Alcoa closes $2.6B debt offering to fund South32 asset acquisition

Alcoa Corporation (NYSE: AA, ASX: AAI) announced the closing of a $2.6 billion senior notes offering intended to help finance its acquisition of South32 Limited's (ASX: S32, LSE: S32.L, JSE: S32) bauxite, alumina and aluminum assets.

The offering consists of two tranches: $1.5 billion in 6.625% senior notes due 2034, issued by Alumina Pty Ltd, and $1.1 billion in 6.875% senior notes due 2036, issued by Alcoa Nederland Holding B.V. Both entities are wholly-owned subsidiaries of Alcoa. The notes are guaranteed on a senior unsecured basis by Alcoa and certain of its subsidiaries.

Proceeds from the notes, combined with cash on hand, are intended to fund approximately $3.1 billion in cash consideration for the acquisition of South32's interests in certain bauxite, alumina and aluminum smelter operations, along with related fees and expenses.

Concurrent with the closing of the notes offering, Alcoa terminated all remaining outstanding commitments under a senior unsecured 364-day bridge term loan credit facility that had been arranged in connection with the acquisition.

Completion of the acquisition remains subject to conditions including approval by South32 shareholders, required regulatory approvals and other customary closing conditions.

The notes were sold in a private placement to qualified institutional buyers under Rule 144A of the Securities Act of 1933 and to certain non-U.S. persons under Regulation S. The notes have not been registered under the Securities Act and may not be offered or sold in the United States without registration or an applicable exemption.

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