Shares of Freeport McMoran are down 91% over the past 5 years, off by 38% this year. The recent drop has pushed the companies debt/eq level above 3–putting fear into the minds of investors, considering FCX has over $20 billion in debt. Their copper mines are the envy of the world, yet no one gives a shit about copper anymore. This has conjured up chatter that the company may opt to put some of their assets up for sale.
According to a recent Deutsche Bank analysis of the companies balance sheet, they should turn a profit again in 2017–providing the price of copper doesn’t tank further.
The only problem with selling assets is the entire sector is in turmoil. FCX was the elite of the group, with crown jewel properties. It’s sort of like trying to find buying for mortgage backed paper in 2009. Who wanted to buy it then? No one. But, after the dust settled, the people who stepped up and bought the good mortgage paper, for pennies on the dollar, made an absolute fortune.
The stock has been in the penalty box for some time now. But things have accelerated to the downside, in a big way, these past two weeks, which is now affecting some of their debt–especially paper that is maturing in 2018.
Their $20 billion in debt is staggered out for the next couple of decades.
Where is the debt chart with the bubbles from?
Looks like Morningstar