PITTSBURGH--(BUSINESS WIRE)--
Alcoa Corporation (NYSE:AA) today made discretionary contributions to
its U.S. pension plans of $500 million, the gross proceeds of a recently closed
debt offering.
On May 17, 2018, Alcoa Nederland Holding B.V., a wholly-owned subsidiary
of Alcoa, closed its offering of $500 million aggregate principal amount
of 6.125 percent senior notes due 2028. The notes were 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.
“This discretionary funding is in complete alignment with our strategic
priority to strengthen the balance sheet, as it reduces near-term
pension funding risk using a fixed-rate, 10-year maturity instrument,”
said Executive Vice President and Chief Financial Officer William
Oplinger. “Further, because the debt increase is offset by a lower net
pension liability, it is leverage neutral and does not impact our 2018
capital allocation strategy.”
As the Company has previously publicly stated, including in its May
2018 investor presentation, Alcoa’s 2018 capital allocation
framework is to:
-
Maintain liquidity with a cash balance greater than $1 billion;
-
Spend approximately $300 million in sustaining capital expenditures;
-
Drive value creation through approximately $150 million in
return-seeking capital expenditures;
-
Optimize liabilities by reducing debt and pension/other postretirement
employee benefits liabilities by a combined approximately $300
million, plus additional reductions with 50 percent of excess cash
above $1 billion cash balance; and
-
Return cash to stockholders using the remaining 50 percent of excess
cash above the $1 billion cash balance.
In April 2018, Alcoa optimized roughly one third of its targeted $300
million in liabilities when the Company purchased group annuity
contracts and transferred approximately $555 million in obligations, and
related assets, of defined benefit pension plans in Canada. As part of
the annuity agreements, Alcoa contributed approximately $95 million to
facilitate the annuity transaction and maintain the funding level of the
remaining plan obligations.
In the remainder of 2018, Alcoa expects to achieve further liability
optimization of approximately $200 million, either through discretionary
contributions to its pension plans, reducing funded debt in Brazil, or
both.
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 nearly 130 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,”
“intends,” “may,” “outlook,” “plans,” “projects,” “seeks,” “sees,”
“should,” “targets,” “will,” “would,” or other words of similar meaning.
All statements that reflect Alcoa’s expectations, assumptions or
projections about the future, other than statements of historical fact,
are forward-looking statements. 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 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 our filings with the
Securities and Exchange Commission. Alcoa 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.
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Alcoa Corporation
Investor Contact
James Dwyer, 412-992-5450
James.Dwyer@alcoa.com
or
Media
Contact
Jim Beck, 412-315-2909
Jim.Beck@alcoa.com
Source: Alcoa Corporation