Summary
Howmet Aerospace Inc. (formerly Alcoa Inc. as indicated by the filing date and name) announced the settlement of a significant civil lawsuit with Aluminium Bahrain B.S.C. (Alba) for $85 million. This settlement resolves a case pending since 2008 and represents Alcoa's effort to avoid further litigation expenses. The company has recorded charges related to this settlement and anticipates potential additional charges pending outcomes of investigations by the Department of Justice and the Securities and Exchange Commission. In addition to resolving the lawsuit, Alcoa and Alba have entered into a new long-term alumina supply agreement. This indicates a renewed commercial relationship, highlighting Alcoa's strategy to leverage its product quality and logistics to serve regional customers. Investors should note the financial impact of the settlement, the ongoing regulatory investigations, and the renewed focus on commercial partnerships.
Key Highlights
- 1Settlement of civil lawsuit with Aluminium Bahrain B.S.C. (Alba) for $85 million cash payment.
- 2Settlement amount is within previously disclosed estimated reasonably possible losses.
- 3Alcoa recorded a $40 million charge in Q3 2012 related to the settlement, in addition to a $45 million Q2 2012 charge.
- 4Potential additional after-tax charge of approximately $25-30 million may be recognized if settlements are reached with the DOJ and SEC.
- 5Alcoa and Alba have entered into a new long-term, Alumina Price Index-based supply agreement.
- 6The settlement included a stipulation of dismissal of the case with prejudice.
- 7The filing also references Alcoa's Q3 2012 earnings press release (Exhibit 99).