McMoRan Exploration Co. Announces Private Placement of $900 Million in Convertible Securities to be Issued Upon Completion of...
September 20 2010 - 7:30AM
Business Wire
McMoRan Exploration Co. (NYSE: MMR) announced today it will
privately issue $900 million in convertible securities upon
completion of its acquisition of Plains Exploration &
Production Company’s (NYSE: PXP) shallow water Gulf of Mexico (GOM)
shelf assets. The private placement will include $200 million of
7-year 4% Convertible Senior Notes (“Notes”) and $700 million of 5
3/4% Convertible Perpetual Preferred Stock (“Preferred Stock”) . A
group of institutional investors has agreed to purchase 44% of the
securities and Freeport-McMoRan Copper & Gold Inc. (NYSE: FCX)
has agreed to purchase 56% of the securities. The private investors
will purchase the Notes and $200 million of the Preferred Stock and
FCX will purchase $500 million of the Preferred Stock. The proceeds
from the sales of the convertible securities will be used to fund
future capital expenditures associated with McMoRan’s expanded
asset base and for general corporate purposes.
The closings of the private placements are subject to the
completion of the PXP transaction, McMoRan shareholder approval of
the issuance of securities to FCX, and other customary closing
conditions. The closings are expected to occur by year-end
2010.
The transaction with FCX was negotiated between a special
committee of independent directors of the McMoRan board of
directors, and a special committee of independent directors of the
FCX board of directors. The special committees each engaged
independent financial and legal advisors in connection with this
transaction. Tudor, Pickering, Holt & Co. Securities, Inc.
served as financial advisor to McMoRan’s special committee, and
Houlihan Lokey Financial Advisors, Inc. provided certain other
financial advisory services to McMoRan’s special committee in
connection with the special committee's consideration of the
transaction with FCX. The law firm of Andrews Kurth LLP advised
McMoRan’s special committee.
The 4% Convertible Senior Notes will be convertible into 12.5
million shares of McMoRan common stock, equivalent to a conversion
price of $16 per share, reflecting a 16% premium to the $13.74
closing price of McMoRan’s common stock on the September 15, 2010
pricing date. The 5 3/4% Convertible Perpetual Preferred Stock will
be convertible into 43.75 million shares of McMoRan common stock,
equivalent to a conversion price of $16 per share, also reflecting
a 16% premium to the $13.74 closing price of McMoRan’s common stock
on the September 15, 2010 pricing date.
McMoRan currently has approximately 95.5 million shares of
common stock outstanding. Assuming conversion of McMoRan’s
remaining outstanding 8% Convertible Perpetual Preferred Stock,
5.25% Convertible Debt and 6 3/4% Mandatory Convertible Preferred
Stock, McMoRan would have between approximately 114 million and 116
million common shares outstanding (based on a defined market price
of McMoRan’s common stock calculated at the time of conversion of
the 6 3/4% Mandatory Convertible Preferred Stock). Pro forma for
the PXP transaction and the private placement of equity and debt
securities, McMoRan would have between 221 and 223 million common
shares outstanding on a fully converted basis.
Weeden & Co. provided financial advisory services to McMoRan
in connection with the placement of securities to the institutional
investor group.
The 4% Convertible Senior Notes and 5 3/4% Convertible Perpetual
Preferred Stock being sold by McMoRan, and the underlying common
stock issuable upon conversion of the Notes and Preferred Stock,
will not be registered under the Securities Act of 1933, as amended
(the “Securities Act”), or any state securities laws and may not be
offered or sold in the United States absent registration or an
applicable exemption from the registration requirements of the
Securities Act and applicable state laws.
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