Item 1.01
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Entry Into a Material Definitive Agreement.
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On May 13, 2020, Arconic Corporation (the Company) completed the issuance and sale of $700 million aggregate principal amount of 6.000%
First Lien Notes due 2025 (the Notes). The offering and sale of the Notes was made through a private placement to qualified institutional buyers in accordance with Rule 144A under the Securities Act of 1933, as amended (the
Securities Act), and outside the United States to non-U.S. persons in accordance with Regulation S under the Securities Act. The Notes were issued pursuant to the Indenture (as defined below).
On May 13, 2020, in connection with the offering of the Notes, the Company also replaced its cash flow revolver with a new senior secured asset-based
credit facility with aggregate commitments of $800 million, pursuant to a credit agreement (the ABL Credit Agreement) with a syndicate of lenders named therein and Deutsche Bank AG New York Branch, as administrative agent and
collateral agent (the ABL Administrative Agent). Availability under the ABL Facility is subject to a borrowing base calculation generally based upon a set percentage of eligible accounts receivable and inventory, less customary reserves.
The Company estimates that the net proceeds from the sale of the Notes are approximately $689,000,000, after deducting discounts and commissions to the
initial purchasers and estimated expenses of the offering. The Company used the net proceeds from the offering, together with cash on hand, (i) to prepay in full the $600 million of obligations outstanding under its senior secured first-lien
term loan B facility, and (ii) to prepay in full the approximately $500 million of obligations outstanding under its revolving credit facility and terminate in full the commitments thereunder.
Indenture
The Notes were issued
pursuant to an Indenture, dated May 13, 2020 (the Indenture), among the Company, the guarantors party thereto, U.S. Bank National Association, as trustee (the Trustee), U.S. Bank National Association, as notes collateral
agent (the Notes Collateral Agent), and U.S. Bank National Association, as registrar, paying agent and authenticating agent.
The Notes mature on May 15, 2025. Interest on the Notes accrues at 6.000% per annum and will be paid semi-annually, in arrears, on
May 15 and November 15 of each year, commencing on November 15, 2020.
The Notes are unconditionally guaranteed, jointly
and severally, by each of the Companys wholly owned domestic subsidiaries that are guarantors (the Guarantors) under the ABL Credit Agreement. Subject to certain limitations, the Notes are secured on a first priority basis by the
notes priority collateral (generally consisting of the Companys and the Guarantors equipment, material owned U.S. real property, intellectual property, certain stock, and other tangible and intangible personal property, in each case,
subject to certain exceptions) (the Notes Priority Collateral) and on a second-priority basis by the ABL priority collateral (generally consisting of substantially all of the accounts receivable, inventory, deposit accounts, securities
accounts, commodities accounts and cash assets of the Company and the Guarantors, and the proceeds thereof) (the ABL Priority Collateral), subject to the ABL-Notes Intercreditor Agreement (as
defined below) and certain permitted liens. The Company and the Guarantors entered into certain collateral agreements concurrently with the effectiveness of the Indenture. Each of the Guarantors will be released from their Note guarantees upon the
occurrence of certain events, including the release of such Guarantor from its obligations as Guarantor under the ABL Credit Agreement.
On and after May 15, 2022, the Company may redeem all or a portion of the Notes at the redemption prices (expressed in percentages of
principal amount on the redemption date) set forth under the Indenture, plus accrued and unpaid interest, if any, to, but excluding, the date of redemption. At any time prior to such date, the Company may redeem all or a portion of the Notes at the
make-whole redemption prices set forth under the Indenture. Additionally, at any time prior to May 15, 2022, the Company may, on one or more occasions, redeem up to 40% of the aggregate principal amount of the Notes at a redemption
price equal to 106.000% of the principal amount of the Notes to be redeemed, plus accrued and unpaid interest, if any, to, but excluding, the redemption date, with the net cash proceeds of certain equity offerings.
The Indenture limits the Companys and its restricted subsidiaries ability to, among other things, make investments, loans,
advances, guarantees and acquisitions; incur or guarantee additional debt and issue certain disqualified equity interests; make certain restricted payments, including a limit on dividends on equity securities or