Alcoa ends third quarter with strong liquidity, $1.9 billion of cash

By Devika Patel

Knoxville, Tenn., Oct. 11 – Alcoa Inc. is in a strong cash position at the end of the third quarter and has additional liquidity due to a $1.25 billion offering of notes that settled in September but has not yet appeared on the company’s balance sheet.

“We have very strong liquidity and ended the quarter with $1.9 billion of cash on hand. Net debt is in line with where we started the year. We have an additional $1.25 billion in gross debt due to the Alcoa Corp. issuance but that money is held in escrow until separation and therefore not included in our cash balances.” executive vice president and chief financial officer William F. Oplinger said in the company’s earnings conference call on Tuesday.

Debt issuance

As previously reported, Alcoa sold $1.25 billion of senior notes (Ba3/BB-) in a two-part offering on Sept. 22. The deal included $750 million of eight-year notes that priced at par to yield 6¾%. In addition Alcoa priced $500 million of 10-year notes at par to yield 7%.

Proceeds will fund the separation of Alcoa Corp. from Arconic Inc.

Morgan Stanley & Co. LLC, J.P. Morgan Securities LLC, Citigroup Global Markets Inc. and Credit Suisse Securities (USA) LLC were the joint lead bookrunners.

Separation

Alcoa will be wholly owned subsidiary Alcoa Nederland Holding BV. 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.

Alcoa is a New York-based aluminum company.

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