Item 1.01. Entry into a Material Definitive Agreement.
On October 19, 2022, Freeport-McMoRan Inc. (FCX) and PT Freeport Indonesia (PT-FI), a subsidiary of FCX, as borrowers, JPMorgan Chase Bank, N.A., as administrative agent, Bank of America, N.A., as syndication agent, and each of the lenders and issuing banks party thereto entered into a new revolving credit agreement (the Revolving Credit Facility). The Revolving Credit Facility is unsecured.
The Revolving Credit Facility replaces FCX’s existing revolving credit agreement dated as of April 20, 2018, as amended. FCX elected, in accordance with the terms of the existing revolving credit agreement, to terminate all of the commitments, with such termination effective October 19, 2022. The Revolving Credit Facility provides for a five-year, unsecured revolving credit facility, under which FCX and PT-FI may obtain loans in an aggregate principal amount of up to $3.0 billion, with PT-FI’s borrowing capacity limited to $500 million. The facility is also available for the issuance of letters of credit up to $1.5 billion. The Revolving Credit Facility matures on October 19, 2027. Amounts repaid under the Revolving Credit Facility prior to the maturity date may be reborrowed, subject to satisfaction of the borrowing conditions. As of October 24, 2022, FCX had no borrowings outstanding under the Revolving Credit Facility and approximately $8 million in letters of credit issued.
Interest on loans made under the Revolving Credit Facility will, at the option of FCX or PT-FI, be determined based on the Adjusted Term Secured Overnight Financing Rate (SOFR), the Alternate Base Rate or Adjusted Daily Simple SOFR (each as defined in the Revolving Credit Facility) plus a spread to be determined by reference to a grid based on FCX’s credit ratings.
The Revolving Credit Facility contains various 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. In addition, the Revolving Credit Facility contains a financial covenant requiring FCX to maintain a total leverage ratio not to exceed 3.75 to 1.00. The Revolving Credit Facility also contains customary affirmative covenants and representations.
If any subsidiary of FCX (other than a borrower under the Revolving Credit Facility) guarantees certain indebtedness of FCX and/or any subsidiary exceeding $200 million, the Revolving Credit Facility will be unconditionally guaranteed by such subsidiary with certain specified exceptions for foreign subsidiaries and foreign subsidiary holding companies. PT-FI’s aggregate liability exposure under the Revolving Credit Facility is capped at $500 million.
Certain of the lenders and agents under the Revolving Credit Facility, and their respective affiliates have in the past engaged, and may in the future engage, in transactions with FCX and its affiliates, and have in the past performed, and may in the future perform, services, including commercial banking, financial advisory and investment banking services, for FCX and its affiliates, in the ordinary course of business for which they have received or will receive customary fees and expenses.
The foregoing description of the Revolving Credit Facility is not intended to be complete and is qualified in its entirety by reference to the Revolving Credit Facility, a copy of which is attached hereto as Exhibit 10.1, and is incorporated herein by reference.
Item 1.02. Termination of a Material Definitive Agreement.
The information in Item 1.01 of this Form 8-K is hereby incorporated by reference into this Item 1.02.
Item 2.03. Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement of a Registrant.
The information in Item 1.01 of this Form 8-K is hereby incorporated by reference into this Item 2.03.
Item 9.01. Financial Statements and Exhibits.
