Notes To Consolidated Financial Statements Notes Payable.  As discussed in Note 2, FCX acquired the  85.7 percent ownership interest in Puncakjaya Power owned  by affiliates of Duke Energy Corporation in July 2003.  Puncakjaya Power’s bank debt is secured by the power-related  assets operated by Puncakjaya Power. At December 31, 2003, FCX and PT Freeport Indonesia had  vendor-financed equipment loans secured by certain PT  Freeport Indonesia assets. The FCX loan had a $19.3 million  balance. PT Freeport Indonesia had three equipment loans  with this vendor ($43.4 million outstanding at December 31,  2003) and had capital leases with this vendor totaling  $47.6 million at December 31, 2003. Interest rates on all of  the equipment loans and the leases are variable. In 2004,  FCX and PT Freeport Indonesia paid the outstanding balances  of their loans and PT Freeport Indonesia had capital leases  totaling $72.5 million at December 31, 2004. Atlantic Copper has a variable-rate project loan (the  Atlantic Copper facility). In February 2004, FCX used a portion  of the proceeds from the sale of the 6  7 /8% Senior Notes (see  below) to repay $162.4 million of Atlantic Copper’s borrowings  and to refinance certain other FCX debt maturities. Atlantic  Copper recorded a $3.7 million charge for losses on early extin- guishment of debt for repayment of certain of its debt. As of  December 31, 2004, the variable-rate project loan, nonrecourse  to FCX, consisted of a $50.0 million working capital revolver  ($4.4 million outstanding at December 31, 2004) that matures  December 2007. Subsequent to December 31, 2004, the  commitment was reduced to $44.0 million. The Atlantic Copper  facility restricts other borrowings and borrowings under the  facility are secured by certain Atlantic Copper receivables and  inventory. Atlantic Copper’s other working capital revolver  required 20 percent of amounts borrowed under the facility  to be deposited in a restricted account which totaled $11.0  million at December 31, 2003. FCX and PT Freeport Indonesia have a $195 million revolving  credit facility, which matures in September 2006. The facility  sets limitations on liens and limitations on transactions with  affiliates, and requires that certain financial ratios be main- tained. The credit facility allows common stock dividends,  common stock purchases and investments as long as avail- ability under the facility plus available cash exceeds $200  million or otherwise as long as certain other thresholds  are exceeded. Security for obligations outstanding under  the credit facility includes over 80 percent of PT Freeport  Indonesia’s assets, 50.1 percent of the outstanding stock  of PT Freeport Indonesia, the outstanding stock of  PT Indocopper Investama owned by FCX, and a pledge of  PT Freeport Indonesia’s rights under its Contract of Work  (see Note 10). PT Freeport Indonesia and FCX guarantee each  other’s obligations under the credit facility. No amounts are  currently outstanding under the facility. FCX and PT Freeport  Indonesia recorded charges to other expense totaling $5.6 million, $3.7 million to net income, in 2003 to accelerate  amortization of deferred financing costs related to the prior  credit facility. Senior Notes.  In February 2003, FCX sold $575 million  of 7% Convertible Senior Notes due 2011 for net proceeds of  $559.1 million. Interest on the notes is payable semian- nually on March 1 and September 1 of each year, beginning  September 1, 2003. The notes are convertible, at the option  of the holder, at any time on or prior to maturity into shares  of FCX’s common stock at a conversion price of $30.87 per  share, which is equal to a conversion rate of approximately  32.39 shares of common stock per $1,000 principal amount of  notes. The notes are unsecured. In January 2003, FCX sold $500 million of 10  1 /8% Senior  Notes due 2010 for net proceeds of $487.3 million. Interest  on the notes is payable semiannually on February 1 and  August 1 of each year, beginning August 1, 2003. FCX may  redeem some or all of the notes at its option at a make- whole redemption price prior to February 1, 2007, and after- wards at stated redemption prices. The indenture governing  the notes contains restrictions and limitations on incurring  debt, creating liens, entering into sale leaseback transac- tions, taking actions to limit distributions from certain  subsidiaries, selling assets, entering into certain transactions  with affiliates, paying cash dividends on common stock,  repurchasing or redeeming common or preferred equity,  prepaying subordinated debt and making investments. The  notes are unsecured. In February 2004, FCX sold $350 million of 6  7 /8%  Senior Notes due 2014 for net proceeds of $344.4 million.  Interest on the notes is payable semiannually on February  1 and August 1 of each year, beginning August 1, 2004.  FCX may redeem some or all of the notes at its option at  a make-whole redemption price prior to February 1, 2009,  and afterwards at stated redemption prices. The indenture  governing the notes contains certain restrictions, including  restrictions on incurring debt, creating liens, selling assets,  entering into certain transactions with affiliates, paying  cash dividends on common stock, repurchasing or redeeming  common or preferred equity, prepaying subordinated debt  and making investments. During the second quarter of  2004, FCX purchased in the open market $9.7 million of  the 6  7 /8% Senior Notes for $8.8 million, which, including  deferred financing costs, resulted in a gain of $0.8 million  recorded as a reduction to losses on early extinguishment  and conversion of debt. In April 2003, FCX concluded tender offers for its 7.20%  Senior Notes due 2026 and its 7.50% Senior Notes due 2006.  Of the total $450 million outstanding at December 31, 2002,  64 |  FREEPORT-McMoRan COPPER & GOLD INC.