8-KOther Events

Howmet Aerospace Inc. 8-K Report, Corporate Update (May 31, 2011)

Filed May 31, 2011For Securities:HWM

Summary

This Form 8-K filing by Alcoa Inc. (the predecessor to Howmet Aerospace Inc.) on May 31, 2011, primarily announces the company's decision to redeem its outstanding 5.375% Notes due 2013, with an aggregate principal amount of $283,902,000. The redemption is scheduled for June 28, 2011, and the redemption price will be determined based on specific provisions within the notes, including a floor of 100% of the principal amount and a calculation involving present values discounted against U.S. Treasury rates plus 20 basis points, in addition to accrued interest. Furthermore, Alcoa expects to incur an after-tax net charge of approximately $30 million in the second quarter of 2011. This charge relates to the early retirement of debt, including the redemption of these 5.375% Notes and the settlement of associated interest rate swaps, which follows the completion of prior tender offers for these and other notes. Investors should note the forward-looking statements and associated risks detailed in the filing, particularly concerning market conditions and interest rate fluctuations.

Key Highlights

  • 1Alcoa Inc. is redeeming all outstanding 5.375% Notes due 2013.
  • 2The aggregate principal amount of the notes to be redeemed is $283,902,000.
  • 3The redemption date for these notes is June 28, 2011.
  • 4The redemption price will be the greater of par value or a present value calculation plus accrued interest.
  • 5An after-tax net charge of approximately $30 million is expected in Q2 2011 due to debt retirement and swap settlements.
  • 6This action is part of Alcoa's broader debt management strategy following prior tender offers.

Frequently Asked Questions

The main event is Alcoa Inc.'s decision to redeem all of its outstanding 5.375% Notes due 2013, totaling $283,902,000 in principal amount. The redemption is set for June 28, 2011.

Alcoa anticipates recognizing an after-tax net charge of approximately $30 million in the second quarter of 2011. This charge is associated with the early retirement of debt and the settlement of related interest rate swaps.

The redemption price will be the greater of: (i) 100% of the principal amount of the notes, or (ii) the sum of the present values of the remaining scheduled payments, discounted to the redemption date using a reference rate for a comparable U.S. Treasury security plus 20 basis points. Accrued and unpaid interest to the redemption date will also be paid.

Key risks include material adverse changes in aluminum industry conditions (supply, demand, LME prices), unfavorable general business and economic conditions, and disruptions in global financial markets or changes in treasury rates that could affect the redemption price calculation.