Pittsburgh-based Alcoa said Wednesday it closed a $2.6 billion senior notes offering through two subsidiaries to finance the approximately $3.1 billion cash portion of its acquisition of South32’s bauxite, alumina, and aluminum assets.
The debt closing marks a significant financing milestone for the Pittsburgh-based aluminum giant as it awaits remaining regulatory and shareholder approvals. The closing offering consists of $1.5 million in aggregate principle issued by Alumina Pty Ltd and due 2034, and $1.1 million aggregate principle issued by Alcoa Nederland Holding B.V. due 2036. Both of the issuers are a wholly-owned subsidiary of Alcoa.
Officials said the issuers intend to use the net proceeds of the issuance of the notes, together with cash on hand, to fund the $3.1 billion cash portion of the South32 Limited acquisition of their bauxite, alumina, and aluminum smelter operations by Alcoa.
Along with the closing of the offering notes, Alcoa terminated all remaining outstanding commitments with respect to the senior unsecured 364-day bridge term loan entered into in connection with the acquisition. Completion of the acquisition is subject to satisfaction or waiver of certain conditions, including the approval of South32’s shareholders, regulatory approvals and other closing conditions.
The acquisition was announced in June and represents and implied enterprise value of approximately $4.7 billion when including net debt related to the normal course financing leases. Alcoa also agreed to provide South 32 with a contingent value right of up to $750 million.