DEBT

12 Months Ended

Dec. 31, 2019

DEBT

FCX’s debt at December 31, 2019, included additions of $11 million ($58 million at December 31, 2018) for unamortized fair value adjustments, and is net of reductions of $66 million ($69 million at December 31, 2018) for unamortized net discounts and unamortized debt issuance costs. The components of debt follow:



	December 31,
	2019			2018
Revolving credit facility	$	—		$	—
Cerro Verde credit facility	826			1,023
Senior notes and debentures:
Issued by FCX:
3.100% Senior Notes due 2020	—			999
4.00% Senior Notes due 2021	194			597
3.55% Senior Notes due 2022	1,876			1,886
6.875% Senior Notes due 2023	—			768
3.875% Senior Notes due 2023	1,917			1,915
4.55% Senior Notes due 2024	846			845
5.00% Senior Notes due 2027	592			—
5.25% Senior Notes due 2029	592			—
5.40% Senior Notes due 2034	741			741
5.450% Senior Notes due 2043	1,844			1,843
Issued by FMC:
7¹/₈% Debentures due 2027	115			115
9½% Senior Notes due 2031	125			126
6¹/₈% Senior Notes due 2034	117			117
Other	41			166
Total debt	9,826			11,141
Less current portion of debt	(5		)	(17		)
Long-term debt	$	9,821		$	11,124

Revolving Credit Facility. At December 31, 2019, FCX had no borrowings outstanding and $13 million in letters of credit issued under its 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. For PT-FI, $500 million of the revolving credit facility is available.

In May 2019, FCX, PT-FI and Freeport-McMoRan Oil & Gas LLC (FM O&G LLC) amended the $3.5 billion, five-year, unsecured revolving credit facility to extend $3.26 billion of the facility by one year to April 20, 2024, with the remaining $240 million maturing on April 20, 2023. In November 2019, the revolving credit facility was amended to allow flexibility during ongoing transition to underground mining at Grasberg. The November 2019 amendment modified (i) the total leverage ratio from 3.75x to 5.25x through June 30, 2021 and (ii) the calculation of the total debt component used to determine the total leverage ratio by adjusting the amount of unrestricted cash that may be applied to reduce the amount of total debt from $2.5 billion to $1.25 billion through June 30, 2021.

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 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 (which was fully prepaid during 2018), $225 million due on June 30, 2021 (which was fully prepaid during 2018), $525 million due on December 31, 2021 (of which $200 million was prepaid during 2019 and $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 3.70 percent at December 31, 2019.

Cerro Verde Shareholder Loans. In December 2014, Cerro Verde entered into loan agreements with three of its shareholders for borrowings up to $800 million. No amounts were outstanding at December 31, 2019 and 2018, and availability under these agreements totals $200 million at December 31, 2019.

Senior Notes issued by FCX. In August 2019, FCX sold $600 million of 5.00% Senior Notes due 2027 and $600 million of 5.25% Senior Notes due 2029 for total net proceeds of $1.187 billion. Interest on these senior notes is payable semiannually on March 1 and September 1 of each year. FCX used the net proceeds from this offering to fund the make-whole redemption of all of its outstanding 6.875% Senior Notes due 2023, and the concurrent tender offers to purchase a portion of its 4.00% Senior Notes due 2021 and its 3.55% Senior Notes due 2022, and the payment of accrued and unpaid interest, premiums, fees and expenses in connection with these transactions.

The 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 5.00% Senior Notes due 2027 are redeemable in whole or in part, at the option of FCX, at a make-whole redemption price prior to September 1, 2022, and at specified redemption prices thereafter. The 5.25% Senior Notes due 2029 are redeemable in whole or in part, at the option of FCX, at a make-whole redemption price prior to September 1, 2024, and at specified redemption prices thereafter. 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 of Debt. During 2019, 2018 and 2017, FCX redeemed in full or purchased a portion of the following senior notes.




	Principal Amount		Net Adjustments			Book Value		Redemption/Tender Value		Loss/(Gain)
Year Ended December 31, 2019
FCX 3.100% Senior Notes due 2020	$	1,000	$	(2	)	$	998	$	1,003	$	5
FCX 6.875% Senior Notes due 2023	728		34			762		768		6
FCX 4.00% Senior Notes due 2021	405		(2		)	403		418		15
FCX 3.55% Senior Notes due 2022	12		—			12		12		—
Total	$	2,145	$	30		$	2,175	$	2,201	$	26



Year Ended December 31, 2018
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		)
Total	$	454	$	26	$	480	$	470	$	(10	)



Year Ended December 31, 2017
FCX 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		)
Total	$	1,234	$	49	$	1,283	$	1,257	$	(26	)

In addition, FCX recorded net losses of $1 million in 2019, $3 million in 2018 and $5 million in 2017, primarily associated with Cerro Verde’s prepayments on its credit facility and the modification of Cerro Verde’s credit facility in 2017.

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 5.25x during the quarterly periods ending December 31, 2019, through and including June 30, 2021, and cannot exceed 3.75x for the quarterly periods ending on or after September 30, 2021, 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, 2019, 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, 2019, total $12 million in 2020, $507 million in 2021, $2.4 billion in 2022, $1.9 billion in 2023, $850 million in 2024 and $4.2 billion thereafter.