Alcoa wraps first offer, gets tenders for less than half of 6.5% notes

By Susanna Moon

Chicago, Aug. 3 - Alcoa Inc. said it completed the tender offer for its $583,467,000 principal amount of 6.5% notes due 2011. It is the first of two offers to purchase notes for up to $750 million.

Investors had tendered $253,412,000, or 43.43%, of the 6.5% notes as of 5 p.m. ET on Aug. 2, the expiration date for the first offer.

Settlement is expected to occur Aug. 3.

In the second offer, the company is offering to purchase its $516,709,000 principal amount of 6% notes due 2012 and $600 million principal amount of 5.375% notes due 2013.

The maximum amount spent on the second offer will be $484,234,165, which is $750 million minus the total purchase price of the 6.5% notes accepted in the first offer.

The maximum tender amount will be applied first to purchase 6% notes. If any is leftover, Alcoa will apply the balance to purchase 5.375% notes, subject to a sublimit of $50 million.

For each $1,000 principal amount, holders will receive $1,048.75 for the 6.5% notes and $1,042.50 for the 6% notes and 5.375% notes.

In addition, the company is offering an early tender premium of $20.00 per note in the second tender offer. The early tender date is 5 p.m. ET on Aug. 6.

The company said payments for notes purchased will include accrued interest up to but excluding the settlement date.

The second offer will expire at 5 p.m. ET on Aug. 23.

The company will fund the tender offers with the proceeds of a new issue of senior debt securities together with cash on hand, as necessary. The tender offers are subject to the satisfaction of the financing condition.

Separately, Alcoa will repay its 7.375% notes due Aug. 1, 2010 at their maturity with cash on hand.

The coordinating dealer managers are Banc of America Securities LLC (980 388-9217 or 888 292-0070) and Citigroup Global Markets Inc. (800 558-3745 or 212 723-6106). The co-dealer managers are Deutsche Bank Securities Inc. (212 250-2955 or 866 627-0391) and UBS Securities LLC (203 719-4210 or 888 719-4210).

The depositary and information agent in all places other than Luxembourg is Global Bondholder Services Corp. (866 804-2200). The Luxembourg agent is Deutsche Bank Luxembourg SA (00352-421-22-639).

Alcoa is a Pittsburgh-based producer of primary aluminum, fabricated aluminum and alumina.

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