Published on 9/22/2016 in the Prospect News High Yield Daily.
New Issue: Alcoa prices upsized $1.25 billion of eight-, 10-year senior notes
By Paul A. Harris
Portland, Ore., Sept. 22 – Alcoa Inc. priced an upsized $1.25 billion two-part offering of senior notes (Ba3/BB-) on Thursday, according to a syndicate source.
The deal included $750 million of eight-year notes that priced at par to yield 6¾%. The yield printed on top of final yield talk, which was revised from earlier talk of 7% to 7¼%.
In addition Alcoa priced $500 million of 10-year notes at par to yield 7%. The yield printed on top of final yield talk; earlier talk was 7¼% to 7½%.
The overall deal size was increased from $1 billion, with the 10-year tranche added in a late restructuring.
Morgan Stanley & Co. LLC, J.P. Morgan Securities LLC, Citigroup Global Markets Inc. and Credit Suisse Securities (USA) LLC were the joint lead bookrunners.
The issuing entity will be wholly owned subsidiary Alcoa Nederland Holding BV.
The New York-based aluminum company plans to use the proceeds to fund the separation of Alcoa Corp. from Arconic Inc.
Alcoa Corp. will retain the business units focused on bauxite, alumina, aluminum, cast products, North American packaged rolled products and energy.
Arconic will retain the engineered products and solutions, transportation and construction solutions and rolled products segments.
Following the separation, existing Alcoa Inc. shareholders will own about 80% of the common stock of Alcoa Corp., and the remainder will be owned by Arconic.
The separation is expected to be completed before the end of the year.
| Issuer: | Alcoa Nederland Holding BV
|
| Amount: | $1.25 billion, increased from $1 billion
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| Securities: | Senior notes
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| Joint lead bookrunners: | Morgan Stanley & Co. LLC, J.P. Morgan Securities LLC, Citigroup Global Markets Inc., Credit Suisse Securities (USA) LLC
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| Bookrunners: | ABN Amro Securities (USA) LLC, BBVA Securities Inc., BNP Paribas Securities Corp., Banco Bradesco BBI SA, BofA Merrill Lynch, Deutsche Bank Securities Inc., Goldman Sachs & Co., MUFG, SMBC Nikko Securities America Inc., SunTrust Robinson Humphrey Inc.
|
| Co-managers: | ANZ Securities Inc., BNY Mellon Capital Markets LLC, PNC Capital Markets LLC, RBC Capital Markets LLC, Scotia Capital (USA) Inc., Williams Capital Group LP
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| Trade date: | Sept. 22
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| Settlement date: | Sept. 27
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| Ratings: | Moody's: Ba3
|
| S&P: BB-
|
| Distribution: | Rule 144A and Regulation S for life
|
| Marketing: | Roadshow
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|
|
| Eight-year notes
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| Amount: | $750 million
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| Maturity: | Sept. 30, 2024
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| Coupon: | 6¾%
|
| Price: | Par
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| Yield: | 6¾%
|
| Spread: | 523 bps
|
| Call: | Make-whole call at Treasuries plus 50 bps until Sept. 30, 2019 then callable at 105.063
|
| Equity clawback: | 35% at 106.75 until Sept. 30, 2019
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| Price talk: | 6¾%, revised from 7% to 7¼%
|
|
|
| 10-year notes
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| Amount: | $500 million
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| Maturity: | Sept. 30, 2026
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| Coupon: | 7%
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| Price: | Par
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| Yield: | 7%
|
| Spread: | 537 bps
|
| Call: | Make-whole call at Treasuries plus 50 bps until Sept. 30, 2021, then callable at 103.5
|
| Equity clawback: | 40% at 107 until Sept. 30, 2019
|
| Price talk: | 7%, revised from 7¼% to 7½%
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