Item 8.01
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Other Information
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On September 16, 2016, Alcoa Upstream Corporation (Holdings), a wholly
owned subsidiary of the Company, and Alcoa Nederland Holding B.V. (the Borrower), a wholly owned subsidiary of Holdings entered into a secured revolving credit agreement with a syndicate of lenders and issuers named therein, and JPMorgan
Chase Bank, N.A., as administrative agent for the lenders and issuers (the Revolving Credit Agreement). The Revolving Credit Agreement provides for revolving loans to be made available in an aggregate principal amount of up to $1.5
billion (the Revolving Credit Facility), of which $750 million of the outstanding loans may be denominated in Euros. In addition, up to $750 million may be utilized for the issuance of letters of credit, with a sublimit of $400 million
for any letters of credit issued for the account of Holdings or any domestic subsidiary (the US Letters of Credit). The proceeds of the Revolving Credit Facility are to be used for transaction costs associated with the previously
announced plan
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to separate the Company into two standalone publicly traded companies, to provide working capital and/or for other general corporate purposes of Holdings and its subsidiaries. The Revolving
Credit Facility will not be available for borrowings until the date on which certain conditions are satisfied (or waived in accordance with the terms of the Revolving Credit Agreement), including the completion of such separation in a manner
consistent, in all material respects, with the description provided to the lenders under the Revolving Credit Facility. In particular, if such conditions have not been satisfied (or waived in accordance with the terms of the Revolving Credit
Agreement) on or before June 30, 2017, or if prior to the satisfaction of such conditions, Holdings receives a public corporate family rating from Moodys of B1 or lower or a public corporate credit rating of B+ or lower from S&P, the
commitments under the Revolving Credit Agreement will be terminated.
The Revolving Credit Facility will mature on the earlier of (i) the date that is
five years following the date on or after which the conditions for funding are first satisfied and (ii) December 31, 2021, with certain extension rights in the discretion of each lender.
Borrowings under the Revolving Credit Facility bear interest at a rate per annum equal to an applicable margin, plus, at the Borrowers option, either
(a) an adjusted LIBOR rate or (b) a base rate determined by reference to the highest of (1) the prime rate of JPMorgan Chase Bank, N.A., (2) the greater of the federal funds effective rate and the overnight bank funding rate, plus 0.5% and (3) the
one month adjusted LIBOR rate plus 1% per annum. The applicable margin for LIBOR loans and base rate loans will vary based on Holdings leverage ratio and will range from 1.75% to 2.50% for LIBOR loans and 0.75% to 1.50% for base rate loans. In
addition to paying interest on outstanding borrowings under the Revolving Credit Facility, the Borrower will be required to pay a quarterly commitment fee based on the unused portion of the Revolving Credit Facility, which will also be determined by
Holdings leverage ratio and will range from 0.225% to 0.450%.
The Borrower will be required to pay customary letter of
credit fees and agency fees. Furthermore, an upfront fee equal to 0.375% of the aggregate amount of each lenders commitment is also payable. We agree to pay a ticking fee at a rate per annum equal to 0.125% of the total commitment, for the
period from and including the date that is 90 days following the effective date of the Revolving Credit Agreement to but excluding the earlier of (i) the date on or after which the conditions for funding are first satisfied and (ii) the date the
commitments are terminated in accordance with Revolving Credit Agreement, and payable on such date.
The Borrower may voluntarily prepay any amounts
outstanding under the Revolving Credit Facility, without penalty or premium, other than customary breakage costs with respect to LIBOR loans, and may also reduce the commitment under the Revolving Credit Facility, in whole or in part, in
each case, subject to certain minimum amounts and increments.
All obligations of Holdings or a domestic entity under the Revolving Credit Facility,
including in respect of or in connection with US Letters of Credit, are guaranteed on a senior secured basis by the Borrower, Holdings, Aluminerie Lauralco, Sàrl and the material domestic wholly-owned subsidiaries of Holdings (collectively
the US Loan Parties), subject to certain exceptions set forth in the Revolving Credit Agreement. All such obligations are secured by, subject to certain exceptions (including a limitation of pledges of equity interests in certain foreign
subsidiaries to 65%, and certain thresholds with respect to real property), a first priority lien on substantially all assets of the US Loan Parties (other than assets owned by the Borrower and Aluminerie Lauralco, Sàrl), 100% of the equity
interests of Alcoa Australian Holdings Pty Ltd. and 65% of the equity interests of both the Issuer and Aluminerie Lauralco, Sàrl.
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All other obligations under the Revolving Credit Facility are guaranteed by the US Loan Parties and the material
foreign wholly-owned subsidiaries of Holdings located in Australia, Brazil, Canada, Luxembourg, the Netherlands and Norway (collectively, the Global Loan Parties), in each case, subject to certain exceptions set forth in the Revolving
Credit Agreement. All such obligations are secured by, subject to certain exceptions (including certain thresholds with respect to real property), a first priority security interest in substantially all assets of the Global Loan Parties, including
equity interests of certain subsidiaries that directly holds equity interests in Alcoa World Alumina and Chemicals (AWAC) entities. However, no AWAC entity is a guarantor of any obligation under the Revolving Credit Facility and no asset of any AWAC
entity, or equity interests in any AWAC entity, will be pledged to secure the obligations under the Revolving Credit Facility.
The Revolving Credit
Facility contains a number of customary affirmative covenants. In addition, the Revolving Credit Facility contains a number of negative covenants (to be applicable to Holdings and its restricted subsidiaries), that, subject to certain exceptions,
include limitations on (among other things): liens, fundamental changes, sales of assets, indebtedness, entering into restrictive agreements, restricted payments, investments, loans, advances, guarantees and acquisitions, transactions with
affiliates, amendment of certain material documents, and a covenant prohibiting reductions in the ownership of AWAC entities held by the Global Loan Parties and certain other specified restricted subsidiaries of Holdings, below an agreed level.
The Revolving Credit Facility also includes financial covenants requiring the maintenance of a specified interest expense coverage ratio of not less than
5.00 to 1.00, and a leverage ratio for any period of four consecutive fiscal quarters that is not greater than 2.25 to 1.00.
The Revolving Credit
Facility contains customary events of default, including with respect to a failure to make payments under the Revolving Credit Facility, cross-default and cross-judgment default and certain bankruptcy and insolvency events.
The foregoing description of the Revolving Credit Facility is not complete and is subject to, and qualified in its entirety by reference to, the full text of
the Revolving Credit Agreement, which is attached hereto as Exhibit 99.1 and is incorporated herein by reference. The representations, warranties and covenants contained in the Revolving Credit Agreement were made only for purposes of that agreement
and as of specific dates and were solely for the benefit of the parties to the Revolving Credit Agreement. Information concerning the subject matter of the representations, warranties and covenants may change after the date of the Revolving Credit
Agreement.
In the ordinary course of their respective businesses, the lenders and issuers under the Revolving Credit Facility, or their affiliates, have
performed, and may in the future perform, commercial banking, investment banking, trust, advisory or other financial services for Holdings and its affiliates for which they have received, and will receive, customary fees and expenses.
Forward-Looking Statements
This communication 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
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words of similar meaning. All statements that reflect the Companys expectations, assumptions or projections about the future, other than statements of historical fact, are forward-looking
statements, including, without limitation, statements regarding the separation. Forward-looking statements are not guarantees of future performance and are subject to risks, uncertainties, and changes in circumstances that are difficult to predict.
Although the Company 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. Such risks and uncertainties include, but are not limited to: (a) uncertainties as to the timing of the separation and whether it will
be completed; (b) the possibility that various closing conditions for the separation may not be satisfied; (c) the outcome of contingencies, including legal proceedings; (d) the impact of the separation on the businesses of the Company; (e) the risk
that the businesses will not be separated successfully or such separation may be more difficult, time-consuming or costly than expected, which could result in additional demands on the Companys resources, systems, procedures and controls,
disruption of its ongoing business and diversion of managements attention from other business concerns; and (f) the other risk factors discussed in the Companys Form 10-K for the year ended December 31, 2015, and other reports filed by
the Company with the U.S. Securities and Exchange Commission. The Company 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.