Phelps Dodge chops debt

The trading period ended June 28 was punctuated by the early transfer of power in Iraq from U.S. authorities to an interim Iraqi government. The move sent energy stocks lower while, more broadly, the Dow Jones Industrial average dropped 37.98 points, to 10,357.09, and the S&P 500 index eased off 1.06 points to 1133.35.

Retreating US73, to US$75.35, copper giant Phelps Dodge strengthened its balance sheet by getting its 80%-owned Chilean subsidiary Minera Candelaria to complete the full prepayment of its senior debt and terminate other existing financing obligations, such as interest-rate swaps. The total book value of the debt retired by Candelaria was about US$166 million. Phelps Dodge has already completed tender offers for notes due in 2005 and 2007, which resulted in the retirement of another US$305 million in long-term debt. The company’s goal is to reduce its ratio of total debt to total capitalization to 25% by the end of the year.

Common shares in Freeport-McMoRan Copper & Gold rose US64 to US$33.16 as the company announced a call for redemption, on July 31, 2004, of its 8.25% convertible senior notes (due in 2006) at a price of 102.75%. Currently US$66.5 million of the notes are outstanding. Holders also may covert their notes into common shares at a rate of about 69.9301 shares per US$1,000 principal amount of notes.

Coeur d’Alene Mines was off US4 as it unveiled an improved resource base at its Kensington gold project in Alaska and lower anticipated capital and operating costs at its San Bartolome silver project in Bolivia. Both projects are slated to reach production in 2006.