Freeport acquires Nusamba's interest

Freeport acquires Nusamba's interest

Dow Jones, Washington

Freeport-McMoRan Copper & Gold Inc. on Feb. 27 repaid a US$253.4 million loan that it guaranteed on behalf of a minority partner, according to the company's annual report released late Friday by the Securities and Exchange Commission.

The partner, Indonesian company PT Nusamba Mineral Industri, informed Freeport-McMoRan that it didn't expect to be able to repay the loan when it came due in March, the filing said.

As a result of its payment, Freeport-McMoRan acquired Nusamba's interest in PT Indocopper Investama, which is a minority-owner of Freeport's principal operating subsidiary, PT Freeport Indonesia.

Freeport-McMoRan said it recorded an additional liability of $253.4 million to reflect the payment of the Nusamba bank loan on its end-of-year balance sheet.

For 2002, Freeport's earnings will reflect an increased ownership interest in PT Freeport Indonesia, increased interest costs related to the loan under its bank credit lines, and additional depreciation and amortization expense for the increase in property, plant and equipment.

Had the company been obligated to perform under the guarantee on Jan. 1, 2001, its 2001 earnings would have been reduced by about $6 million, or 4 cents a share, the filing said.

Other changes made to Freeport's balance sheet as a result of the action include a reduction of "other assets" by $61.6 million to reflect the nonpayment of a loan to Nusamba and an increase in deferred income taxes of $4.2 million to reflect tax liabilities relating to Freeport's increased equity ownership in PT Freeport Indonesia.

Also, Freeport reduced minority interests by $52 million to reflect its increased equity ownership in PT Freeport Indonesia, and increased property, plant and equipment by $267.3 million to reflect the cost of the acquisition in excess of the book value.

Following repayment of the loan, Freeport owns 90.6 percent of PT Freeport Indonesia.