Freeport (FCX) Announces Upsizing & Pricing of Senior Notes

Freeport-McMoRan Inc. FCX has announced the pricing of an upsized offering of $1.5-billion senior notes. The collective offering is comprised of two trances of debt - $650 million of total principal amount of its 4.375% senior notes due 2028 and $850 million of total principal amount of its 4.625% senior notes due 2030. Notably, the offering size has been increased to $1.5 billion from the earlier announced $800 million of total principal amount.

The company expects the sale to close on Jul 27, 2020, which is subject to customary closing conditions. Freeport is simultaneously conducting cash tender offers for up to $1.5 billion total purchase price of its 4.55% senior notes due 2024, 3.875% senior notes due 2023 and 3.55% senior notes due 2022 (collectively known as Tender Offers).

The transaction will enable Freeport to extend the maturities of some of its outstanding indebtedness. Freeport plans to employ the net proceeds from this offering to fund the Tender Offers, including the payment of any associated fees, premiums, expenses, and unpaid and accrued interest. Further, any unused proceeds will be used by the company for general corporate purposes, including repurchases or redemptions of Freeport’s notes.

Freeport’s shares have gained 16.9% in the past year compared with the industry’s 6.8% rise.

Recently, Freeport issued an update on its second-quarter 2020 operational and financial performance.

The company expects second-quarter 2020 copper sales to exceed the April 2020 estimate of 690 million pounds by nearly 8% and gold sales to surpass the previous estimate of 165,000 ounces by around 10%.

Assuming average copper price realization of $2.54 per pound in the second quarter, Freeport projects adjusted EBITDA to be around $650 million. It also expects to incur net loss before nonrecurring items of around 3 cents per share. 

As of Jun 30, 2020, the company’s total consolidated debt and consolidated cash are estimated to be around $9.9 billion and roughly $1.5 billion, respectively. Freeport is slated to release second-quarter 2020 financial and operating results on Jul 23, 2020, before the opening bell.

Zacks Rank & Other Key Picks

Freeport currently carries a Zacks Rank #2 (Buy).

Other top-ranked stocks in the basic materials space include Sandstorm Gold Ltd. SAND, Harmony Gold Mining Company Limited HMY and Royal Gold, Inc. RGLD, each carrying a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Sandstorm Gold has an expected earnings growth rate of 55.6% for 2020. The company’s shares have surged 63.3% in the past year.

Harmony Gold has an expected earnings growth rate of 264.3% for fiscal 2020. Its shares have returned 130.1% in the past year.

Royal Gold has an expected earnings growth rate of 66.2% for fiscal 2020. The company’s shares have gained 9.5% in the past year.

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FreeportMcMoRan Inc. (FCX) : Free Stock Analysis Report
 
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