Though Freeport-McMoRan Inc (NYSE:FCX) has earned the right to ask for free advice from Credit Suisse Group AG (ADR) (NYSE:CS), it has elected to pick Goldman Sachs Group Inc (NYSE:GS) and Barclays PLC (ADR) (NYSE:BCS) for the same. According to a Reuters report, the company has sought the help of the two firms to find private equity companies that are willing to finance few of its projects.
The decision to find funding sources came two years after the company took over the two oil companies; McMoRan Exploration Co and Plains Exploration & Production Co in a $19 billion deal. Freeport-McMoRan Inc (NYSE:FCX) acquired the two companies with the intention to diversify its copper loaded portfolio. However, the oil slump lately has left the company more worried.
As oil prices went southward from $100 per barrel to $44 per barrel, the company is finding it increasingly difficult to generate cash or even develop its two acquired assets. Both copper and oil prices slipped by 20% and 50% respectively, forcing Freeport-McMoRan Inc (NYSE:FCX) to find funds in order to meet its capital expenditure requirement in the Gulf of Mexico.
Billion dollars cash need
As per people with knowledge of the matter, Freeport-McMoRan Inc (NYSE:FCX) is underway discussions with Apollo Global Management LLC, Blackstone Group LP and Warburg Pincus LC for potential partnerships. Though the exact requirement of capital is not known but it is speculated that the company will need billions of dollars. The 2013 deal to buy two oil companies pushed Freeport-McMoRan Inc (NYSE:FCX) under debt pile. The company has been trying hard to shed its debt, but its efforts have so far gone vain. As a part of its efforts, the company had come to finalization of the sale of its $5 billion worth of assets located in California but oil plunge prevented Freeport from doing so.
Meanwhile, the company continues to face workers’ demonstration at its Indonesian unit, which is an added concern for the company. The stock closed 3% down at $17.42 during the previous day’s trade.