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Freeport-McMoRan Wraps Up $1.5 Billion Equity Offering


Freeport-McMoRan FCX has completed its earlier announced at-the-market offering of common stock. The mining giant raised gross proceeds worth $1.5 billion through the sale of 116.5 million shares of Freeport common stock in open market transactions since Jul 28, 2016.

These shares were issued pursuant to the company’s shelf registration statement. Freeport will have around 1.44 billion shares of common stock outstanding after giving effect to this offering. This key milestone marks the successful completion of the company’s plans to generate proceeds for debt repayment through asset sales and the issuance of equity.

Freeport noted that the completion of this equity offering coupled with its earlier announced asset sale transactions will allow it to strengthen its balance sheet and achieve its debt-reduction goals. The company remains focused on executing its operating plans to generate significant free cash flow and create long-term value for shareholders.

Freeport logged net income (attributable to common stock) of 16 cents per share for third-quarter 2016, as against a loss of $3.58 per share a year ago. Adjusted earnings of 13 cents a share missed the Zacks Consensus Estimate of 19 cents. Revenues climbed around 15% year over year to $3,877 million and surpassed the Zacks Consensus Estimate of $3,860 million.

Freeport is taking aggressive actions to manage costs and capital spending amid a still challenging operating environment. Benefits of the company’s ongoing cost-cutting initiatives were evident in the third quarter. Consolidated net unit cash costs fell 25% year over year in the quarter, reflecting the company’s cost control actions.

Freeport also remains focused on de-leveraging its balance sheet, partly through divestitures. The company has announced $6.6 billion in asset sale transactions so far in 2016 and expects to receive $5.2 billion in gross proceeds during fourth-quarter 2016.

Freeport recently completed the sale of its 70% interest in TF Holdings Limited (“TFHL”) to China Molybdenum Co., Ltd. for $2.65 billion in cash. Under the deal terms, Freeport could also get contingent consideration of up to $120 million in cash. The company plans to use the net proceeds from the transaction to repay debt.

Freeport currently carries a Zacks Rank #3 (Hold).



Stocks to Consider

Better-ranked companies in the basic materials space include BHP Billiton Limited BHP, Vale S.A. VALE and MAG Silver Corp. MAG.

BHP Billiton holds a Zacks Rank #1 (Strong Buy). The company has an expected earnings growth of 147.8% for the current year.

Vale has an expected earnings growth of around 308.3% for the current year. The stock carries a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.

MAG Silver carries a Zacks Rank #2 (Buy) and has an expected earnings growth of around 61.1% for the current year.

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