Alcoa subsidiary prices $1 billion in senior notes

PITTSBURGH - Alcoa (NYSE:AA) Corporation (NYSE:AA; ASX: AAI), a leader in the production of bauxite, alumina, and aluminum products, with a market capitalization of $8.1 billion and annual revenue of $11.9 billion, announced through its wholly-owned subsidiary, Alumina (OTC:AWCMY) Pty Ltd, the pricing of a $1 billion offering of senior notes. According to InvestingPro data, the company maintains a fair financial health profile with a current ratio of 1.45. The notes, guaranteed by Alcoa and select subsidiaries, are slated for sale completion on March 17, 2025, pending customary closing conditions.

The proceeds from this offering are earmarked for internal financing within the Alcoa group. Specifically, funds will be channeled to Alcoa Nederland Holding B.V. (ANHBV), another wholly-owned subsidiary responsible for $750 million of 5.500% Notes due 2027 and $500 million of 6.125% Notes due 2028. The company’s total debt stands at $2.86 billion, with a manageable debt-to-equity ratio of 0.55, according to InvestingPro analysis. The capital will be used to repay intercompany debts and issue dividends, with additional funds potentially allocated toward cash tender offers for these existing notes, subject to the tender offers’ success and acceptance.

Should any proceeds remain post-offering, including scenarios where the tender offers do not proceed, Alcoa intends to apply such funds to general corporate purposes. These may include the redemption of ANHBV’s existing notes.

The notes and their guarantees are being offered in a private placement exclusively to qualified institutional buyers and certain non-U.S. persons in offshore transactions. They have not been registered under the Securities Act of 1933 or any state securities laws, and as such, cannot be offered or sold in the U.S. without registration or an exemption from registration requirements.

This press release, which is based on a press release statement, does not constitute an offer to buy or sell the notes or related guarantees. Offers for the notes and guarantees are made solely through a private offering memorandum, while the tender offers are being made only through the relevant offer to purchase and notice of guaranteed delivery.

Alcoa has a storied history of innovation and commitment to sustainability, safety, and community development in the aluminum industry. Currently trading at $31.33, InvestingPro analysis suggests the stock is slightly undervalued, with analysts setting price targets between $40 and $58. The company’s forward-looking statements regarding the notes offering and tender offers reflect its ambitions and expectations for the future, although they are subject to various risks and uncertainties that could cause actual results to differ. InvestingPro subscribers have access to 8 additional key insights about Alcoa, including detailed valuation metrics and growth forecasts in the comprehensive Pro Research Report.

In other recent news, Alcoa Corporation has announced a significant development involving its wholly-owned subsidiary, Alumina Pty Ltd, which plans to offer $1 billion in senior notes. The proceeds from this offering are intended to fund contributions to Alcoa Nederland Holding B.V., repay intercompany debts, and support cash tender offers for existing notes due in 2027 and 2028. This move reflects Alcoa’s ongoing commitment to its financial strategy and sustainable industry practices. Additionally, Alcoa has declared a quarterly cash dividend of $0.10 per share for its common and Series A convertible preferred stock, showcasing its focus on enhancing shareholder value.

In leadership changes, Alcoa announced that Steven W. Williams, Chairman of its Board of Directors, will not stand for re-election, resulting in the board reducing from twelve to eleven members. This transition is not due to any disagreement with the company, and Alcoa’s CEO, William F. Oplinger, acknowledged Williams’ significant contributions. Meanwhile, Oplinger also discussed potential impacts of tariffs on the aluminum industry, warning of possible job losses in the U.S. due to proposed tariffs on Canadian aluminum imports. This could lead to a 35% net tariff on metal from Canada, potentially affecting Alcoa’s operations given its substantial capacity in Canada.

Lastly, Japan and Australia are seeking exemptions from the U.S. tariffs on steel and aluminum set to be reinstated next month, which could impact global trade dynamics. These tariffs, originally imposed in 2018 and maintained by the Biden administration, have previously provided exemptions to several key U.S. trading partners. As these developments unfold, stakeholders and investors in Alcoa and the broader aluminum industry are closely monitoring the potential implications on international trade and company operations.

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