Freeport-McMoRan sells copper/aluminum wire and cable business to reduce debt

Despite telling analysts last April that Freeport-McMoRan Copper & Gold did not have to sell assets to reduce post-merger debt, the New Orleans-based mega gold and copper miner said Wednesday it was selling the Phelps Dodge International Corporation (PDIC) wire and cable business for $735 million to repay debt. In a news release, Freeport CEO Richard Adkerson said, "The transaction will provide FCX with significant cash proceeds and is consistent with our strategy to focus on resources on the exciting opportunities that exist in our mining operations and development projects in the Americas, Indonesia, and Africa." FCX expects to use the estimated $620 million in net proceeds after the sale of PDIC to Kentucky-based General Cable to help repay the remaining debt from Freeport's $29.5 billion cash-and-stock merger with Phelps Dodge. The transaction was completed in March. PDIC supplies copper and aluminum products-including copper rod, conductors, building and line wire, and power, mining, communications, and automotive cable-to 19 nations in the Americas, Asia, and Africa. The products are used in power, construction, oil and gas, mining, original equipment manufacturers and telecommunications markets. In a news release published Wednesday, General Cable said the acquisition "will contribute approximately $1.4 billion in revenues at current metal prices and is expected to be accretive to earnings in the first full year by 20 to 30-cents per share based on 2006 results. The combined companies expect to derive additional benefits over time through cross-selling opportunities, logistics and purchasing synergies, and the implementation of best practices throughout the entire organization." For 2006 PDIC reported revenues of $1.2 billion and operating earnings of $77 million. Gregory B. Kenney, President and CEO of General Cable, said the PDIC acquisition "is truly a unique opportunity, greatly accelerating our initiative to expand into many of the faster growing emerging economies of the world. ...PDIC has an experienced and disciplined management team led by Mathias Sandoval, President of Phelps Dodge International Corporation." Sandoval will continue to lead PDIC as well as assume responsibility for some General Cable assets.