Alcoa (ASX:AAI) has announced the pricing of a US$2.6 billion ($3.6 billion) senior notes offering to finance its acquisition of South32’s (ASX:S32) bauxite, alumina, and aluminium assets.
The debt offering comprises US$1.5 billion of 6.625% senior notes due 2034 issued by subsidiary Alumina and US$1.1 billion of 6.875% senior notes due 2036 issued by Alcoa Nederland.
Both issuers are wholly owned subsidiaries of Alcoa, with the notes guaranteed on a senior unsecured basis by Alcoa and certain subsidiaries.
The sale of the notes is expected to complete on 23 September, subject to customary closing conditions.
Alcoa intends to use the net proceeds, together with cash on hand, to fund approximately US$3.1 billion in cash consideration for the acquisition.
Upon completion of the offering, the company expects to terminate any remaining outstanding commitments under its senior unsecured 364-day bridge term loan credit facility.
The transaction remains subject to South32 shareholder approval, required regulatory approvals, and customary closing conditions.
The notes and related guarantees will be sold in a private placement to qualified institutional buyers under rule 144A of the Securities Act of 1933 and to non-US persons under regulation S.
Alcoa is focused on the production of alumina and aluminium.
Write to Paula Fabe at Mining.com.au
Images: South32
