PHOENIX (dpa-AFX) - Mining and oil company Freeport-McMoRan Inc. (FCX) announced Monday that it has entered into a definitive agreement to sell a 13 percent ownership interest in its Morenci unincorporated joint venture to Sumitomo Metal Mining Co., Ltd. for $1.0 billion in cash.
The Morenci unincorporated joint venture is currently owned 85 percent by Freeport-McMoRan and 15 percent by Sumitomo Metal Mining Arizona Inc. Following completion of the transaction, the joint venture will be owned 72 percent by Freeport-McMoRan, 15 percent by SMMAz, and 13 percent by an affiliate that is fully owned by SMM.
The transaction is expected to close in mid-2016, subject to regulatory approvals and customary closing conditions. Freeport-McMoRan expects to use the proceeds to repay borrowings under its bank term loan and revolving credit facility.
The company expects to record an approximate $550 million gain on the transaction. FCX expects to use losses to offset cash taxes on the transaction.
Richard Adkerson, FCX's President and Chief Executive Officer, said, 'This transaction represents an important initial step toward our objective to accelerate debt reduction and restore our balance sheet, while retaining a portfolio of high quality assets and resources.'
In Japan, Sumitomo Metal Mining shares were gaining 8.82 percent to trade at 1,128.50 yen.
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