DEBT AND EQUITY TRANSACTIONS

At June 30, 2013, FCX had $21.2 billion in debt, which included $10.5 billion of acquisition-related debt and $7.1 billion of debt assumed in the acquisitions of PXP and MMR. As of June 30, 2013, debt included $708 million of fair value adjustments. All of FCX's debt is unsecured.

A summary of the changes in debt for the six months ended June 30, 2013, follow (in millions):



Balance at December 31, 2012	$	3,527
Additions:
Acquisition-related debt:
Bank term loan	4,000
2.375% Senior Notes due 2018	1,500
3.100% Senior Notes due 2020	1,000
3.875% Senior Notes due 2023	1,999
5.450% Senior Notes due 2043	1,991
PXP debt assumed at the acquisition date (initially recorded at fair value):
Amended credit facility:
Revolving line of credit	1,469
Five-year term loan due 2017	750
Seven-year term loan due 2019	1,250
7⅝% Senior Notes due 2018	415
6⅛% Senior Notes due 2019	823
8⅝% Senior Notes due 2019	451
7⅝% Senior Notes due 2020	339
6½% Senior Notes due 2020	1,658
6⅝% Senior Notes due 2021	663
6¾% Senior Notes due 2022	1,117
6⅞% Senior Notes due 2023	1,695
MMR debt assumed at the acquisition date (initially recorded at fair value):
11.875% Senior Notes due 2014	314
4% Convertible Senior Notes due 2017	237
5¼% Convertible Senior Notes due 2013	69
PXP's additional borrowings under the amended credit facility	396
Other borrowings and changes	93
Subtotal	25,756
Less cash repayments:
PXP's amended credit facility	3,865
MMR's 4% Convertible Senior Notes due 2017	186
PXP's 7⅝% Senior Notes due 2018	415
Other	75
Total debt balance at June 30, 2013	21,215
Less current portion	(73		)
Long-term debt	$	21,142

Revolving Credit Facility. On February 14, 2013, FCX and PT Freeport Indonesia entered into a new senior unsecured $3.0 billion revolving credit facility, which replaced FCX's existing revolving credit facility (scheduled to mature on March 30, 2016) upon completion of the acquisition of PXP. On May 31, 2013, in connection with the PXP acquisition, FCX satisfied all conditions under its new senior unsecured $3.0 billion revolving credit facility, and PXP joined the revolving credit facility as a borrower. The new revolving credit facility is available until May 31, 2018, in an aggregate principal amount of $3.0 billion, with $500 million available to PT Freeport Indonesia. At June 30, 2013, FCX had no borrowings and $46 million of letters of credit issued under the revolving credit facility, resulting in availability of approximately $3.0 billion, of which $1.5 billion could be used for additional letters of credit. Interest on the new revolving credit facility, currently London Interbank Offered Rate (LIBOR) plus 1.50 percent, will be determined by reference to FCX's credit rating.

Acquisition-Related Debt. In connection with financing FCX's acquisitions of PXP and MMR, FCX used the proceeds from the issuance of $6.5 billion of senior notes and a $4.0 billion unsecured bank term loan (the Term Loan) to fund the cash portion of the merger consideration for both transactions, to refinance certain of PXP's outstanding debt and for general corporate purposes.

Senior Notes. On March 7, 2013, in connection with the financing of FCX's then pending acquisitions of PXP and MMR, FCX issued $6.5 billion of senior unsecured notes in four tranches. FCX sold $1.5 billion of 2.375% Senior Notes due March 2018 (5-year notes), $1.0 billion of 3.100% Senior Notes due March 2020 (7-year notes), $2.0 billion of 3.875% Senior Notes due March 2023 (10-year notes) and $2.0 billion of 5.450% Senior Notes due March 2043 (30-year notes) for total net proceeds of $6.49 billion. Interest on these notes is payable semiannually on March 15 and September 15, commencing on September 15, 2013. FCX used the proceeds from the senior notes, together with its Term Loan, primarily to fund the acquisitions of PXP and MMR, including the payment of cash consideration for the acquisitions and the repayment of certain indebtedness.

Bank Term Loan. On February 14, 2013, FCX entered into an agreement for a $4.0 billion unsecured Term Loan in connection with the then-pending acquisitions of PXP and MMR. Borrowings of up to $4.0 billion under the unsecured Term Loan became available to FCX upon the closing of the PXP acquisition. At the time of the closing of the PXP acquisition, PXP joined the Term Loan as a borrower. The Term Loan will amortize in equal quarterly installments during the second, third and fourth years of the loan in annual amounts equal to 10 percent, 15 percent and 20 percent, respectively, of the original aggregate principal amount, and the remainder will mature five years from the date of the first borrowing (May 31, 2013). At FCX's option, the Term Loan will bear interest at either an adjusted LIBOR or an alternate-based rate (as defined under the Term Loan agreement) plus a spread to be determined by reference to FCX's credit ratings (currently LIBOR plus 1.50 percent or the alternate-based rate plus 0.50 percent).

PXP Debt Assumed. At the close of the acquisition of PXP, FCX assumed long-term debt with a stated value of $9.9 billion, which was increased by $762 million to reflect the acquisition-date fair market value of these obligations. The fair value adjustments will be amortized over the term of the senior notes and recorded as a reduction of interest expense. Following is a brief description of the debt assumed in the PXP acquisition.

PXP's 6⅛% Senior Notes due 2019, 8⅝% Senior Notes due 2019, 7⅝% Senior Notes due 2020, 6½% Senior Notes due 2020, 6⅝% Senior Notes due 2021, 6¾% Senior Notes due 2022 and 6⅞% Senior Notes due 2023 had a total stated value of $6.4 billion (including the 7⅝% Senior Notes due 2018 that were repaid in June 2013), which was increased by $716 million to reflect the acquisition-date fair market value of these senior notes. Interest on these notes is payable semiannually. These senior notes are redeemable in whole or in part, at the option of FCX, at make-whole redemption prices prior to the dates stated below, and beginning on the dates below at specified redemption prices. In addition, up to 35 percent of the principal amount of certain of these notes may be redeemed at specified redemption prices with all or a portion of the proceeds of an equity contribution. A summary of the dates before which the make-whole redemption price applies for each of the senior notes follows:



Debt Instrument		Date
6⅛% Senior Notes due 2019		June 15, 2016
8⅝% Senior Notes due 2019		October 15, 2014
7⅝% Senior Notes due 2020		April 1, 2015
6½% Senior Notes due 2020		November 15, 2015
6⅝% Senior Notes due 2021		May 1, 2016
6¾% Senior Notes due 2022		February 1, 2017
6⅞% Senior Notes due 2023		February 15, 2018

MMR Debt Assumed. At the close of the acquisition of MMR, FCX assumed long-term debt with a stated value of $558 million, which was increased by $62 million to reflect the acquisition-date fair market value of these obligations. The fair value adjustments will be amortized over the term of the senior notes and recorded as a reduction of interest expense. Following is a brief description of the debt assumed in the MMR acquisition.

Interest on MMR's 11.875% Senior Notes due 2014 is payable semiannually, and these notes are redeemable in whole or in part, at the option of FCX, at specified redemption prices. These notes are callable at par in November 2013. Interest on MMR's 4% Convertible Senior Notes due 2017 is payable semiannually, and these notes are convertible, at the option of the holder, at any time on or prior to maturity into the merger consideration. During June 2013, approximately 90 percent of these notes were converted after the acquisition of MMR. Interest on MMR's 5¼% Convertible Senior Notes due 2013 is payable semiannually. These notes mature on October 6, 2013, and are convertible, at the option of the holder, at any time on or prior to maturity into the merger consideration.

Repayments. In connection with the acquisition of PXP, FCX repaid the $3.9 billion outstanding under PXP's amended credit facility because of the change of control provision in the agreement. Additionally, during June 2013, FCX redeemed all of its 7⅝% Senior Notes due 2018, which were recorded at fair value on the date of acquisition, for $415 million.

During June 2013, certain holders of MMR's 4% Convertible Senior Notes due 2017, which were recorded at acquisition-date fair value, converted notes into merger consideration totaling $211 million, including cash consideration of $186 million and 14.5 million royalty trust units (fair value of $25 million at the date of acquisition).

On March 14, 2012, FCX redeemed the remaining $3.0 billion of its outstanding 8.375% Senior Notes due 2017, for which holders received 104.553 percent of the principal amount together with the accrued and unpaid interest. As a result of this redemption, FCX recorded a loss on early extinguishment of debt of $168 million ($149 million to net income attributable to FCX common stockholders) in second-quarter 2012.

Other. During the first quarter of 2013, FCX recorded a loss on early extinguishment of debt of $45 million ($39 million to net income attributable to FCX common stockholders) for financing costs incurred for the terminated $9.5 billion acquisition bridge loan facility, which was entered into in December 2012 to provide interim financing for the acquisitions of PXP and MMR but was replaced with other financing.

In February 2012, FCX sold $500 million of 1.40% Senior Notes due 2015, $500 million of 2.15% Senior Notes due 2017 and $2.0 billion of 3.55% Senior Notes due 2022 for total net proceeds of $2.97 billion. Interest on these notes is payable semiannually.

Guarantees. In connection with the acquisition of PXP, FCX guaranteed the PXP senior notes, and the guarantees by certain PXP subsidiaries were released. At the time of FCX's acquisition of MMR, FCX guaranteed MMR's 11.875% Senior Notes due 2014, and the guarantees by certain MMR subsidiaries were released. Refer to Note 14 for a discussion of FCX's senior notes guaranteed by FM O&G.

Restrictive Covenants. The Term Loan and new revolving credit facility both contain customary affirmative covenants and representations, and also contain a number of negative covenants that, among other things, restrict, subject to certain exceptions, the ability of FCX's subsidiaries that are not borrowers or guarantors to incur additional indebtedness (including guarantee obligations) and FCX's ability or the ability of FCX's subsidiaries to: create liens on assets; enter into sale and leaseback transactions; engage in mergers, liquidations and dissolutions; and sell assets. The Term Loan and new revolving credit facility also contain financial ratios governing maximum total leverage and minimum interest coverage. The FCX senior notes contain limitations on liens that are generally typical for investment grade companies.

Maturities. Maturities of debt instruments based on the amounts and terms outstanding at June 30, 2013, total $70 million for the remainder of 2013; $616 million in 2014; $1.1 billion in 2015, $750 million in 2016, $727 million in 2017 and $18.0 billion thereafter.

Consolidated interest expense (excluding capitalized interest) totaled $167 million in second-quarter 2013, $55 million in second-quarter 2012, $242 million for the first six months of 2013 and $154 million for the first six months of 2012. Capitalized interest totaled $35 million in second-quarter 2013 and $12 million in second-quarter 2012, $53 million for the first six months of 2013 and $48 million for the first six months of 2012.

Equity. On May 31, 2013, FCX's Board of Directors declared a supplemental dividend of $1.00 per share, which was paid on July 1, 2013, to common shareholders of record at the close of business on June 14, 2013. On June 27, 2013, FCX's Board of Directors declared a quarterly dividend of $0.3125 per share, which was paid on August 1, 2013, to common shareholders of record at the close of business on July 15, 2013.