DEBT

FCX's debt at December 31, 2016, included additions of $179 million ($210 million at December 31, 2015) for unamortized fair value adjustments (primarily from the 2013 oil and gas acquisitions), and is net of reductions of $100 million ($129 million at December 31, 2015) for unamortized net discounts and unamortized debt issuance costs. The components of debt follow:



	December 31,
	2016			2015
Bank term loan	$	—		$	3,032
Revolving credit facility	—			—
Lines of credit	—			442
Cerro Verde credit facility	1,390			1,781
Cerro Verde shareholder loans	261			259
Senior notes and debentures:
Issued by FCX:
2.15% Senior Notes due 2017	500			499
2.30% Senior Notes due 2017	728			747
2.375% Senior Notes due 2018	1,480			1,495
6.125% Senior Notes due 2019	186			—
3.100% Senior Notes due 2020	996			995
6½% Senior Notes due 2020	583			—
6.625% Senior Notes due 2021	242			—
4.00% Senior Notes due 2021	595			594
6.75% Senior Notes due 2022	432			—
3.55% Senior Notes due 2022	1,882			1,987
6⁷/₈% Senior Notes due 2023	784			—
3.875% Senior Notes due 2023	1,912			1,987
4.55% Senior Notes due 2024	844			843
5.40% Senior Notes due 2034	739			788
5.450% Senior Notes due 2043	1,842			1,973
Issued by Freeport-McMoRan Oil & Gas LLC (FM O&G LLC):
6.125% Senior Notes due 2019	60			251
6½% Senior Notes due 2020	69			662
6.625% Senior Notes due 2021	35			281
6.75% Senior Notes due 2022	48			488
6⁷/₈% Senior Notes due 2023	55			857
Issued by FMC:
7¹/₈% Debentures due 2027	115			115
9½% Senior Notes due 2031	128			128
6¹/₈% Senior Notes due 2034	116			116
Other	5			4
Total debt	16,027			20,324
Less current portion of debt	(1,232		)	(649		)
Long-term debt	$	14,795		$	19,675

Bank Term Loan. In February 2013, FCX entered into an agreement for a $4.0 billion unsecured bank term loan (Term Loan) in connection with the acquisitions of PXP and MMR. Upon closing the PXP acquisition, FCX borrowed $4.0 billion under the Term Loan, and FM O&G LLC (a wholly owned subsidiary of FM O&G and the successor entity of PXP) joined the Term Loan as a borrower.

During 2016, FCX paid off the balance of the Term Loan with a portion of the proceeds from sales of assets (refer to Note 2 for further discussion).

Revolving Credit Facility. In May 2014, FCX, PT-FI and FM O&G LLC amended the senior unsecured $3.0 billion revolving credit facility to extend the maturity date one year to May 31, 2019, and increase the aggregate facility amount from $3.0 billion to $4.0 billion, with $500 million available to PT-FI. FCX, PT-FI and FM O&G LLC had entered into the $3.0 billion revolving credit facility on May 31, 2013 (upon completion of the acquisition of PXP). In February and December 2015, FCX modified the revolving credit facility to amend the maximum total leverage ratio. In February 2016, FCX amended its revolving credit facility, which included (i) modification of the maximum leverage ratio and the minimum interest expense coverage ratio and (ii) a commitment reduction from $4.0 billion to $3.5 billion.

At December 31, 2016, FCX had no borrowings outstanding and $43 million of letters of credit issued under the revolving credit facility, resulting in availability of approximately $3.5 billion, of which $1.5 billion could be used for additional letters of credit.

Interest on the revolving credit facility (London Interbank Offered Rate (LIBOR) plus 2.50 percent or an alternate base rate (ABR) plus 1.50 percent at December 31, 2016) is determined by reference to FCX's credit ratings.

Lines of Credit. At December 31, 2016, FCX had no borrowings outstanding on its uncommitted and short-term lines of credit with certain financial institutions. These unsecured lines of credit allow FCX to borrow at a spread over LIBOR or the respective financial institution's cost of funds with terms and pricing that are generally more favorable than FCX's revolving credit facility.

Cerro Verde Credit Facility. In March 2014, Cerro Verde entered into a five-year, $1.8 billion senior unsecured credit facility that is nonrecourse to FCX and the other shareholders of Cerro Verde. Interest on amounts drawn under the term loan is based on LIBOR plus a spread (1.90 percent at December 31, 2016) based on Cerro Verde’s total net debt to EBITDA ratio as defined in the agreement. At December 31, 2016, term loan borrowings under the facility totaled $1.4 billion. The credit facility amortizes in four installments in amounts necessary for the aggregate borrowings and outstanding letters of credit not to exceed 85 percent of the $1.8 billion commitment on September 30, 2017, 70 percent on March 31, 2018, and 35 percent on September 30, 2018, with the remaining balance due on the maturity date of March 10, 2019. The interest rate on Cerro Verde's credit facility was 2.67 percent at December 31, 2016.

Cerro Verde Shareholder Loans. In December 2014, Cerro Verde entered into loan agreements with three of its shareholders for borrowings up to $800 million. Cerro Verde can designate all or a portion of the shareholder loans as subordinated. If the loans are not designated as subordinated, they bear interest at LIBOR plus the current spread on Cerro Verde’s credit facility. If they are designated as subordinated, they bear interest at the same rate plus 0.5 percent. The loans mature on December 22, 2019, unless at that time there is senior financing associated with the Cerro Verde expansion project that is senior to the shareholder loans, in which case the shareholder loans mature two years following the maturity of the senior financing. At December 31, 2016, the outstanding balance on the Cerro Verde shareholder loans was $261 million (excluding $345 million from FMC, which is eliminated in consolidation). The weighted-average interest rate on the Cerro Verde shareholder loans was 3.10 percent at December 31, 2016.

Senior Notes issued by FCX. In December 2016, FCX completed an exchange offer and consent solicitation associated with FM O&G LLC senior notes. Holders representing 89 percent of the outstanding FM O&G LLC senior notes tendered their notes and received new FCX senior notes. Each series of newly issued FCX senior notes have an interest rate that is identical to the interest rate of the applicable series of FM O&G LLC senior notes. The newly issued FCX senior notes are senior unsecured obligations of FCX and rank equally in right of payment with all other existing and future senior unsecured indebtedness of FCX. These new FCX senior notes have not been registered with the SEC under the Securities Act of 1933, as amended, or any state or foreign securities law. The 6.125% Senior Notes due 2019, 6½% Senior Notes due 2020 and 6.625% Senior Notes due 2021 are redeemable at specified redemption prices. The 6.75% Senior Notes due 2022 and 6⁷/₈% Senior Notes due 2023 are redeemable in whole or in part, at the option of FCX, at make-whole redemption prices prior to February 1, 2018, and February 15, 2020, respectively, and at specified redemption prices thereafter. A summary of the tenders follows:



	Principal Amount Outstanding		Principal Amount Tendered		Book Value of New FCX Senior Notes
6.125% Senior Notes due 2019	$	237	$	179	$	186
6½% Senior Notes due 2020	617		552		583
6.625% Senior Notes due 2021	261		228		242
6.75% Senior Notes due 2022	449		404		432
6⁷/₈% Senior Notes due 2023	778		728		785
	$	2,342	$	2,091	$	2,228

The principal amounts were increased by $151 million to reflect the remaining unamortized acquisition-date fair market value adjustments associated with the PXP acquisition. In addition, FCX paid $14 million in cash consideration for FM O&G LLC’s senior notes that were tendered, which reduced the book value of the new FCX senior notes. These adjustments and cash consideration are being amortized over the term of these senior notes and recorded as a net reduction of interest expense.

In November 2014, FCX sold $750 million of 2.30% Senior Notes due 2017, $600 million of 4.00% Senior Notes due 2021, $850 million of 4.55% Senior Notes due 2024 and $800 million of 5.40% Senior Notes due 2034 for total net proceeds of $2.97 billion. In March 2013, in connection with the financing of FCX's acquisitions of PXP and MMR, FCX issued $6.5 billion of unsecured senior notes in four tranches. FCX sold $1.5 billion of 2.375% Senior Notes due March 2018, $1.0 billion of 3.100% Senior Notes due March 2020, $2.0 billion of 3.875% Senior Notes due March 2023 and $2.0 billion of 5.450% Senior Notes due March 2043 for total net proceeds of $6.4 billion. In February 2012, FCX sold $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 $2.47 billion.

The 2.15% Senior Notes due 2017, 2.30% Senior Notes due 2017, 2.375% Senior Notes due 2018, 3.100% Senior Notes due 2020 and 4.00% Senior Notes due 2021 are redeemable in whole or in part, at the option of FCX, at a make-whole redemption price. The senior notes listed below are redeemable in whole or in part, at the option of FCX, at a make-whole redemption price prior to the dates stated below, and beginning on the dates stated below at 100 percent of principal.



Debt Instrument		Date
3.55% Senior Notes due 2022		December 1, 2021
3.875% Senior Notes due 2023		December 15, 2022
4.55% Senior Notes due 2024		August 14, 2024
5.40% Senior Notes due 2034		May 14, 2034
5.450% Senior Notes due 2043		September 15, 2042

These senior notes rank equally with FCX's other existing and future unsecured and unsubordinated indebtedness.

Senior Notes issued by FM O&G LLC. In May 2013, in connection with the acquisition of PXP, FCX assumed unsecured senior notes with a stated value of $6.4 billion, which was increased by $716 million to reflect the acquisition-date fair market value of these senior notes. After redemptions and the 2016 exchange offer and consent solicitation discussed above, as of December 31, 2016, the stated value of these senior notes totaled $251 million, which was increased by $16 million to reflect the remaining unamortized acquisition-date fair market value adjustments that are being amortized over the term of these senior notes and recorded as a reduction of interest expense. The 6.125% Senior Notes due 2019, 6½% Senior Notes due 2020, 6.625% Senior Notes due 2021 and 6.75% Senior Notes due 2022 are redeemable at specified redemption prices. The 6⁷/₈% Senior Notes due 2023 are redeemable in whole or in part, at the option of FM O&G LLC, at make-whole redemption prices prior to February 15, 2018, and at specified redemption prices thereafter.

Exchanges and Early Extinguishment of Debt. During 2016, FCX redeemed certain senior notes in exchange for its common stock (refer to Note 10 for further discussion) and purchased certain senior notes in open-market transactions. A summary of these debt extinguishments follows:



	Principal Amount		Discounts/Deferred Debt Issuance Costs		Book Value		Redemption Value		Gain

2.30% Senior Notes due 2017	$	20	$	—	$	20	$	20	$	—
2.375% Senior Notes due 2018	18		—		18		18		—
3.55% Senior Notes due 2022	108		1		107		96		11
3.875% Senior Notes due 2023	77		—		77		68		9
5.40% Senior Notes due 2034	50		1		49		41		8
5.450% Senior Notes due 2043	134		2		132		106		26
	$	407	$	4	$	403	$	349	$	54

Partially offsetting the $54 million gain was $28 million in losses, primarily related to deferred debt issuance costs for the Term Loan that was repaid and costs associated with the December 2016 senior note exchange offer and consent solicitation.

A summary of debt extinguishments during 2014 resulting from redemptions and tender offers follows:



	Principal Amount		Purchase Accounting Fair- Value Adjustments		Book Value		Redemption Value		Gain (Loss)

1.40% Senior Notes due 2015	$	500	$	—	$	500	$	501	$	(1	)
6.125% Senior Notes due 2019	513		40		553		555		(2		)
8.625% Senior Notes due 2019	400		41		441		417		24
7.625% Senior Notes due 2020	300		32		332		318		14
6½% Senior Notes due 2020	883		79		962		952		10
6.625% Senior Notes due 2021	339		31		370		367		3
6.75% Senior Notes due 2022	551		57		608		600		8
6⁷/₈% Senior Notes due 2023	722		84		806		785		21
	$	4,208	$	364	$	4,572	$	4,495	$	77

Partially offsetting the net $77 million gain was $4 million in losses, primarily associated with the modification of FCX's revolving credit facility in May 2014.

Guarantees. In connection with the acquisition of PXP, FCX guaranteed the PXP senior notes, and the guarantees by certain PXP subsidiaries were released. Refer to Note 17 for a discussion of FCX’s senior notes guaranteed by FM O&G LLC.

Restrictive Covenants. FCX's revolving credit facility contains customary affirmative covenants and representations, and also 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. FCX's revolving credit facility also contains financial ratios governing maximum total leverage and minimum interest coverage. Following the February 2016 amendment, FCX's leverage ratio (Net Debt/EBITDA, as defined in the credit agreement) cannot exceed 4.25x in 2017 and 3.75x thereafter. Additionally, under the February 2016 amendments, many of the exceptions to the subsidiary indebtedness restrictions and the lien restrictions were narrowed significantly through March 31, 2017. In addition, on or prior to March 31, 2017, FCX is not permitted to pay dividends on its common stock or make other restricted payments. The pricing under the amended revolving credit facility also changed and is a function of credit ratings and the leverage ratio. FCX’s senior notes contain limitations on liens. At December 31, 2016, FCX was in compliance with all of its covenants.

Maturities. Maturities of debt instruments based on the principal amounts and terms outstanding at December 31, 2016, total $1.2 billion in 2017, $2.3 billion in 2018, $1.1 billion in 2019, $1.6 billion in 2020, $862 million in 2021 and $8.8 billion thereafter.