Freeport McMoran Inc – ‘8-K’ for 3/7/95 – EX-99

As of:  Tuesday, 3/7/95   ·   For:  3/7/95   ·   Accession #:  831259-95-4   ·   File #:  1-08124

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Current Report   —   Form 8-K
Filing Table of Contents

Document/Exhibit                   Description                      Pages   Size 

 1: 8-K         Current Report                                         2±     9K 
 2: EX-99       Miscellaneous Exhibit                                  3±    14K 

EX-99   —   Miscellaneous Exhibit

Freeport-McMoRan Inc. To Sell Portion Of Its      
Shares in Freeport-McMoRan Copper & Gold Inc.     

Freeport-McMoRan Copper & Gold Inc. and       
RTZ America Inc. and The RTZ Corporation PLC      
to Establish Strategic Alliance     

New Orleans, LA., March 7, 1995 -- Freeport-McMoRan Copper &          
Gold Inc. (NYSE:FCX), Freeport-McMoRan Inc. (NYSE:FTX), The RTZ                 
Corporation PLC (RTZ) and RTZ America Inc. (RTZ America)                        
announced today that they have signed letters of intent whereby                 
RTZ America may acquire over 18% of the outstanding common equity               
of FCX for up to approximately $875 million; FCX and subsidiaries               
of FCX will enter into joint venture arrangements with                          
subsidiaries of RTZ pursuant to which RTZ's subsidiaries intend                 
to invest up to $850 million on exploration and development                     
projects on lands controlled by FCX's Indonesian subsidiaries and               
RTZ will acquire 25% of FCX's Spanish smelter operations.                       
RTZ America will acquire from FTX approximately 21.5 million          
shares of FCX Class A common stock (approximately 10.4% of the                  
outstanding common equity of FCX) for $450 million.   FTX will                  
call its 6.55% Convertible Subordinated Notes (Notes), the                      
outstanding principal amount of which is approximately $373                     
million.  If requested by FTX, RTZ America will make a cash                     
tender offer for the Notes.  RTZ America will be obligated to                   
convert any Notes it acquires into the common stock of FTX.  If                 
RTZ America acquires all of the Notes and exercises an option it                
will receive from FTX to acquire approximately 3.5 million common               
shares of FCX, after completion of FTX's previously announced                   
restructuring RTZ America would own approximately 12% of FTX's                  
common shares anticipated to be outstanding and, in the                         
aggregate, over 18% of the outstanding common equity of FCX.  FTX               
anticipates it will offer FTX common shares in exchange for its                 
$4.375 Convertible Exchangeable Preferred Stock.  FTX's Zero                    
Coupon Convertible Subordinated Debentures will be redeemed for                 
cash.                                                                           
The transaction with RTZ America would enable FTX to                  
distribute its FCX ownership to its shareholders pursuant to the                
tax-free spin-off plan announced by FTX in May 1994.  As previously             
announced,in November 1994 FTX received a private letter ruling from            
the Internal Revenue Service that the distribution would be a tax-free          
transaction. As the total number of shares of FCX will not change as a          
result of these transactions, RTZ's acquisition of FCX shares from FTX          
will not result in any dilution to the current holders of FCX                   
Class A shares.                                                                 
RTZ is expected to contribute substantial operating and               
management expertise to FCX's business.  Representatives of RTZ                 
America, in proportion to RTZ America's ownership in FCX, will be               
nominated to the FCX Board of Directors.  In addition, RTZ and                  
FCX will exchange management personnel and establish an Operating               
Committee, consisting of personnel of FCX and RTZ, through which                
the policies established by the Board of Directors of FCX will be               
implemented and operations will be conducted.                                   
In addition to RTZ America's acquisition of FCX stock, RTZ            
and FCX have agreed to establish exploration joint ventures                     
involving the Contracts of Work (COWs) held by subsidiaries of                  
FCX, P.T. Freeport Indonesia Company (PT-FI) and a subsidiary of                
Eastern Mining Company (EMC).  Under the joint venture                          
arrangements, subsidiaries of RTZ will acquire a 40% beneficial                 
interest in the COW held by EMC and a 40% beneficial interest in                
the portion of PT-FI's COW generally referred to as Block B which               
excludes PT-FI's current operations.  In addition, a subsidiary                 
of RTZ will acquire a 40% beneficial interest in future expansion               
projects in Block A of PT-FI's COW, which is the area encompassed               
by PT-FI's original COW and which includes its current                          
operations.  Under the joint venture arrangements, RTZ and FCX                  
will establish an Exploration Committee to approve exploration                  
expenditures and subsidiaries of RTZ will pay for all further                   
exploration approved by the committee until RTZ has paid an                     
aggregate of $100 million.  The parties will pay ratably in                     
proportion to their ownership, additional exploration costs and                 
the costs to develop projects mutually agreed upon in EMC's COW                 
area and Block B of PT-FI's COW.                                                
For future expansion projects in Area A of PT-FI's COW,               
subsidiaries of RTZ will provide up to a maximum of $750 million                
for 100% of defined costs to develop such projects. RTZ will                    
receive 100% of incremental cash flow attributed to the expansion               
projects until it has received an amount equal to the funds it                  
has provided plus interest based on RTZ's cost of borrowing.                    
Subsequently, the parties will share in incremental  cash flow                  
ratably in proportion to their ownership.  Future expansion                     
projects in Block A of PT-FI's COW will exclude any interest in                 
future production equivalent to FCX's expanded 115,000 tons per day             
milling operations.                                                             
A subsidiary of RTZ will purchase a 25% interest in FCX's             
Huelva, Spain copper smelter, which is currently being expanded                 
to 270 thousand metric tons of annual metal production.  RTZ will               
also acquire a 25% interest in FCX's Spanish mineral exploration                
program.                                                                        
James R. Moffett, Chairman and CEO of FTX and Chairman of             
FCX said "This strategic combination allows two world-class                     
mining companies to combine their expertise in a truly                          
synergistic transaction that will further enhance what is now one               
of the world's most successful mining and mineral exploration                   
companies.  RTZ's operating and management expertise will assist                
FCX in remaining one of the lowest cost copper operations in the                
world while FCX continues to focus on its exploration                           
opportunities in Indonesia.  RTZ's funding for FCX's Indonesian                 
operations will free up FCX's significant cash flow that will be                
generated by its 115K expansion now being completed.  In                        
addition, the transaction with RTZ America will provide the funds               
necessary to complete the refinancing of FTX's liabilities, which               
will remove the last major hurdle in FTX's restructuring                        
announced last May".                                                            
Robert Wilson, RTZ's Chief Executive said "We are delighted           
to have this unique opportunity to participate in the future                    
development of Grasberg, one of the world's most remarkable                     
mineral resources, and in the exceptional exploration potential                 
of Irian Jaya.  Grasberg is a large and complex operation, but                  
given RTZ's experience in other major open pit copper orebodies                 
such as Bingham Canyon, Palabora and Escondida, we anticipate                   
considerable mutual benefit from combining our skills in this                   
way.  We welcome the opportunity to make a substantial investment               
in the fast growing Indonesian economy.  When additional reserves               
are established and production is increased at Grasberg, or new                 
orebodies discovered, there will be excellent opportunities to                  
enhance the value of both companies for the benefit of our                      
respective shareholders."                                                       
All of these arrangements are subject to, among other                 
things, certain regulatory approvals and approval by the FCX                    
Class A common shareholders of the Plan of Merger dated February                
7, 1995.  RTZ America's acquisition of shares in FCX is expected                
to be completed by June 30, 1995.                                               

Dates Referenced Herein   and   Documents Incorporated by Reference

This ‘8-K’ Filing		Date		Other Filings
		6/30/95		10-Q
Filed on / For Period End:		3/7/95
		2/7/95
				List all Filings