CEO of copper giant praises acquisition
Freeport CEO says $26.4B for Phelps Dodge worth debt
The company, now the largest publicly traded copper producer, is surging from copper prices that remain three times what they were in the 1990s, and the company could pay off $10 billion in debt that came from the Phelps Dodge deal by the end of this year, CEO Richard C. Adkerson said.
"We feel excellent," Adkerson told The Associated Press on Tuesday. "We're really benefiting by the fact that we have such high prices right now, because it generates so much cash."
The company's stock price has shot up 48 percent since Freeport announced the acquisition of Phelps Dodge in March. And the copper market has blessed the deal with prices remaining well above $3 per pound, compared with $1 per pound throughout the 1990s.
Freeport officials had expected it would take three to four years to pay off the loan to acquire Phelps Dodge. But after raising an unexpected $5.6 billion by issuing new stock, the company may pay it off by December if copper prices remain high, Adkerson said.
Even so, the company still would have about $7.6 billion in debt, Freeport spokesman Pete Faur said.
"We always recognized there was a good match strategically between Freeport and Phelps Dodge," Adkerson said.
Freeport focuses its attention on one primary asset, the Grasberg mine in Papua, Indonesia — one of the world's largest sources of precious metals. Meanwhile, Phelps Dodge manages numerous operations around the world.
Adkerson saw the Phoenix-based miner as a quick way to diversify Freeport's assets and boost its copper reserves. But it wasn't until Phelps Dodge canceled its bid to take over Toronto-based Inco Ltd. last fall that Adkerson got serious, he said.
"At that point, I felt Phelps Dodge was at a turning point," he said. "They had the situation with shareholders who were critical of their financial policy and were trying to get the company to return more cash to shareholders in the form of dividends or stock buybacks. So the company was, strategically, in an unusual place."
Buying Phelps Dodge put Freeport $17.6 billion in debt. The company already has paid off much of that with the $5.6 billion in new stock. It also deposited another $500 million in April.
Though its debt is under control, Adkerson told the AP that he still is thinking about selling off some of the company's assets.
"We bought this company to be a major copper producer, so the major copper producing mines are certainly assets that we would not be likely to sell," he said.
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