Freeport-McMoRan Sells $6.5 Billion of Bonds for Plains Buyout

Freeport-McMoRan Copper & Gold Inc. (FCX), the mining company purchasing Plains Exploration & Production Co. and McMoRan Exploration Co. (MMR) for about $9 billion, issued $6.5 billion in a four-part bond sale to help fund the acquisition.

The world’s largest publicly traded copper producer sold $1.5 billion of 2.375 percent, five-year securities to yield 162.5 basis points more than similar-maturity Treasuries and $1 billion of 3.1 percent, seven-year debt at a relative yield of 187.5 basis points, according to data compiled by Bloomberg. The company also issued $2 billion each of 3.875 percent, 10-year notes at a 200 basis-point spread and 5.45 percent, 30-year bonds at 237.5.

The debt is rated Baa3 by Moody’s Investors Service, the ratings company said today in a statement.

The deal announced Dec. 5 will give Freeport oil fields in the Gulf of Mexico, after Houston-based Plains bought assets from BP Plc (BP/) and Royal Dutch Shell Plc (RDSA) for $6.1 billion in September.

“The transactions do provide a certain amount of diversification into another commodity market with positive fundamentals,” Wen Li, an analyst at Creditsights Inc., wrote in a research note today.

The bonds, with the exception of the five-year notes, will be redeemed at 101 cents on the dollar if the deal is not completed by June 5 or, if extended, by Sept. 5, according to a person familiar with the transaction, who asked not to be identified citing lack of authorization to speak publicly.

Bank of America Corp. and JPMorgan Chase & Co. managed the offering, Bloomberg data show. Freeport last sold debt a year ago, issuing $3 billion in a three-part issue.

To contact the reporter on this story: Sarika Gangar in New York at sgangar@bloomberg.net

To contact the editor responsible for this story: Alan Goldstein at agoldstein5@bloomberg.net

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