Freeport-McMoRan Reconstitutes Board

The Phoenix company produces oil and natural gas around the country.

Last week Icahn told Reuters that he was very bullish on the prospects of the copper business, saying “copper prices in the next few years will rise again”. Analysts said the fall in copper was partly due to concerns about China’s economy and its demand appetite. Corporate raider Carl Icahn this summer acquired an 8.46% stake and said he planned to have discussions concerning capital structure and production operations (see Daily GPI, August 27).

Freeport-McMoRan said its board has undertaken a strategic review of its oil and gas business to evaluate alternative options, in order to enhance value to shareholders and also achieve self-funding of the oil and gas business from its cash flows and resources.

The new board has seven independent directors, including lead Gerald Ford, Robert Day, Lydia Kennard, Jon Madonna, Dustan McCoy, Stephen Siegele and Frances Fragos Townsend, and two executive directors, including James “Jim Bob” Moffett, who is chairman, and Richard Adkerson, who is vice chairman.

To prepare for a possible separation, five FCX directors have been appointed to a separate FM O&G board.

Freeport said it its still considering an initial public offering for the oil and gas business, which filed for an IPO in June. The news has the shares up 4.6% to $11.69 at midday – a much-needed boost for a stock that’s staring at a 50% year-to-date deficit.

Other alternatives being considered for FM O&G include a spinoff to FCX shareholders, “joint venture arrangements and further spending reductions”.

Shares of Freeport-McMoRan Inc. rose 2.9 percent after the announcement before the stock market opened Tuesday.

The company noted that while it takes prudent near-term steps in response to the now weak market conditions, it remains confident about the longer term outlook for copper prices based on the global demand and supply fundamentals. Many have cut spending as a result.