ALCOA CORP: Entering into a Material Definitive Agreement, Creating a Direct Financial Obligation or Obligation Under an Off-Balance Sheet Arrangement of a Registrant, Settlement FD Disclosure, Financial Statements and Exhibits (Form 8- K)

0

Section 1.01 Entering into a Material Definitive Agreement.

Third amendment to the credit agreement

On June 27, 2022, Alcoa Corporation (“Entries”), Alcoa Nederland Holding B.V.., a wholly owned subsidiary of Holdings (the “Borrower”), and certain subsidiaries of Holdings, have entered into a Third Amendment and Restatement Agreement (the “Third Amendment”) to the Revolving Credit Agreement, dated from September 16, 2016as amended on October 26, 2016as amended and updated at
November 14, 2017as amended and updated at November 21, 2018as amended on August 16, 2019as amended on April 21, 2020as amended on
June 24, 2020 and as amended on March 4, 2021 (the “Original Revolving Credit Agreement”), in each case, with a syndicate of lenders and issuers named therein, and JPMorgan Chase Bank, North America., as administrative agent (the “Administrative Agent”) for the lenders and issuers. The Third Amendment was entered into to modify certain terms of the Original Revolving Credit Agreement (the Original Revolving Credit Agreement, as amended by the Third Amendment, the “Amended Revolving Credit Agreement”).

The Amended Revolving Credit Agreement extends the maturity date of the Credit Facility by November 21, 2023 at June 27, 2027, with certain extension rights at the discretion of each lender. The total amount of commitments under the amended revolving credit agreement is reduced by $1.5 billion at
$1.25 billion. In addition, the Amended Revolving Credit Agreement continues to permit the Borrower, from time to time, to request existing lenders (at their discretion) or new lenders to provide one or more additional tranches of term loans or increase the total amount of revolving credit commitments, for an overall principal amount of up to $500 million.

Pursuant to the Third Amendment, each party to the loan was automatically released from its obligations under the security documents (other than the security agreement to which it is a party) and the liens granted by such parties on any security under the initial revolving credit agreement have been released and terminated. Under the Amended Revolving Credit Agreement, if Holdings or the Borrower, as the case may be, fails to achieve a designated rating of Ba1 from Moody’s and BB+ from S&P or better, in each case (the “Rating Requirement”) ) (such occurrence, a “Collateral Event”), each party to the loan will be required to execute all collateral documents at the request of the Administrative Agent or certain lenders to secure any collateral under the modified revolving credit, with regard to the obligations of the parties to the loan organized in United Stateswithin ninety (90) days from the date of the relevant collateral event and, with respect to obligations of lenders organized in a foreign jurisdiction, within one hundred and eighty (180) days from from the date of the relevant warranty event.

Borrowings under the Amended Revolving Credit Agreement bear interest at an annual rate equal to an applicable margin, plus, at the Borrower’s option, either (a)(1) for loans denominated in dollars, a SOFR rate adjusted term, either (2) for loans denominated in euros, an adjusted EURIBOR rate, or (b) in each case, a base rate determined by reference to the higher of (1) the interest rate offered by the the wall street journal as a “prime rate” in United States(2) the greater of the effective federal funds rate and the overnight bank financing rate, plus 0.5% and (3) the SOFR rate adjusted to one month plus 1.0% per annum.

Under the Amended Revolving Credit Agreement, the applicable margin for Reference Term Loans and Base Rate Loans will vary depending on the debt ratings of Holdings or the borrower, as applicable, by Moody’s, S&P and Fitch, which will range from 1.125% to 1.750% for term benchmark loans and from 0.125% to 0.750% for base rate loans. In addition to paying interest on outstanding borrowings, 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 the ratings of the Holdings or Borrowers, as the case may be, by Moody’s, S&P and Fitch, which will range from 0.100% to 0.250%.

————————————————– ——————————

In addition, the Amended Revolving Credit Agreement implements a sustainability adjustment to the applicable margin and commitment fee for the Revolving Facility payable by the Borrower which may result in a positive or negative adjustment of up to ( a) 0.050% for the applicable rate and (b) 0.010% for the commitment fee, based in each case on the targeted greenhouse gas emissions intensity, defined in metric tonnes of CO2 equivalent per tonne metric of aluminum (smelter + refining segments) and on targeted percentages of energy consumption (electricity purchased and consumed by smelters) from renewable sources, including hydro, geothermal, solar, wind and biomass.

The financial covenants require (a) maintenance of an interest expense coverage ratio of at least 4.00 to 1.00, and (b) prior to the date Holdings obtains an investment grade rating ( a “Financial Covenant Reset Event”), a maximum leverage ratio for any period of four consecutive fiscal quarters that is not greater than 3.25 to 1.00. After a financial covenant reset event, the maximum leverage ratio will no longer apply and will be replaced by a total debt to capitalization ratio that does not exceed 0.60 to 1.00. Under the Amended Revolving Credit Agreement, this maximum leverage ratio of 3.25 to 1.00 may be increased to 3.50 to 1.00 in certain circumstances.

The Amended Revolving Credit Agreement contains customary affirmative covenants, negative covenants and events of default substantially comparable to the original Revolving Credit Agreement, but provides additional flexibility, in some cases based on financial ratios, for Holdings and its subsidiaries make restricted payments, to make investments and incur debt, as described in more detail below.

The amended revolving credit agreement provides Holdings with additional flexibility for dividends and other restricted payments by allowing such payments as long as Holdings is in pro forma compliance with the maximum leverage ratio, which is available as long as no event of default continues (provided that the condition of pro forma compliance with the maximum leverage ratio ceases to apply in the event of a reset of the financial covenants).

The Amended Revolving Credit Agreement provides a broad general investment basket for the investments, so long as Holdings is in pro forma compliance with the maximum leverage ratio, which is available so long as no event of default continues (provided that the condition relating to the formal respect of the maximum leverage ratio will cease to apply in the event of a reset event of the financial covenants). This new basket replaces various general investment baskets in the original revolving credit agreement.

The Amended Revolving Credit Agreement also provides additional flexibility for the Holdings and other loan parties to incur unsecured debt, so long as the maximum leverage ratio would be satisfied on a pro forma basis (provided the condition of meeting pro forma maximum leverage ratio . . .

Item 2.03 Creation of a Direct Financial Obligation or an Obligation or

Off-balance sheet arrangement of a registrant.

The information set out under the heading “Point 1.01. Entering into a Material Definitive Agreement” of this Current Report on Form 8-K (“Form 8-K”) are incorporated by reference into this Section 2.03.

Section 7.01 Disclosure of FD Rules.

On June 29, 2022, the Company issued a press release announcing the amended revolving credit agreement. A copy of the press release is attached hereto as Exhibit 99.1 and is incorporated by reference into this Section 7.01.

The information contained in this Section 7.01, including the attached Exhibit 99.1, shall be deemed “provided” and shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended ( the “Exchange Act”), or otherwise subject to the obligations of this section, nor shall it be deemed incorporated by reference in any filing made under the Securities Act of 1933, as amended, or the Exchange Act, except as expressly provided by specific reference in such filing.

Item 9.01 Financial statements and supporting documents.


(d) Exhibits.

Exhibit
number       Description

10.1           Third Amendment and Restatement Agreement, dated as of June 27,
             2022, which includes, as Exhibit A thereto, the Revolving Credit
             Agreement, dated as of September 16, 2016, as amended as of
             October 26, 2016, as amended and restated as of November 14, 2017, as
             amended and restated as of November 21, 2018, as amended as of
             August 16, 2019, as amended as of April 21, 2020, as amended as of
             June 24, 2020, as amended as of March 4, 2021 and as amended and
             restated as of June 27, 2022, among Alcoa Corporation, Alcoa Nederland
             Holding B.V., the lenders and issuers from time to time party thereto,
             and JPMorgan Chase Bank N.A., as administrative agent for the lenders
             and issuers.

99.1           Press Release of Alcoa Corporation dated June 29, 2022

104          Cover Page Interactive Data File (embedded within the Inline XBRL
             document)



                                       3

————————————————– ——————————

© Edgar Online, source Previews

Share.

About Author

Comments are closed.