Alcoa Corporation Announces Pension Funding After Closing of Debt Offering
May 22 2018 - 5:05PM
Business Wire
Alcoa Corporation (NYSE:AA) today made discretionary
contributions to its U.S. pension plans of $500 million, the gross
proceeds of a recently closed debt offering.
On May 17, 2018, Alcoa Nederland Holding B.V., a wholly-owned
subsidiary of Alcoa, closed its offering of $500 million aggregate
principal amount of 6.125 percent senior notes due 2028. The notes
were sold in a private placement to qualified institutional buyers
in accordance with Rule 144A under the Securities Act of 1933, as
amended, (the “Securities Act”) and to certain non-United States
persons in offshore transactions in accordance with Regulation S
under the Securities Act.
“This discretionary funding is in complete alignment with our
strategic priority to strengthen the balance sheet, as it reduces
near-term pension funding risk using a fixed-rate, 10-year maturity
instrument,” said Executive Vice President and Chief Financial
Officer William Oplinger. “Further, because the debt increase is
offset by a lower net pension liability, it is leverage neutral and
does not impact our 2018 capital allocation strategy.”
As the Company has previously publicly stated, including in its
May 2018 investor presentation, Alcoa’s 2018 capital allocation
framework is to:
- Maintain liquidity with a cash balance
greater than $1 billion;
- Spend approximately $300 million in
sustaining capital expenditures;
- Drive value creation through
approximately $150 million in return-seeking capital
expenditures;
- Optimize liabilities by reducing debt
and pension/other postretirement employee benefits liabilities by a
combined approximately $300 million, plus additional reductions
with 50 percent of excess cash above $1 billion cash balance;
and
- Return cash to stockholders using the
remaining 50 percent of excess cash above the $1 billion cash
balance.
In April 2018, Alcoa optimized roughly one third of its targeted
$300 million in liabilities when the Company purchased group
annuity contracts and transferred approximately $555 million in
obligations, and related assets, of defined benefit pension plans
in Canada. As part of the annuity agreements, Alcoa contributed
approximately $95 million to facilitate the annuity transaction and
maintain the funding level of the remaining plan obligations.
In the remainder of 2018, Alcoa expects to achieve further
liability optimization of approximately $200 million, either
through discretionary contributions to its pension plans, reducing
funded debt in Brazil, or both.
About Alcoa
Alcoa is a global industry leader in bauxite, alumina, and
aluminum products, and is built on a foundation of strong values
and operating excellence dating back nearly 130 years to the
world-changing discovery that made aluminum an affordable and vital
part of modern life. Since developing the aluminum industry, and
throughout our history, our talented Alcoans have followed on with
breakthrough innovations and best practices that have led to
efficiency, safety, sustainability, and stronger communities
wherever we operate.
Forward-Looking Statements
This press release contains statements that relate to future
events and expectations and as such constitute forward-looking
statements within the meaning of the Private Securities Litigation
Reform Act of 1995. Forward-looking statements include those
containing such words as “anticipates,” “believes,” “could,”
“estimates,” “expects,” “forecasts,” “intends,” “may,” “outlook,”
“plans,” “projects,” “seeks,” “sees,” “should,” “targets,” “will,”
“would,” or other words of similar meaning. All statements that
reflect Alcoa’s expectations, assumptions or projections about the
future, other than statements of historical fact, are
forward-looking statements. Forward-looking statements are not
guarantees of future performance and are subject to known and
unknown risks, uncertainties, and changes in circumstances that are
difficult to predict. Although Alcoa believes that the expectations
reflected in any forward-looking statements are based on reasonable
assumptions, it can give no assurance that these expectations will
be attained and it is possible that actual results may differ
materially from those indicated by these forward-looking statements
due to a variety of risks and uncertainties. Additional information
concerning factors that could cause actual results to differ
materially from those projected in the forward-looking statements
is contained in our filings with the Securities and Exchange
Commission. Alcoa disclaims any obligation to update publicly any
forward-looking statements, whether in response to new information,
future events or otherwise, except as required by applicable
law.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20180522006381/en/
Alcoa CorporationInvestor ContactJames Dwyer,
412-992-5450James.Dwyer@alcoa.comorMedia
ContactJim Beck, 412-315-2909Jim.Beck@alcoa.com
Alcoa (NYSE:AA)
Historical Stock Chart
From Apr 2024 to May 2024
Alcoa (NYSE:AA)
Historical Stock Chart
From May 2023 to May 2024