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CFO: Freeport to go ahead with Anadarko deal without bondholders' nod

Freeport-McMoRan Inc. CFO Kathleen Quirk indicated that the company will proceed with the US$2 billion sale of its deepwater Gulf of Mexico assets to Anadarko Petroleum Corp. without bondholders' approval, as some of them are demanding more money and changes to existing lender agreements.

The Phoenix, Ariz.-based company is seeking approval from five groups of noteholders to complete the sale, which was announced earlier in September, with Freeport-McMoRan keeping the debt on its own balance sheet.

The resistant bondholders own an aggregate US$1.1 billion worth of company debt, according to a Sept. 27 report from Bloomberg News.

According to a creditor letter obtained by Bloomberg, the bondholders are asking for a larger consent fee, an increase in interest rates and additional protective measures in exchange for approval of the deal. Otherwise, they want the debt liabilities to be transferred to Anadarko, which reportedly has a better credit profile compared to Freeport-McMoRan.

Quirk said there was no reason for the company to offer better rates to secure consent, as the company is offering about US$2.5, or 25 basis points, against each US$1,000 to holders of about US$2.3 billion notes.

If the company can't secure bondholder approval, it will instead amalgamate Freeport-McMoRan Oil & Gas LLC to complete the transaction with Anadarko while keeping the debt.

However, Paul Weiss, the law firm representing the majority of bondholders, said the company's alternative plan would not be authorized under the current deal with creditors, as it would be a related transaction, with the sale conditional upon the debt being assumed by the buyer.

Freeport has until Sept. 28 to secure the bondholders' consent.