Alcoa Corp 8-K, filed Mar 8, 2021
Alcoa Corp (AA)
About this 8-K
Alcoa Corp filed this 8-K on March 8, 2021.
Items reported
- Item 8.01: Other events
- Item 9.01: Financial statements and exhibits
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported):
(Exact name of registrant as specified in its charter)
| (State or other jurisdiction of incorporation) |
(Commission File Number) |
(IRS Employer Identification No.) |
| |
||
| (Address of principal executive offices) | (Zip Code) |
Registrant’s telephone number, including area code:
Not applicable
(Former name or former address, if changed since last report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):
| Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
| Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
| Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
| Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class |
Trading Symbol(s) |
Name of each exchange on which registered | ||
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§ 230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§ 240.12b-2 of this chapter).
Emerging growth company
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
| Item 8.01 | Other Events. |
Offering of Senior Notes
On March 8, 2021, Alcoa Corporation (the “Company”) issued a press release announcing a proposed offering (the “Offering”) of senior notes (the “New Notes”) by Alcoa Nederland Holding B.V. (the “Issuer”), a wholly-owned subsidiary of the Company. The Issuer intends to use the net proceeds of the issuance of the New Notes, together with cash on hand, to contribute approximately $500 million to affiliate U.S. defined benefit pension plans applicable to salaried and hourly employees and to redeem in full the outstanding 6.75% Senior Notes due 2024 (the “2024 Notes”), and pay transaction-related fees and expenses. A copy of the press release is attached hereto as Exhibit 99.1, and is incorporated by reference into this Item 8.01.
The Issuer intends to issue a conditional notice of redemption to redeem all $750 million aggregate principal amount outstanding of its 2024 Notes. The 2024 Notes would be redeemed on the 30th day following the date of the conditional notice of redemption (the “Redemption Date”) at a redemption price equal to 103.375% of the principal amount of the 2024 Notes, plus accrued and unpaid interest to but not including the Redemption Date. The Issuer’s obligation to redeem the 2024 Notes would be conditioned upon the consummation, on or prior to the Redemption Date, of the Offering on terms and conditions that are satisfactory to the Issuer (the “Condition”). In the Issuer’s discretion, the Redemption Date may be delayed until such time as the Condition has been satisfied (or waived by the Issuer in its sole discretion).
Sale of the Warrick Rolling Mill
As previously announced, on November 30, 2020, the Company entered into an agreement to sell its rolling mill (the “Warrick Rolling Mill”), held by Alcoa Warrick LLC, to Kaiser Aluminum Corporation for total consideration of approximately $670 million, which includes $587 million in cash and the assumption of $83 million in other postretirement benefit liabilities. The sale is expected to close by the end of the first quarter of 2021 and is subject to customary closing conditions. There can be no guarantee that the sale will be completed. Filed herewith as Exhibit 99.2 are unaudited pro forma condensed consolidated financial information based on the Company’s historical consolidated financial statements, as adjusted to give effect to the Company’s sale of the Warrick Rolling Mill. The Company is not yet required to file the pro forma financial statements giving effect to the sale of the Warrick Rolling Mill on a Current Report on Form 8-K as the sale has not yet been completed. However, the Company is filing the unaudited pro forma condensed consolidated financial information with this Current Report on Form 8-K at this time in connection with the proposed Offering.
| Item 9.01 | Financial Statements and Exhibits. |
(d) Exhibits.
| Exhibit number |
Description | |
| 99.1 | Press Release of Alcoa Corporation dated March 8, 2021 | |
| 99.2 | Pro Forma Condensed Combined Financial Statements | |
| 104 | Cover Page Interactive Data File (embedded within the Inline XBRL document) | |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| ALCOA CORPORATION | ||
| By: | /s/ Marissa P. Earnest | |
| Marissa P. Earnest | ||
| Senior Vice President, Chief | ||
| Governance Counsel and Secretary | ||
Date: March 8, 2021
Exhibit 99.1
FOR IMMEDIATE RELEASE
| Investor Contact | Media Contact | |
| James Dwyer | Jim Beck | |
| 412-992-5450 | 412-315-2909 | |
| James.Dwyer@alcoa.com | Jim.Beck@alcoa.com |
Alcoa Corporation Announces Proposed Debt Offering
March 8, 2021—PITTSBURGH—Alcoa Corporation (NYSE:AA) (“Alcoa”) announced today a proposed offering of $500,000,000 aggregate principal amount of senior notes (the “notes”) by Alcoa Nederland Holding B.V. (the “issuer”), a wholly-owned subsidiary of Alcoa. The notes will be guaranteed on a senior unsecured basis by Alcoa and certain of its subsidiaries.
The timing of pricing and terms of the notes are subject to market conditions and other factors. The issuer intends to use the net proceeds from the issuance of the notes being offered, together with cash on hand, to contribute approximately $500 million to affiliate U.S. defined benefit pension plans applicable to salaried and hourly employees and to redeem in full the outstanding 6.75% Senior Notes due 2024 (the “2024 Notes”), and pay transaction-related fees and expenses. As disclosed in more detail in a concurrent filing on Form 8-K, the issuer intends to issue a conditional notice of redemption to redeem all $750 million aggregate principal amount outstanding of its 2024 Notes. The 2024 Notes would be redeemed on the 30th day following the date of the conditional notice of redemption (the “Redemption Date”) at a redemption price equal to 103.375% of the principal amount of the 2024 Notes, plus accrued and unpaid interest to but not including the Redemption Date.
The notes and related guarantees will be sold in a private placement to qualified institutional buyers in accordance with Rule 144A under the Securities Act of 1933, as amended, (the “Securities Act”), and to certain non-United States persons in offshore transactions in accordance with Regulation S under the Securities Act.
The notes and related guarantees have not been and will not be registered under the Securities Act or the securities laws of any other jurisdiction and may not be offered or sold in the United States or to, or for the benefit of, U.S. persons absent registration under, or an applicable exemption from, the registration requirements of the Securities Act.
This press release does not constitute an offer to sell or a solicitation of an offer to buy the notes or any other security and shall not constitute an offer, solicitation or sale in any state or jurisdiction in which, or to any persons to whom, such an offer, solicitation or sale would be unlawful. Any offers of the notes or related guarantees will be made only by means of a private offering memorandum.
About Alcoa
Alcoa is a global industry leader in bauxite, alumina, and aluminum products, and is built on a foundation of strong values and operating excellence dating back 135 years to the world-changing discovery that made aluminum an affordable and vital part of modern life. Since developing the aluminum industry, and throughout our history, our talented Alcoans have followed on with breakthrough innovations and best practices that have led to efficiency, safety, sustainability, and stronger communities wherever we operate.
Forward-Looking Statements
This press release contains statements that relate to future events and expectations and as such constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements include those containing such words as “anticipates,” “believes,” “could,” “estimates,” “expects,” “forecasts,” “goal,” “intends,” “may,” “outlook,” “plans,” “projects,” “seeks,” “sees,” “should,” “targets,” “will,” “would,” or other words of similar meaning. All statements by Alcoa Corporation that reflect expectations, assumptions or projections about the future, other than statements of historical fact, are forward-looking statements, and include statements with respect to the proposed debt offering and conditional redemption of the 2024 Notes. Forward-looking statements are not guarantees of future performance and are subject to known and unknown risks, uncertainties, and changes in circumstances that are difficult to predict. Although Alcoa Corporation believes that the expectations reflected in any forward-looking statements are based on reasonable assumptions, it can give no assurance that these expectations will be attained and it is possible that actual results may differ materially from those indicated by these forward-looking statements due to a variety of risks and uncertainties. Additional information concerning factors that could cause actual results to differ materially from those projected in the forward-looking statements is contained in Alcoa Corporation’s filings with the Securities and Exchange Commission. Alcoa Corporation disclaims any obligation to update publicly any forward-looking statements, whether in response to new information, future events or otherwise, except as required by applicable law.
2
Exhibit 99.2
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL INFORMATION
On November 30, 2020, Alcoa Corporation (the “Company”) entered into an agreement to sell (the “Sale”) its rolling mill (the “Warrick Rolling Mill”), held by Alcoa Warrick LLC, to Kaiser Aluminum Corporation (“Kaiser”) for total consideration of approximately $670 million, which includes $587 million in cash and the assumption of $83 million in other postretirement benefit liabilities. The Sale is expected to close by the end of the first quarter of 2021 and is subject to customary closing conditions. There can be no guarantee that the Sale will be completed. The assets and liabilities of the Warrick Rolling Mill were classified as held for sale in the Company’s consolidated balance sheet as of December 31, 2020.
The following unaudited pro forma condensed consolidated financial information is based on historical consolidated financial statements adjusted to give effect to the Sale. The unaudited pro forma condensed consolidated statement of operations has been prepared as if the Sale occurred on January 1, 2020 and the unaudited pro forma condensed consolidated balance sheet has been prepared as if the Sale occurred on December 31, 2020. The assumptions and estimates underlying the unaudited transaction accounting adjustments to the Company’s historical consolidated financial information are described in the accompanying notes, which should be read together with the unaudited pro forma condensed consolidated financial information.
The unaudited pro forma condensed consolidated financial information reflects certain assumptions and adjustments that the Company’s management believes are reasonable under the circumstances and as of the date of this Current Report on Form 8-K. The unaudited pro forma condensed consolidated financial information reflects adjustments that, in the opinion of the Company’s management, are necessary to present fairly the pro forma balance sheet as of December 31, 2020 and results of operations for the year ended December 31, 2020.
The unaudited pro forma condensed consolidated financial information has been provided for informational purposes only and does not purport to project the future financial position or operating results that the Company would have reported had the Sale been completed as of the dates set forth in this unaudited pro forma condensed consolidated financial information, and is not necessarily indicative of the future consolidated results of operations or financial position. The actual results may differ significantly from those reflected in the unaudited pro forma condensed consolidated financial information for a number of reasons, including, but not limited to, differences between the assumptions used to prepare the unaudited pro forma condensed consolidated financial information and actual amounts. These preliminary assumptions and estimates are subject to change upon the actual closing of the Sale.
The unaudited pro forma condensed consolidated financial information should be read together with the Company’s historical financial statements and the notes included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2020.
Alcoa Corporation and subsidiaries
Pro Forma Statement of Condensed Consolidated Operations (unaudited)
(dollars in millions, except per-share amounts)
| December 31, 2020 | ||||||||||||||||
| Registrant Historical |
Transition Accounting Adjustments |
Notes | Pro Forma | |||||||||||||
| Sales |
$ | 9,286 | $ | (793 | ) | (a) | $ | 8,493 | ||||||||
| Cost of goods sold (exclusive of expenses below) |
7,969 | (689 | ) | (b) | 7,280 | |||||||||||
| Selling, general administrative, and other expenses |
206 | (12 | ) | (c) | 194 | |||||||||||
| Research and development expenses |
27 | (2 | ) | (d) | 25 | |||||||||||
| Provision for depreciation, depletion, and amortization |
653 | (27 | ) | (e) | 626 | |||||||||||
| Restructuring and other charges, net |
104 | — | 104 | |||||||||||||
| Interest expense |
146 | — | 146 | |||||||||||||
| Other expenses (income), net |
8 | (41 | ) | (f) | (33 | ) | ||||||||||
|
|
|
|
|
|
|
|||||||||||
| Total costs and expenses |
9,113 | (771 | ) | 8,342 | ||||||||||||
| Income (loss) before income taxes |
173 | (22 | ) | 151 | ||||||||||||
| Provision for income taxes |
187 | — | (g) | 187 | ||||||||||||
|
|
|
|
|
|
|
|||||||||||
| Net loss |
(14 | ) | (22 | ) | (36 | ) | ||||||||||
| Less: Net income attributable to noncontrolling interest |
156 | — | 156 | |||||||||||||
|
|
|
|
|
|
|
|||||||||||
| NET LOSS ATTRIBUTABLE TO ALCOA CORPORATION |
$ | (170 | ) | $ | (22 | ) | $ | (192 | ) | |||||||
|
|
|
|
|
|
|
|||||||||||
| EARNINGS PER SHARE ATTRIBUTABLE TO ALCOA CORPORATION COMMON SHAREHOLDERS: |
||||||||||||||||
| Basic: |
||||||||||||||||
| Net loss |
$ | (0.91 | ) | $ | (1.03 | ) | ||||||||||
| Average number of shares |
185,875,964 | 185,875,964 | ||||||||||||||
| Diluted: |
||||||||||||||||
| Net loss |
$ | (0.91 | ) | $ | (1.03 | ) | ||||||||||
| Average number of shares |
185,875,964 | 185,875,964 | ||||||||||||||
Alcoa Corporation and subsidiaries
Pro Forma Statement of Condensed Consolidated Balance Sheet (unaudited)
(dollars in millions, except per-share amounts)
| December 31, 2020 | ||||||||||||||||
| Registrant Historical |
Transition Accounting Adjustments |
Notes | Pro Forma | |||||||||||||
| ASSETS |
||||||||||||||||
| Current assets: |
||||||||||||||||
| Cash and cash equivalents |
$ | 1,607 | $ | 500 | (h) | $ | 2,107 | |||||||||
| Receivables from customers |
471 | — | 471 | |||||||||||||
| Other receivables |
85 | — | 85 | |||||||||||||
| Inventories |
1,398 | — | 1,398 | |||||||||||||
| Assets held for sale |
648 | (648 | ) | (i) | — | |||||||||||
| Fair value of derivative instruments |
21 | — | 21 | |||||||||||||
| Prepaid expenses and other current assets |
290 | — | 290 | |||||||||||||
|
|
|
|
|
|
|
|||||||||||
| Total current assets |
4,520 | (148 | ) | 4,372 | ||||||||||||
|
|
|
|
|
|
|
|||||||||||
| Properties, plants, and equipment |
20,522 | — | 20,522 | |||||||||||||
| Less: accumulated depreciation, depletion, and amortization |
13,332 | — | 13,332 | |||||||||||||
|
|
|
|
|
|
|
|||||||||||
| Properties, plants, and equipment, net |
7,190 | — | 7,190 | |||||||||||||
|
|
|
|
|
|
|
|||||||||||
| Investments |
1,051 | — | 1,051 | |||||||||||||
| Deferred income taxes |
655 | — | 655 | |||||||||||||
| Other noncurrent assets |
1,444 | — | 1,444 | |||||||||||||
|
|
|
|
|
|
|
|||||||||||
| Total assets |
$ | 14,860 | $ | (148 | ) | $ | 14,712 | |||||||||
|
|
|
|
|
|
|
|||||||||||
| LIABILITIES |
||||||||||||||||
| Current liabilities: |
||||||||||||||||
| Accounts payable, trade |
$ | 1,403 | $ | — | $ | 1,403 | ||||||||||
| Accrued compensation and retirement costs |
395 | — | 395 | |||||||||||||
| Taxes, including income taxes |
91 | — | 91 | |||||||||||||
| Fair value of derivative instruments |
103 | — | 103 | |||||||||||||
| Liabilities held for sale |
242 | (242 | ) | (i) | — | |||||||||||
| Other liabilities |
525 | 8 | (j) | 533 | ||||||||||||
| Long-term debt due within one year |
2 | — | 2 | |||||||||||||
|
|
|
|
|
|
|
|||||||||||
| Total current liabilities |
2,761 | (234 | ) | 2,527 | ||||||||||||
|
|
|
|
|
|
|
|||||||||||
| Long-term debt, less amount due within one year |
2,463 | — | 2,463 | |||||||||||||
| Accrued pension benefits |
1,492 | — | 1,492 | |||||||||||||
| Accrued other postretirement benefits |
744 | — | 744 | |||||||||||||
| Asset retirement obligations |
625 | — | 625 | |||||||||||||
| Environmental remediation |
293 | — | 293 | |||||||||||||
| Fair value of derivative instruments |
742 | — | 742 | |||||||||||||
| Noncurrent income taxes |
209 | — | 209 | |||||||||||||
| Other noncurrent liabilities and deferred credits |
515 | 55 | (k) | 570 | ||||||||||||
|
|
|
|
|
|
|
|||||||||||
| Total liabilities |
9,844 | (179 | ) | 9,665 | ||||||||||||
|
|
|
|
|
|
|
|||||||||||
| EQUITY |
||||||||||||||||
| Alcoa Corporation shareholders’ equity: |
||||||||||||||||
| Common stock |
2 | — | 2 | |||||||||||||
| Additional capital |
9,663 | — | 9,663 | |||||||||||||
| Retained earnings (deficit) |
(725 | ) | 31 | (l) | (694 | ) | ||||||||||
| Accumulated other comprehensive loss |
(5,629 | ) | — | (5,629 | ) | |||||||||||
|
|
|
|
|
|
|
|||||||||||
| Total Alcoa Corporation shareholders’ equity |
3,311 | 31 | 3,342 | |||||||||||||
|
|
|
|
|
|
|
|||||||||||
| Noncontrolling interest |
1,705 | — | 1,705 | |||||||||||||
|
|
|
|
|
|
|
|||||||||||
| Total equity |
5,016 | 31 | 5,047 | |||||||||||||
|
|
|
|
|
|
|
|||||||||||
| Total liabilities and equity |
$ | 14,860 | $ | (148 | ) | $ | 14,712 | |||||||||
|
|
|
|
|
|
|
|||||||||||
Notes to Unaudited Pro Forma Condensed Consolidated Financial Information
(in millions, except per share information)
Note 1 — Basis of Presentation
The historical consolidated financial statements have been adjusted in the unaudited pro forma condensed consolidated financial information to give effect to pro forma adjustments. The pro forma condensed consolidated financial information does not necessarily reflect what the Company’s financial condition or results of operations would have been had the Sale occurred on the dates indicated. The actual financial position and results of operations may differ significantly from the pro forma amounts reflected herein due to a variety of factors.
Note 2 – Pro Forma Adjustments
| (a) | Represents the net impact to sales as a result of the Sale by removing $1,115 of historical third-party sales and adding $322 of new third-party sales of power and metal based on sales agreements with Kaiser. |
| (b) | Represents the net impact to cost of goods sold as a result of the Sale by removing $1,025 related to historical cost of goods sold and adding $336 of cost of goods sold related to new power and metal sales to Kaiser. |
| (c) | Represents the removal of selling, general administrative, and other expenses. |
| (d) | Represents the removal of research and development expenses. |
| (e) | Represents the removal of provision for depreciation, depletion and amortization. |
| (f) | Represents the removal of other expenses of $10 and the recognition of an estimated gain on the Sale of $31. |
| (g) | There is no income tax impact related to the pro forma adjustments for the year ended December 31, 2020. Alcoa Warrick LLC, the United States legal entity holding the Warrick Rolling Mill, has a full valuation allowance and has sufficient net operating losses to offset the estimated gain to be recorded upon the closing of the Sale. |
| (h) | Represents the cash proceeds from the Sale of $587 less $87 for initial site separation and transaction costs, as well as working capital adjustments. |
| (i) | Represents the removal of assets and liabilities held for the Sale as of December 31, 2020. |
| (j) | Represents the recognition of a liability for transaction costs not paid at the closing of the Sale. |
| (k) | Represents the recognition of additional obligations related to site separation costs which will be paid after the closing of the Sale. |
| (l) | Represents the recognition of the estimated gain upon the closing of the Sale. |