Summary
This 8-K filing from Alcoa Inc. (the filing company, which is the predecessor to Howmet Aerospace Inc. in this context) announces the entry into a new Five-Year Revolving Credit Agreement, effective July 25, 2011. This agreement establishes a $3.75 billion senior unsecured revolving credit facility, intended for general corporate purposes, including working capital and supporting its commercial paper program. The new facility replaces an existing agreement set to mature in October 2012 and provides Alcoa with enhanced financial flexibility and a significant liquidity backstop. Key terms of the new credit facility include a five-year maturity (extensible by two one-year periods), unsecured and unsubordinated ranking, and the ability to borrow in USD or EUR. Interest rates are tied to LIBOR or a base rate plus an applicable margin determined by Alcoa's credit ratings, with specific rates outlined for base rate loans, LIBOR loans, undrawn letters of credit, and a facility fee. The agreement also includes customary covenants, such as leverage ratio requirements and limitations on mergers and asset sales, and details events of default that could lead to acceleration of obligations.
Key Highlights
- 1Alcoa Inc. entered into a new $3.75 billion Five-Year Revolving Credit Agreement.
- 2The new credit facility replaces a prior agreement and extends its maturity to July 25, 2016 (with extension options).
- 3Proceeds are designated for working capital and general corporate purposes, including support for Alcoa's commercial paper program.
- 4The facility is unsecured and unsubordinated, ranking pari passu with other senior unsecured debt.
- 5Borrowings can be denominated in USD or EUR, with interest rates based on LIBOR or base rate plus a margin tied to credit ratings.
- 6The agreement includes customary covenants such as leverage ratio limitations and restrictions on mergers and asset sales.
- 7Specific fees are outlined for facility commitment, undrawn letters of credit, and interest on borrowings.