Pittsburgh-based Alcoa has priced a $2.6 billion senior note offering to finance the cash portion of its acquisition of South32’s bauxite, alumina and aluminum assets, a move that will advance one of the largest deals in the company’s recent history.
The notes will be issued by two companies, both wholly-owned Alcoa subsidiaries, and will be guaranteed on a senior unsecured basis by Alcoa and certain subsidiaries. Alumina Pty Ltd will issue notes consisting of $1.5 billion aggregate principal amount of 6.625 percent senior notes due 2034. Alcoa Nederland Holding B.V. will issue notes consisting of $1.1 billion aggregate principal amount of 6.875 percent senior notes due 2036.
The sale of the notes is expected to complete on Sept. 23, subject to customary closing conditions. They will be sold with related guarantees to qualified institutional buyers. Net proceeds will partially fund the approximately $3.1 billion cash portion of its purchase of South32’s interests in certain bauxite, alumina and aluminum smelter operations and pay for related fees and expenses.
Australia-based South32 is a global mining and metals company. The sale is subject to the satisfaction or waiver of certain conditions, including required regulatory approvals, other customary closing conditions and the approval of South32’s shareholders.