Freeport-McMoRan Inc. has reduced the size of its Board from sixteen to nine members and is undertaking a review of strategic alternatives for its oil and gas business.
According to Freeport-McMoRan, its reconstituted nine-membered Board is comprised of seven independent and two executive directors. The independent directors are: Gerald J. Ford (Lead Independent Director), Robert A. Day, Lydia H. Kennard, Jon C. Madonna, Dustan E. McCoy, Stephen H. Siegele, and Frances Fragos Townsend; while the executive directors are: James R. Moffett, Chairman, and Richard C. Adkerson, Vice Chairman, President and Chief Executive Officer. In addition, the company will no longer have an Office of the Chairman management structure.
Gerald J. Ford, Lead Independent Director, said: “We have discussed as a Board our proper and most effective size and make-up, consistent with the needs of the business going forward. We have listened to and taken into account views and concerns from many of our largest shareholders. Our newly reconstituted Board brings diverse and extensive professional, financial and business experience while balancing independence and tenure. The Board represents a strong blend of institutional knowledge and fresh perspectives that will benefit shareholders as we address market challenges and position the company for long-term success.”
As for undertaking a strategic review of its oil and gas business (FM O&G), the company said it was to evaluate alternative courses of action designed to enhance value to its shareholders and achieve self-funding of the oil and gas business from its cash flows and resources.
The company says its O&G’s asset base, substantial underutilized Deepwater Gulf of Mexico infrastructure, large inventory of low risk development opportunities and its personnel and management team provide alternatives to generate value. Furthermore, the previously announced potential public offering of a minority interest in its oil and gas business remains an alternative for future consideration, the timing of which is subject to market conditions.
Other alternatives under consideration include a spinoff of its oil and gas business to its shareholders, joint venture arrangements, and further spending reductions, the Phoenix-based company said.
The company added that the oil and gas strategic review was being undertaken with an objective of improving its financial position and enhancing long-term value for its shareholders.
In preparation of considering a separation of the oil and gas business, five directors have left the Freeport-McMoRan’s Board, and have been appointed to the FM O&G Board of Directors. James C. Flores has been named FM O&G Chairman and remains Chief Executive Officer of FM O&G. Joining him on the FM O&G Board are Robert J. Allison, Jr., Alan R. Buckwalter, III, Thomas A. Fry, III and Charles C. Krulak.
H. Devon Graham, Jr. and Bobby Lee Lackey have retired from the Board, the company added.
James R. Moffett, Chairman of the Board, said: “On behalf of the Board, I would like to extend our deepest gratitude to our former directors and acknowledge their contributions, service, guidance and counsel while serving on the FCX Board.”
Freeport-McMoRan’s strategy will focus on its global position in the copper industry. Near-term, this strategy will involve managing its production activities, spending on capital projects and operations, and the administration of its business to enhance cash flows and protect liquidity, the company said.
“While taking prudent near-term steps responsive to the currently weak market conditions, FCX remains confident about the longer term outlook for copper prices based on the global demand and supply fundamentals. A primary objective will be a significant reduction over time of FCX’s current debt level,” Freeport-McMoRan concluded.