DBRS Comments on Alcoa’s $1 billion Asset Sale

DBRS today notes that Alcoa Inc. (Alcoa or the Company) is exiting a special purpose vehicle formed together with Aluminum Corporation of China of China (Chinalco) to purchase shares in Rio Tinto plc. Alcoa expects to receive a total of $1.0 billion in cash payable in three installments over a six-month period ending July 31, 2009, resulting in a modest after-loss of $0.1 billion on their original $1.2 billion investment. DBRS views this as a positive development for Alcoa, freeing up cash to support the completion of the Company’s expansion projects in Brazil and other financial needs. Nonetheless, the closing of the transaction is not expected to change Alcoa’s Senior Unsecured Debt rating at A (low) or Alcoa’s Commercial Paper rating at R-1(low).

Alcoa also announced that Chinalco and Alcoa will continue to explore opportunities to expand their commercial relationship by identifying strategic ventures that will benefit from their respective strengths in bauxite, alumina, aluminum and fabricated products. DBRS notes that Alcoa has worked with Chinalco for many years and that an ongoing relationship will be beneficial to Alcoa in serving important Asian as well as other markets.

Notes:
The ratings of Alcoa are based on public information.
All figures are in U.S. dollars unless otherwise noted.

The applicable methodology is Rating Mining, which can be found on our website under Methodologies.

This is a Corporate rating.