Freeport-McMoran’s Divestment Agreement with PT Inalum

Davis Polk advised Freeport-McMoRan Inc. (“FCX”) in connection with its divestment agreement with PT Indonesia Asahan Aluminium (Persero) (“Inalum”) in connection with Inalum’s acquisition of shares of PT Freeport Indonesia (“PT-FI”), under which Inalum will acquire for cash consideration of $3.85 billion all of Rio Tinto’s interests associated with its joint venture with PT-FI and 100% of FCX’s interests in PT Indocopper Investama (“PT-II”), which owns 9.36% of PT-FI.

Under the terms of the divestment agreement, the Rio Tinto interests will be merged into PT-FI concurrent with Inalum’s acquisition in exchange for a 40% share ownership in PT-FI. The arrangements provide for FCX and existing PT-FI shareholders to retain the economics of the revenue and cost sharing arrangements under the joint venture. Following completion of the transactions, PT-FI will have an expanded asset base to include the Rio Tinto interests and Inalum’s share ownership will be 51.2% of PT-FI (subject to a dividend assignment mechanism to replicate the joint venture economics), and FCX’s ownership will be 48.8%. At closing, Rio Tinto will receive $3.5 billion, and FCX will receive $350 million, in cash proceeds. FCX will continue to manage the operations of PT-FI. The transaction, which is expected to close by the first quarter of 2019, is subject to certain conditions.

FCX is a leading international mining company with headquarters in Phoenix, Arizona. FCX operates large, long-lived geographically diverse assets with significant proven and probable reserves of copper, gold and molybdenum, and is the world’s largest publicly traded copper producer. FCX’s portfolio of assets includes the Grasberg minerals district in Indonesia, one of the world’s largest copper and gold deposits; and significant mining operations in the Americas, including the large-scale Morenci minerals district in North America and the Cerro Verde operation in South America.

The Davis Polk corporate team included partner Marc O. Williams (Picture) and associates Darren M. Schweiger, Julian Azran and Katey Peardon. The intellectual property and technology team included partner Pritesh P. Shah. The tax team included partner William A. Curran. Partner Sartaj Gill provided credit advice.

 

Involved fees earner: Marc Williams – Davis Polk & Wardwell; Darren Schweiger – Davis Polk & Wardwell; Julian Azran – Davis Polk & Wardwell; Katey Peardon – Davis Polk & Wardwell; Pritesh P. Shah – Davis Polk & Wardwell; William Curran – Davis Polk & Wardwell; Sartaj Gill – Davis Polk & Wardwell;

Law Firms: Davis Polk & Wardwell;

Clients: Freeport-McMoRan Inc.;

 

Author: Ambrogio Visconti