DEBT

FCX’s debt at December 31, 2018, included additions of $58 million ($97 million at December 31, 2017) for unamortized fair value adjustments (primarily from the 2013 oil and gas acquisitions), and is net of reductions of $69 million ($85 million at December 31, 2017) for unamortized net discounts and unamortized debt issuance costs. The components of debt follow:



	December 31,
	2018			2017
Revolving credit facility	$	—		$	—
Cerro Verde credit facility	1,023			1,269
Senior notes and debentures:
Issued by FCX:
2.375% Senior Notes due 2018	—			1,408
3.100% Senior Notes due 2020	999			997
4.00% Senior Notes due 2021	597			596
6.75% Senior Notes due 2022	—			427
3.55% Senior Notes due 2022	1,886			1,884
6⁷/₈% Senior Notes due 2023	768			776
3.875% Senior Notes due 2023	1,915			1,914
4.55% Senior Notes due 2024	845			845
5.40% Senior Notes due 2034	741			740
5.450% Senior Notes due 2043	1,843			1,842
Issued by FMC:
7¹/₈% Debentures due 2027	115			115
9½% Senior Notes due 2031	126			127
6¹/₈% Senior Notes due 2034	117			116
Issued by Freeport-McMoRan Oil & Gas LLC (FM O&G LLC):
6⁷/₈% Senior Notes due 2023	—			54
Other	166			119
Total debt	11,141			13,229
Less current portion of debt	(17		)	(1,414		)
Long-term debt	$	11,124		$	11,815

Revolving Credit Facility. At December 31, 2018, there were no borrowings outstanding and $13 million in letters of credit issued under FCX’s revolving credit facility, resulting in availability of approximately $3.5 billion, of which approximately $1.5 billion could be used for additional letters of credit.

In April 2018, FCX, PT-FI and FM O&G LLC entered into a new $3.5 billion, five-year, unsecured revolving credit facility, which replaced FCX’s prior revolving credit facility (scheduled to mature on May 31, 2019). The new revolving credit facility is available until April 20, 2023, with $500 million available to PT-FI, and up to $1.5 billion available in letters of credit, and has a substantially similar structure and terms as the prior revolving credit facility. Interest on loans made under the new revolving credit facility is, at the option of FCX, determined based on the adjusted London Interbank Offered rate (LIBOR) or the alternate base rate (each as defined in the new revolving credit facility) plus a spread to be determined by reference to FCX’s credit ratings.

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. In June 2017, Cerro Verde’s credit facility was amended (balance outstanding at the time of amendment was $1.275 billion) to increase the commitment by $225 million to $1.5 billion, to modify the amortization schedule and to extend the maturity date to June 19, 2022. The amended credit facility amortizes in four installments, with $225 million due on December 31, 2020 (of which $5 million was prepaid during 2018 and $220 million was prepaid during 2017), $225 million due on June 30, 2021 (which was fully prepaid during 2018), $525 million due on December 31, 2021 (of which $20 million was prepaid during 2018), and the remaining balance due on the maturity date of June 19, 2022. All other terms, including the interest rates, remain the same. Interest under the term loan is based on LIBOR plus a spread based on Cerro Verde’s total net debt to earnings before interest, taxes, depreciation and amortization (EBITDA) ratio as defined in the agreement. The interest rate on Cerro Verde’s credit facility was 4.42 percent at December 31, 2018.

Cerro Verde Shareholder Loans. In December 2014, Cerro Verde entered into loan agreements with three of its shareholders for borrowings up to $800 million. In June 2017, Cerro Verde used the proceeds from its amended credit facility plus available cash to repay the balance of its outstanding shareholder loans. The remaining availability for borrowings under these agreements totals $200 million.

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. 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 2013 oil and gas acquisitions. 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. All of these senior notes, except the 6.75% Senior Notes due 2022 and the 6⁷/₈% Senior Notes due 2023, were redeemed during 2017 and the 6.75% Senior Notes due 2022 were redeemed during 2018 (refer to Early Extinguishment and Exchanges of Debt in this note). The 6⁷/₈% Senior Notes due 2023 are redeemable in whole or in part, at the option of FCX, at a make-whole redemption price prior to February 15, 2020, and at a specified redemption price thereafter. As of December 31, 2018, the book value of these senior notes totaled $768 million, which reflects the remaining unamortized acquisition-date fair market value adjustments ($46 million) and the cash consideration ($6 million) that 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 (which matured and were repaid in 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 the 2013 oil and gas acquisitions, 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 (which matured and were repaid in 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 (which matured and were repaid in 2017) and $2.0 billion of 3.55% Senior Notes due 2022 for total net proceeds of $2.47 billion.

The 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.

Early Extinguishment and Exchanges of Debt. During 2018, FCX redeemed in full certain senior notes, and holders received the principal amounts together with the redemption premiums and accrued and unpaid interest up to the redemption date. A summary of these redemptions follows:




	Principal Amount		Net Adjustments		Book Value		Redemption Value		Gain
FCX 6.75% Senior Notes due 2022	$	404	$	22	$	426	$	418	$	8
FM O&G LLC 6⁷/₈% Senior Notes due 2023	50		4		54		52		2
	$	454	$	26	$	480	$	470	$	10

Partially offsetting the $10 million gain were losses of $3 million, primarily associated with Cerro Verde’s prepayments in 2018 and entering into the new revolving credit facility in April 2018.

During 2017, FCX redeemed in full or purchased in open-market transactions certain senior notes. A summary of these debt extinguishments follows:



	Principal Amount		Net Adjustments		Book Value		Redemption Value		Gain
2.375% Senior Notes due 2018	$	74	$	—	$	74	$	74	$	—
FCX 6.125% Senior Notes due 2019	179		5		184		182		2
FM O&G LLC 6.125% Senior Notes due 2019	58		2		60		59		1
FCX 6½% Senior Notes due 2020	552		23		575		562		13
FM O&G LLC 6½% Senior Notes due 2020	65		3		68		66		2
FCX 6.625% Senior Notes due 2021	228		12		240		234		6
FM O&G LLC 6.625% Senior Notes due 2021	33		2		35		34		1
FM O&G LLC 6.750% Senior Notes due 2022	45		2		47		46		1
	$	1,234	$	49	$	1,283	$	1,257	$	26

Partially offsetting the $26 million gain was a net loss of $5 million, primarily associated with the modification of Cerro Verde’s credit facility in June 2017 and Cerro Verde’s prepayment in December 2017.

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 transactions follows:



	Principal Amount		Net Adjustments			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 an unsecured bank term loan that was repaid and costs associated with the December 2016 senior note exchange offer and consent solicitation.

Guarantees. 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 contains 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 or its subsidiaries’ abilities 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 expense coverage. FCX’s leverage ratio (ratio of total debt to consolidated EBITDA, as defined in the credit agreement) cannot exceed 3.75x, and the minimum interest expense coverage ratio (ratio of consolidated EBITDA to consolidated cash interest expense, as defined in the credit agreement) is 2.25x. FCX’s senior notes contain limitations on liens. At December 31, 2018, 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, 2018, total $17 million in 2019, $1.0 billion in 2020, $1.1 billion in 2021, $2.4 billion in 2022, $2.7 billion in 2023 and $3.9 billion thereafter.