DBRS Places Alcoa Ratings Under Review-Developing Following Announcement of Plan to Separate Into Two Publicly Traded Companies

DBRS Limited (DBRS) has today placed the BBB Issuer Rating and Senior Unsecured Debt ratings of Alcoa Inc. (Alcoa or the Company) Under Review with Developing Implications, following the Company’s announcement that its Board of Directors has unanimously approved a plan to separate into two independent, publicly traded companies. Alcoa indicates that it is targeting to complete the separation in the second half of 2016.

One of the two go-forward entities will be focused on Alcoa’s bauxite mining, alumina refining and aluminum production assets (Upstream company) and the other will provide multi-material products and solutions with 157 globally operating locations and approximately 43,000 employees largely aligned with the Company’s current Global Rolled Products, Engineered Products and Solutions and Transportation and Construction Solutions units (Downstream company).

At the time of the announcement of Alcoa’s intent to separate into Upstream and Downstream companies, it did not provide details of the going forward entities, including their capital structure and other matters. In addition, the transaction is subject to certain conditions, including obtaining final approval by Alcoa’s board of directors, receipt of a favourable opinion of legal counsel with respect to the tax-free nature of the transaction for U.S. federal income tax purposes and effectiveness of a Form 10 registration statement to be filed with the U.S. Securities and Exchange Commission. As well, Alcoa may, at any time and for any reason until the proposed transaction is complete, abandon the separation or modify or change its terms. Accordingly, DBRS is placing its Alcoa ratings Under Review with Developing Implications until it can ascertain further details about the proposed transaction.

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 methodologies are Rating Companies in the Mining Industry, Rating Companies in the Industrial Products Industry, DBRS Criteria: Commercial Paper Liquidity Support for Non-Bank Issuers and Preferred Share and Hybrid Criteria for Corporate Issuers, which can be found on our website under Methodologies.

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