DBRS Finalizes Provisional BBB Rating on Alcoa New Debt Issue, Negative Trend

DBRS has today finalized its provisional rating of the senior unsecured notes (New Notes) to be issued by Alcoa Inc. (Alcoa or the Company) at BBB with a Negative trend. The New Notes were provisionally rated by DBRS on September 17, 2014 (see “DBRS Assigns Provisional BBB Rating to Alcoa New Debt Issue, Negative Trend”). Alcoa has priced the $1.25 billion aggregate principal amount of the 5.125% New Notes due October 1, 2024, and has filed a prospectus supplement dated September 17, 2014, to its base shelf prospectus dated July 30, 2014, that is consistent with its preliminary prospectus supplement dated September 16, 2014.

The $1.25 billion New Notes form part of the financing of Alcoa’s $2.85 billion Firth Rixson Limited (Firth Rixson) acquisition and related fees and expenses. The offering of New Notes is expected to close on September 22, 2014, subject to customary closing conditions. Alcoa will be required to redeem the New Notes in whole, but not in part, if the Firth Rixson acquisition does not proceed prior to April 1, 2015.

The Firth Rixson acquisition transaction remains subject to customary conditions and receipt of regulatory approvals, and is expected by Alcoa to close by the end of 2014.

Alcoa continues to be challenged to stabilize its financial metrics with what DBRS sees as a general weakness in world commodity markets, including aluminum, and heightened price volatility in the near to medium term.

Notes:
All figures are in U.S. dollars unless otherwise noted.

The related regulatory disclosures pursuant to the National Instrument 25-101 Designated Rating Organizations are hereby incorporated by reference and can be found by clicking on the link to the right under Related Research or by contacting us at info@dbrs.com.

The applicable methodology is Rating Companies in the Mining Industry (primary), which can be found on our website under Methodologies.

This rating is endorsed by DBRS Ratings Limited for use in the European Union.