for other debt securities of the same series. Debt securities
may be transferred or exchanged at the office of the security
registrar or at the office of any transfer agent designated by
us.
We will not impose a service charge for any transfer or
exchange, but we may require holders to pay any taxes,
assessments or other governmental charges associated with any
transfer or exchange.
In the event of any potential redemption of debt securities of
any series, we will not be required to:
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issue, register the transfer of, or exchange, any debt security
of that series during a period beginning at the opening of
business 15 days before the day of mailing of a notice of
redemption and ending at the close of business on the day of the
mailing; or
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register the transfer of or exchange any debt security of that
series selected for redemption, in whole or in part, except the
unredeemed portion being redeemed in part.
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We may initially appoint the trustee as the security registrar.
Any transfer agent, in addition to the security registrar,
initially designated by us will be named in the prospectus
supplement. We may designate additional transfer agents or
change transfer agents or change the office of the transfer
agent. However, we will be required to maintain a transfer agent
in each place of payment for the debt securities of each series.
13
Payment and
paying agent
The provisions of this paragraph will apply to the debt
securities unless otherwise indicated in the prospectus
supplement. Payment of interest on a debt security on any
interest payment date will be made to the person in whose name
the debt security is registered at the close of business on the
regular record date. Payment on debt securities of a particular
series will be payable at the office of a paying agent or paying
agents designated by us. However, at our option, we may pay
interest by mailing a check to the record holder. Unless
otherwise indicated in a prospectus supplement, the corporate
trust office of the trustee in the City of New York will be
designated as our sole paying agent.
We may name any other paying agents in the prospectus
supplement. We may designate additional paying agents, change
paying agents or change the office of any paying agent. However,
we will be required to maintain a paying agent in each place of
payment for the debt securities of a particular series.
All moneys paid by us to a paying agent for payment on any debt
security which remain unclaimed at the end of two years after
such payment was due will be repaid to us. Thereafter, the
holder may look only to us for such payment.
Consolidation,
merger and sale of assets
The indentures may contain covenants that restrict our ability
to merge or consolidate with another person, or sell, convey,
transfer or otherwise dispose of all or substantially all of our
assets. Any successor or acquirer of such assets must assume all
of our obligations under the indentures and the debt securities.
Events of
default
Unless we inform you otherwise in the prospectus supplement, the
indentures will define an event of default with respect to any
series of debt securities as one or more of the following events:
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failure to pay principal of or any premium on any debt security
of that series when due;
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failure to pay any interest on any debt security of that series
for 30 days when due;
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failure to perform any other covenant in the indenture continued
for 60 days after being given the notice required in the
indenture;
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our bankruptcy, insolvency or reorganization; and
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any other event of default specified in the prospectus
supplement.
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An event of default of one series of debt securities is not
necessarily an event of default for any other series of debt
securities.
If an event of default, other than an event of default described
in the fourth bullet point above, shall occur and be continuing,
either the trustee or the holders of at least 25% in aggregate
principal amount of the outstanding debt securities of a series,
by notice in writing to us, and to the trustee if notice is
given by such holders, may declare the principal amount of the
debt securities of that series to be due and payable immediately.
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If an event of default described in the fourth bullet point
above shall occur, the principal amount of all debt securities
of that series will automatically become immediately payable.
Any payment by us on the subordinated debt securities following
any such acceleration will be subject to the subordination
provisions described below under Subordinated Debt
Securities.
The holders of a majority in principal amount of the outstanding
debt securities of an affected series may waive any default or
event of default with respect to such series and it
consequences, except a continuing default or events of default
in the payment of principal, premium, if any, or interest on the
debt securities of such series.
After acceleration, the holders of a majority in aggregate
principal amount of the outstanding debt securities of an
affected series may, under certain circumstances, rescind and
annul such acceleration if all events of default, other than the
non-payment of accelerated principal, or other specified
amounts, have been cured or waived.
Other than the duty to act with the required care during an
event of default, the trustee will not be obligated to exercise
any of its rights or powers at the request of the holders unless
the holders shall have offered to the trustee reasonable
indemnity. Generally, the holders of a majority in aggregate
principal amount of the outstanding debt securities of any
series will have the right to direct the time, method and place
of conducting any proceeding for any remedy available to the
trustee or exercising any trust or power conferred on the
trustee.
A holder will not have any right to institute any proceeding
under the indentures, or for the appointment of a receiver or a
trustee, or for any other remedy under the indentures, unless:
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the holder has previously given to the trustee written notice of
a continuing event of default with respect to the debt
securities of that series;
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the holders of at least 25% in aggregate principal amount of the
outstanding debt securities of that series have made a written
request and have offered reasonable indemnity to the trustee to
institute the proceeding; and
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the trustee has failed to institute the proceeding and has not
received direction inconsistent with the original request from
the holders of a majority in aggregate principal amount of the
outstanding debt securities of that series within 60 days
after the original request.
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A holder of debt securities may, however, sue to enforce the
payment of principal, premium or interest on any debt security
on or after the due date or to enforce the right, if any, to
convert any debt security without following the procedures
listed above.
We will periodically file statements with the trustee regarding
our compliance with certain of the covenants in the indentures.
Modification and
waiver
We and the trustee may change an indenture without the consent
of any holders with respect to certain matters, including:
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to fix any ambiguity, defect or inconsistency in such
indenture; and
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to change anything that does not materially adversely affect the
interests of any holder of the debt securities of any series.
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We and the trustee may make modifications and amendments to an
indenture with the consent of the holders of a majority in
aggregate principal amount of the outstanding debt securities of
each series affected by the modification or amendment. However,
neither we nor the trustee may make any modification or
amendment without the consent of the holder of each outstanding
debt security of that series affected by the modification or
amendment if such modification or amendment would:
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change the stated maturity of any debt security;
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reduce the principal, premium, if any, or interest on any debt
security;
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reduce the principal of an original issue discount security or
any other debt security payable on acceleration of maturity;
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change the currency in which any debt security is payable;
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impair the right to enforce any payment after the stated
maturity or redemption date;
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waive any default or event of default in payment of the
principal of, premium or interest on any debt security;
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waive a redemption payment or modify any of the redemption
provisions of any debt security;
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in the case of the subordinated debt securities, modifying the
subordination provisions in a manner adverse to the holders of
the subordinated debt securities;
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in the case of secured debt securities, changing the terms and
conditions pursuant to which the debt securities are secured in
a manner adverse to the holders of such secured debt securities;
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adversely affect the right to convert or exchange any debt
security in any material respect; or
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change the provisions in an indenture that relate to modifying
or amending such indenture.
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Satisfaction and
discharge; defeasance
We may be discharged from our obligations on the debt securities
of any series that have matured or will mature or be redeemed
within one year if we deposit with the trustee enough cash to
pay all the principal, interest and any premium due to the
stated maturity date or redemption date of the debt securities.
Each indenture contains a provision that permits us to elect:
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to be discharged from all of our obligations, subject to limited
exceptions, with respect to any series of debt securities then
outstanding; and/or
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to be released from our obligations under certain covenants
described in the indentures and from the consequences of an
event of default resulting from a breach of these covenants.
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We refer to the first bullet point above as legal
defeasance and the second bullet point above as
covenant defeasance. Our legal defeasance or
covenant defeasance option may be exercised only if:
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we deposit in trust with the trustee enough money in cash
and/or
U.S. government obligations to pay in full the principal of
and interest and premium, if any, on the debt securities.
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the deposit of the money by us does not result in a breach or
violation of, or constitute a default under the applicable
indenture or any other agreement or instrument to which we are a
party.
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no default or event of default with respect to the debt
securities of such series shall have occurred and be continuing
on the date of the deposit of the money or during the preference
period applicable to us.
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we deliver to the trustee an opinion of counsel to the effect
that the holders of the debt securities will not recognize
income, gain or loss for Federal income tax purposes as a result
of such deposit and defeasance and will be subject to federal
income tax on the same amount in the same manner and at the same
times as would have been the case if such deposit and defeasance
had not occurred. In the case of legal defeasance this opinion
must be based on a ruling of the Internal Revenue Service or a
change in the United Stated federal income tax law.
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in the case of legal defeasance, such legal defeasance does not
result in the trust arising from the deposit of the money
constituting an investment company, as defined in the Investment
Company Act of 1940, as amended, or the 1940 Act, or such trust
shall be qualified under the 1940 Act or exempt from regulation
thereunder.
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we deliver to the trustee an officers certificate and
opinion of counsel, each stating that all conditions precedent
with respect to such defeasance have been complied with.
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If any of the above events occurs, the holders of the debt
securities of the series will not be entitled to the benefits of
the applicable indenture, except for the rights of holders to
receive payments on debt securities or the registration of
transfer and exchange of debt securities and replacement of
lost, stolen or mutilated debt securities.
Governing
law
The indentures and the debt securities will be governed by, and
construed in accordance with the law of the State of New York.
Regarding the
trustee
We may appoint a separate trustee for any series of debt
securities. The trustee will have all the duties and
responsibilities of an indenture trustee specified in the
Trust Indenture Act. The trustee is not required to spend
or risk its own money or otherwise become financially liable
while performing its duties unless it reasonably believes that
it will be repaid or receive adequate indemnity.
Each indenture limits the right of the trustee, should it become
a creditor of us, to obtain payment of claims or secure its
claims.
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The trustee is permitted to engage in certain other
transactions. However, if the trustee acquires any conflicting
interest, and there is a default under the debt securities of
any series for which they are trustee, the trustee must
eliminate the conflict or resign.
Subordinated debt
securities
Payment on the subordinated debt securities will, to the extent
provided in the subordinated indenture, be subordinated in right
of payment to the prior payment in full of all of our senior
indebtedness. The subordinated debt securities also will be
effectively subordinated to all debt and other liabilities,
including trade payables and lease obligations, if any, of our
subsidiaries, if any.
Upon any distribution of our assets upon any dissolution,
winding up, liquidation or reorganization, the payment of the
principal of and interest on the subordinated debt securities
will be subordinated in right of payment to the prior payment in
full in cash or other payment satisfactory to the holders of our
senior indebtedness. In the event of any acceleration of the
subordinated debt securities because of an event of default, the
holders of any of our senior indebtedness would be entitled to
payment in full in cash or other payment satisfactory to such
holders of all senior indebtedness obligations before the
holders of the subordinated debt securities are entitled to
receive any payment or distribution. The subordinated indenture
requires us or the trustee to promptly notify holders of
designated senior indebtedness if payment of the subordinated
debt securities is accelerated because of an event of default.
We may not make any payment on the subordinated debt securities,
including upon redemption at the option of the holder of any
subordinated debt securities or at our option, if:
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a default in the payment of the principal, premium, if any,
interest, rent or other obligations in respect of senior
indebtedness occurs and is continuing beyond any applicable
period of grace, which is called a payment default;
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a default other than a payment default on any designated senior
indebtedness occurs and is continuing that permits holders of
designated senior indebtedness to accelerate its maturity, and
the trustee receives notice of such default, which is called a
payment blockage notice from us or any other person
permitted to give such notice under the subordinated indenture,
which is called a non-payment default; or
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any judicial proceeding is pending in connection with a default.
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If the trustee or any holder of the subordinated debt securities
receives any payment or distribution of our assets in
contravention of the subordination provisions on the
subordinated debt securities before all senior indebtedness is
paid in full in cash, property or securities, including by way
of set-off, or other payment satisfactory to holders of senior
indebtedness, then such payment or distribution will be held in
trust for the benefit of holders of senior indebtedness or their
representatives to the extent necessary to make payment in full
in cash or payment satisfactory to the holders of senior
indebtedness of all unpaid senior indebtedness.
In the event of our bankruptcy, dissolution or reorganization,
holders of senior indebtedness may receive more, ratably, and
holders of the subordinated debt securities may receive less,
ratably, than our other creditors (including our trade
creditors). This subordination will not prevent the occurrence
of any event of default under the subordinated indenture.
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We are obligated to pay reasonable compensation to the trustee
and to indemnify the trustee against certain losses, liabilities
or expenses incurred by the trustee in connection with its
duties relating to the subordinated debt securities. The
trustees claims for these payments will generally be
senior to those of noteholders in respect of all funds collected
or held by the trustee.
The subordinated indenture allows us to change the subordination
provisions relating to any particular issue of subordinated debt
securities prior to issuance. We will describe any change in the
prospectus supplement relating to the subordinated debt
securities.
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Description of
warrants
We may issue warrants to purchase our debt or equity securities
or securities of third parties or other rights, including rights
to receive payment in cash or securities based on the value,
rate or price of one or more specified commodities, currencies,
securities or indices, or any combination of the foregoing.
Warrants may be issued independently or together with any other
securities and may be attached to, or separate from, such
securities. Each series of warrants will be issued under a
separate warrant agreement to be entered into between us and a
warrant agent. The terms of any warrants to be issued and a
description of the material provisions of the applicable warrant
agreement will be set forth in the applicable prospectus
supplement.
The applicable prospectus supplement will describe the following
terms of any warrants in respect of which this prospectus is
being delivered:
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the title of such warrants;
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the aggregate number of such warrants;
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the price or prices at which such warrants will be issued;
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the currency or currencies, in which the price of such warrants
will be payable;
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the securities or other rights, including rights to receive
payment in cash or securities based on the value, rate or price
of one or more specified commodities, currencies, securities or
indices, or any combination of the foregoing, purchasable upon
exercise of such warrants;
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the price at which and the currency or currencies, in which the
securities or other rights purchasable upon exercise of such
warrants may be purchased;
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the date on which the right to exercise such warrants shall
commence and the date on which such right shall expire;
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if applicable, the minimum or maximum amount of such warrants
which may be exercised at any one time;
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if applicable, the designation and terms of the securities with
which such warrants are issued and the number of such warrants
issued with each such security;
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if applicable, the date on and after which such warrants and the
related securities will be separately transferable;
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information with respect to book-entry procedures, if any;
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if applicable, a discussion of material United States federal
income tax considerations; and
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any other terms of such warrants, including terms, procedures
and limitations relating to the exchange and exercise of such
warrants.
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Description of
purchase contracts
We may issue purchase contracts for the purchase or sale of:
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debt or equity securities issued by us or securities of third
parties, a basket of such securities, an index or indices of
such securities or any combination of the above as specified in
the applicable prospectus supplement;
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currencies; or
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commodities.
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Each purchase contract will entitle the holder thereof to
purchase or sell, and obligate us to sell or purchase, on
specified dates, such securities, currencies or commodities at a
specified purchase price, which may be based on a formula, all
as set forth in the applicable prospectus supplement. We may,
however, satisfy our obligations, if any, with respect to any
purchase contract by delivering the cash value of such purchase
contract or the cash value of the property otherwise deliverable
or, in the case of purchase contracts on underlying currencies,
by delivering the underlying currencies, as set forth in the
applicable prospectus supplement. The applicable prospectus
supplement will also specify the methods by which the holders
may purchase or sell such securities, currencies or commodities
and any acceleration, cancellation or termination provisions or
other provisions relating to the settlement of a purchase
contract.
The purchase contracts may require us to make periodic payments
to the holders thereof or vice versa, which payments may be
deferred to the extent set forth in the applicable prospectus
supplement, and those payments may be unsecured or prefunded on
some basis. The purchase contracts may require the holders
thereof to secure their obligations in a specified manner to be
described in the applicable prospectus supplement.
Alternatively, purchase contracts may require holders to satisfy
their obligations thereunder when the purchase contracts are
issued. Our obligation to settle such pre-paid purchase
contracts on the relevant settlement date may constitute
indebtedness. Accordingly, pre-paid purchase contracts will be
issued under either the senior indenture or the subordinated
indenture.
Description of
units
We may issue units consisting of two or more securities
described in this prospectus, in any combination. Each unit will
be issued so that the holder of the unit is also the holder of
each security included in the unit. The holder of a unit,
therefore, will have the rights and obligations of a holder of
each underlying security. The applicable prospectus supplement
will describe:
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the terms of the units and of the underlying securities,
including whether and under what circumstances the securities
comprising the units may be traded separately;
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a description of the terms of any unit agreement governing the
units; and
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a description of the provisions for the payment, settlement,
transfer or exchange of the units.
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21
Forms of
securities
Each debt security, warrant and unit will be represented by one
or more global securities representing the entire issuance of
securities. Global securities will be issued in registered form.
Global securities name a depositary or its nominee as the owner
of the debt securities, warrants or units represented by these
global securities. The depositary maintains a computerized
system that will reflect each investors beneficial
ownership of the securities through an account maintained by the
investor with its broker/dealer, bank, trust company or other
representative, as will be explained more fully in the
applicable prospectus supplement.
22
Plan of
distribution
We may sell the securities in one or more of the following ways
(or in any combination) from time to time:
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through underwriters or dealers for resale to the public or to
investors;
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directly to a limited number of purchasers or to a single
purchaser; or
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through agents.
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The prospectus supplement will state the terms of the offering
of the securities, including:
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the name or names of any underwriters, dealers or agents;
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the purchase price of such securities and the proceeds to be
received by us, if any;
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any underwriting discounts or agency fees and other items
constituting underwriters or agents compensation;
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any initial public offering price;
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any discounts or concessions allowed or reallowed or paid to
dealers; and
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any securities exchanges on which the securities may be listed.
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Any initial public offering price and any discounts or
concessions allowed or reallowed or paid to dealers may be
changed from time to time.
If we use underwriters in the sale, the securities will be
acquired by the underwriters for their own account and may be
resold from time to time in one or more transactions, including:
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negotiated transactions,
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at a fixed public offering price or prices, which may be changed,
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at market prices prevailing at the time of sale,
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at prices related to prevailing market prices or
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at negotiated prices.
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Unless otherwise stated in a prospectus supplement, the
obligations of the underwriters to purchase any securities will
be conditioned on customary closing conditions and the
underwriters will be obligated to purchase all of such series of
securities, if any are purchased.
We may authorize underwriters, dealers or agents to solicit
offers by certain purchasers to purchase the securities from us
at the public offering price set forth in the prospectus
supplement pursuant to delayed delivery contracts providing for
payment and delivery on a specified date in the future. These
contracts will be subject only to those conditions set forth in
the prospectus supplement, and the prospectus supplement will
set forth any commissions we pay for solicitation of these
contracts.
We may sell the securities through agents from time to time. The
prospectus supplement will name any agent involved in the offer
or sale of the securities and any commissions we pay to them.
Generally, any agent will be acting on a best efforts basis for
the period of its appointment.
23
Underwriters and agents may be entitled under agreements entered
into with us to indemnification by us against certain civil
liabilities, including liabilities under the Securities Act, or
to contribution with respect to payments which the underwriters
or agents may be required to make. Underwriters and agents may
be customers of, engage in transactions with, or perform
services for us and our affiliates in the ordinary course of
business.
Unless otherwise specified in the applicable prospectus
supplement, each series of securities will be a new issue of
securities and will have no established trading market, other
than the common stock which is listed on the New York Stock
Exchange. We may elect to list any other class or series of
securities on any exchange or market, but we are not obligated
to do so. Any underwriters to whom securities are sold for
public offering and sale may make a market in the securities but
such underwriters will not be obligated to do so and may
discontinue any market making at any time without notice. We
cannot give any assurance as to the liquidity of the trading
market for any of the securities.
24
Where you can
find more information
Government
filings
We file annual, quarterly and current reports, proxy statements
and other information with the Securities and Exchange
Commission under the Securities Exchange Act of 1934, as
amended. You may read and copy this information at the following
location of the Securities and Exchange Commission:
Public Reference Room
100 F Street, N.E.
Room 1580
Washington, D.C. 20549
You may also obtain copies of this information by mail from the
Public Reference Section of the Securities and Exchange
Commission, 100 F Street, N.E., Room 1580,
Washington, D.C. 20549, at prescribed rates. You may obtain
information on the operation of the Securities and Exchange
Commissions Public Reference Room by calling the
Securities and Exchange Commission at
1-800-SEC-0330.
The Securities and Exchange Commission also maintains an
Internet worldwide web site that contains reports, proxy
statements and other information about issuers like us who file
electronically with the Securities and Exchange Commission. The
address of the site is
http://www.sec.gov
.
Information
incorporated by reference
The Securities and Exchange Commission allows us to incorporate
by reference information into this document. This means that we
can disclose important information to you by referring you to
another document filed separately with the Securities and
Exchange Commission. The information incorporated by reference
is considered to be a part of this document, except for any
information superseded by information that is included directly
in this document or incorporated by reference subsequent to the
date of this document.
This prospectus incorporates by reference the documents listed
below and any future filings that we make with the Securities
and Exchange Commission under Section 13(a), 13(c), 14 or
15(d) of the Securities Exchange Act of 1934, as amended (other
than information in the documents or filings that is deemed to
have been furnished and not filed), until all the securities
offered under this prospectus are sold.
25
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McMoRan Exploration Co.
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Securities and exchange commission filings
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Period or date filed
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Annual Report on
Form 10-K
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Fiscal year ended December 31, 2006
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Quarterly Report on
Form 10-Q
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First quarter ended March 31, 2007 and second quarter ended
June 30, 2007
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Current Reports on
Form 8-K
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January 5, 2007, January 11, 2007, January 18,
2007, January 23, 2007, January 30, 2007,
February 26, 2007, March 21, 2007, April 17,
2007, May 29, 2007, June 22, 2007, July 2, 2007,
July 3, 2007, July 12, 2007, July 19, 2007,
August 3, 2007, August 10, 2007, August 16, 2007
and September 27, 2007
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Proxy Statement on Schedule 14A
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Filed on March 26, 2007
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Documents incorporated by reference are available from us
without charge, excluding any exhibits to those documents unless
the exhibit is specifically incorporated by reference as an
exhibit in this document. You can obtain documents incorporated
by reference in this document by requesting them in writing or
by telephone from the company at the following address:
McMoRan Exploration Co.
1615 Poydras Street
New Orleans, Louisiana 70112
Attention: Investor Relations
Telephone:
(504) 582-4000
26
Information
concerning forward-looking statements
This prospectus and our financial statements and other documents
incorporated by reference in this prospectus contain statements
relating to future results, which are forward-looking statements
as that term is defined in the Private Securities Litigation Act
of 1995. When used in this document, the words
anticipates, may, can,
plans, feels, believes,
estimates, expects,
projects, intends, likely,
will, should, to be and any
similar expressions and any other statements that are not
historical facts, in each case as they relate to us or company
management are intended to identify those assertions as
forward-looking statements. In making any of those statements,
the person making them believes that its expectations are based
on reasonable assumptions. However, these forward-looking
statements are subject to numerous risks and uncertainties that
could cause actual results to differ materially from those
expressed in, or implied or projected by, the forward-looking
information and statements. Any such statement may be influenced
by factors that could cause actual outcomes and results to be
materially different from those projected or anticipated. These
factors include, but are not limited to, those which may be set
forth in the accompanying prospectus supplement and those under
the heading Risk Factors included in Item 1A of
our annual report on
Form 10-K
for the year ended December 31, 2006, and other factors
described in our periodic reports filed from time to time with
the Securities and Exchange Commission.
Some other risks and uncertainties include, but are not limited
to:
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general industry conditions, such as fluctuations in the market
prices of oil and natural gas;
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our ability to obtain additional capital;
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environmental and related indemnification obligations;
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adverse weather conditions and natural disasters, such as
hurricanes;
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the speculative nature of oil and gas exploration;
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adverse financial market conditions;
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shortage of supplies, equipment and personnel;
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regulatory and litigation matters and risks; and
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changes in tax and other laws.
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Our actual results or performance could differ materially from
those expressed in, or implied by, any forward-looking
statements relating to those matters. Accordingly, no assurances
can be given that any of the events anticipated by the
forward-looking statements will transpire or occur, or if any of
them do so, what impact they will have on the results of our
operations or financial condition. Except as required by law, we
are under no obligation, and expressly disclaim any obligation,
to update, alter or otherwise revise any forward-looking
statement, whether written or oral, that may be made from time
to time, whether as a result of new information, future events
or otherwise.
27
Legal
opinions
The validity of the securities in respect of which this
prospectus is being delivered will be passed on for us by Jones,
Walker, Waechter, Poitevent, Carrère &
Denègre, L.L.P., New Orleans, Louisiana.
Experts
The consolidated financial statements of McMoRan Exploration Co.
appearing in McMoRan Exploration Co.s Annual Report on
Form 10-K
for the year ended December 31, 2006 and McMoRan
Exploration Co. managements assessment of the
effectiveness of internal control over financial reporting as of
December 31, 2006 included therein, have been audited by
Ernst & Young LLP, independent registered public
accounting firm, as set forth in their reports thereon included
therein, and incorporated herein by reference. Such financial
statements and managements assessment are, and audited
financial statements and McMoRan Exploration Co.
managements assessments of the effectiveness of internal
control over financial reporting to be included in subsequently
filed documents will be, incorporated herein in reliance upon
the reports of Ernst & Young LLP pertaining to such
financial statements and managements assessments (to the
extent covered by consents filed with the SEC) given on the
authority of such firm as experts in accounting and auditing.
With respect to the unaudited condensed consolidated interim
financial information of McMoRan Exploration Co. as of
March 31, 2007 and for the three-month periods ended
March 31, 2007 and 2006, and as of June 30, 2007 and
for the three-month and six-month periods ended June 30,
2007 and 2006, incorporated by reference in this prospectus,
Ernst & Young LLP reported that they have applied
limited procedures in accordance with professional standards for
a review of such information. However, their separate report
dated April 30, 2007, included in McMoRan Exploration
Co.s Quarterly Report on
Form 10-Q
for the quarter ended March 31, 2007, and their separate
report dated August 6, 2007 included in McMoRan Exploration
Co.s Quarterly Report on
Form 10-Q
for the quarter ended June 30, 2007, both of which reports
are incorporated by reference herein, state that they did not
audit and they do not express opinions on that interim financial
information. Accordingly, the degree of reliance on their report
on such information should be restricted in light of the limited
nature of the review procedures applied. Ernst & Young
LLP is not subject to the liability provisions of
Section 11 of the Securities Act of 1933 (the
Securities Act) for their reports on the unaudited
interim financial information because those reports are not
reports or parts of the Registration
Statement prepared or certified by Ernst & Young LLP
within the meaning of Sections 7 and 11 of the Securities
Act.
The audited historical statements of revenues and direct
operating expenses of certain oil and gas properties acquired
from Newfield Exploration Company included on pages 1 through 8
of Exhibit 99.1 of McMoRan Exploration Co.s Current
Report on
Form 8-K/A
dated August 16, 2007, have been so incorporated in
reliance on the report of PricewaterhouseCoopers LLP, an
independent registered public accounting firm, given on the
authority of said firm as experts in auditing and accounting.
28
Reserves
The information regarding our reserves as of December 31,
2006 that is either included in this prospectus or incorporated
by reference to our annual report on
Form 10-K
for the year ended December 31, 2006 has been reviewed and
verified by Ryder Scott Company, L.P. This reserve information
has been included in this prospectus and incorporated by
reference herein in reliance upon the authority of Ryder Scott
as experts in reserve determination.
29
14,500,000 shares
McMoRan Exploration
Co.
Common shares
Prospectus supplement
Book-Running Manager
J.P. Morgan
Co-Managers
June 17, 2009
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