On September 27, 2016, the Issuer completed an offering of
$750,000,000 aggregate principal amount of 6.75% senior notes due 2024 (the 2024 notes) and $500,000,000 aggregate principal amount of 7.00% senior notes due 2026 (the 2026 notes and, together with the 2024 notes, the
notes). The notes were issued pursuant to an indenture (the Indenture) among (i) the Issuer, (ii) Alcoa Corporation and (iii) The Bank of New York Mellon Trust Company, National Association, as trustee (the
Trustee).
Concurrently with the closing, the Issuer deposited (i) the net proceeds from the offering of notes and
(ii) an additional amount of cash sufficient to fund the redemption of the notes and to pay all regularly scheduled interest on the notes to, but not including, the latest possible redemption date for the Special Mandatory Redemption (as
defined below) and to pay the maximum possible Special Mandatory Redemption Price (as defined below) into segregated escrow accounts. The release of the escrowed funds will be subject to the conditions set forth in the escrow agreements among the
Issuer, the Trustee and SunTrust Bank, as escrow agent (the Escrow Agent) and securities intermediary, including the delivery of an officers certificate to the Trustee and Escrow Agent to the effect, among other things, that the
separation of the Alcoa Corporation Business (as defined in the Indenture) from the Company and the distribution of Alcoa Corporations common stock to the Companys stockholders will occur substantially concurrently with the release of
the escrowed funds and that each Initial Subsidiary Guarantor (as defined in the Indenture) has executed and delivered to the Trustee a supplemental indenture to the Indenture to provide a guarantee and that such guarantee will be effective from and
after the separation and distribution. If the separation and distribution have not been completed on or before April 3, 2017 (the Outside Date) or, prior to the Outside Date, the Issuer has delivered to the Trustee and the Escrow
Agent an officers certificate stating that the separation and distribution have been abandoned or that the conditions for the release of funds will not be satisfied, the Issuer must redeem the notes (the Special Mandatory
Redemption) at a price equal to (i) 100% of the principal amount of the notes if the redemption occurs on or before December 31, 2016 or (b) 101% of the principal amount of the notes otherwise, in each case, plus accrued and
unpaid interest to, but not including, the date on which the Special Mandatory Redemption occurs (the Special Mandatory Redemption Price).
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Prior to the satisfaction of the conditions for the release of funds, the notes are secured by a
first-priority lien on the funds held in the escrow accounts. Prior to the distribution date, the notes are guaranteed on a senior unsecured basis by Alcoa Corporation only. From and after the distribution date, the notes will be guaranteed on a
senior unsecured basis by Alcoa Corporation and Alcoa Corporations subsidiaries that are guarantors under the secured revolving credit agreement among the Issuer, Alcoa Corporation and a syndicate of lenders and issuers named therein and
JPMorgan Chase Bank, N.A., as administrative agent, dated as of September 16, 2016 (the Revolving Credit Agreement) on the distribution date, subject to certain exceptions (the subsidiary guarantors and, together with
Alcoa Corporation, the guarantors). Each of the subsidiary guarantors will be released from their note guarantees upon the occurrence of certain events, including the release of such guarantor from its obligations as a guarantor under
the Revolving Credit Agreement.
The Indenture contains certain restrictive covenants that will, after the separation and distribution,
limit the Issuers and each guarantors ability to, among other things, incur, assume or guarantee debt or issue certain disqualified equity interests and preferred shares; pay dividends on or make other distributions in respect of capital
stock and make other restricted payments and investments; sell or transfer certain assets; create liens on assets to secure debt unless the notes are secured equally and ratably; enter into certain transactions with our affiliates; restrict
dividends and other payments by certain of our subsidiaries; consolidate, merge, sell or otherwise dispose of all or substantially all of our assets; and take any actions that would reduce our ownership of AWAC entities below an agreed level. These
covenants are subject to a number of limitations and exceptions. The Indenture also contains customary events of default.
The notes may
be redeemed at the Issuers option, in whole or in part, at any time and from time to time after September 30, 2019, in the case of the 2024 notes, and September 30, 2021, in the case of the 2026 notes, at the applicable redemption
prices that will be set forth in the Indenture. At any time prior to such dates, the Issuer will be entitled at its option to redeem all, but not less than all, of the notes at a make-whole redemption price that will be set forth in the
Indenture. Additionally, at any time prior to September 30, 2019, the Issuer may, on one or more occasions, redeem up to 40% of the aggregate principal amount of the notes of each series at the applicable redemption prices set forth in the
Indenture with the net cash proceeds of certain equity offerings. The notes may also be redeemed at the option of the Issuer at any time in connection with certain changes in withholding taxes. Upon the occurrence of a change of control, if certain
other conditions are met, the Issuer must offer to purchase the notes at a purchase price in cash equal to 101% of the principal amount thereof on the date of purchase, plus accrued and unpaid interest.
Upon release from escrow, the Issuer intends to use a substantial portion of the net proceeds of the issuance of the notes to make a payment
to the Company to fund the transfer of certain assets from the Company to the Issuer in connection with the separation and distribution, and remaining net proceeds may be used for general corporate purposes.
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The foregoing description of the Indenture is not complete and is subject to, and qualified in
its entirety by reference to, the full text of the Indenture, which is attached hereto as Exhibit 99.2 and is incorporated herein by reference.