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March 2, 2009
Exit of Shining Prospect to Improve Alcoa Balance Sheet
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Alcoa to Receive More Than $1 Billion in Cash
NEW YORK--(BUSINESS WIRE)--Alcoa today announced it is exiting the Shining Prospect special purpose vehicle formed together with Chinalco to purchase shares in Rio Tinto plc. Alcoa will receive a total of $1.021 billion in cash payable in three installments over a six-month period ending July 31, 2009. Alcoa also will receive its pro rata portion of dividends paid by Rio Tinto to date since the investment was made as and when recovered by Shining Prospect.
This transaction will improve Alcoa’s cash position and result in a positive impact on the Company’s debt-to-capital ratio. The Company will record a non-cash after-tax loss of approximately $120 million on the investment in the first quarter of 2009.
“This transaction, combined with our intention to explore opportunities to expand our commercial relationship, strengthens Alcoa’s ability to weather the economic downturn,” said Klaus Kleinfeld, Alcoa President and CEO. “When the global economy recovers, the pent-up consumer and industrial demand will create a broad array of opportunities in both developed and developing regions for Chinalco and Alcoa.”
Alcoa Inc. and Aluminum Corporation of China ("Chinalco") to Explore Strategic Ventures
BEIJING & NEW YORK--(BUSINESS WIRE)--Chinalco and Alcoa jointly announced today that the two companies intend to explore opportunities to expand their commercial relationship by identifying strategic ventures that will benefit from the companies’ complementary strengths in bauxite, alumina, aluminum and fabricated products.
"Alcoa is a respected leader in our industry and a valuable friend. We intend to grow our friendship and find ways to complement each other’s business on a global basis," said Mr. Xiao Yaqing, President of Chinalco. "Alcoa is the founder of the modern aluminum industry, and Chinalco is one of the fastest-growing companies in the industry. As partners we will have many opportunities to prosper and revitalize the market."
Klaus Kleinfeld, CEO and President of Alcoa, highlighted some of those opportunities for a strategic relationship: "As governments stimulate their economies during the downturn, particularly infrastructure stimulus programs in China and the United States, the demand for high quality, high performing aluminum technologies will grow dramatically. And when the global economy recovers, the pent-up consumer and industrial demand will create a broad array of opportunities in both developed and developing regions for Chinalco and Alcoa."
Stressing the advantages of aluminum to address the current megatrends of population growth, urbanization and climate change, Kleinfeld said: "Because aluminum is a very strong, but lightweight, material that is fully recyclable it is increasingly vital in the construction industry's shift towards "green buildings" in the modern urban environment and it satisfies the quest by the transportation industry for lightweight, fuel efficient vehicles. We estimate global aluminum demand will increase 6% CAGR over the next decade, with the highest growth in Asia."
Mr. Xiao highlighted his confidence that an expanded commercial relationship between Alcoa and Chinalco will have significant benefits for the two companies. "The cooperation between Chinalco and Alcoa began in 2001 when Chinalco completed the initial public offering of one of its subsidiaries, Chalco, in Hong Kong and New York. We strengthened our relationship in 2008 with the formation of Shining Prospect Pte. Ltd. We have appreciated Alcoa’s valuable support and cooperation to date, and we continue to do so. We look forward to exploring opportunities for future cooperation in respect of business ventures where both Alcoa and Chinalco can combine their respective strengths and expertise. Looking to the future we see many such opportunities to build on, and deepen, that strong base of collaboration and cooperation."
About Alcoa
Alcoa is the world leader in the production and management of primary aluminum, fabricated aluminum and alumina combined, through its active and growing participation in all major aspects of the industry. Alcoa serves the aerospace, automotive, packaging, building and construction, commercial transportation and industrial markets, bringing design, engineering, production and other capabilities of Alcoa's businesses to customers. In addition to aluminum products and components including flat-rolled products, hard alloy extrusions, and forgings, Alcoa also markets Alcoa® wheels, fastening systems, precision and investment castings, and building systems. The Company has been named one of the top most sustainable corporations in the world at the World Economic Forum in Davos, Switzerland and has been a member of the Dow Jones Sustainability Index for seven consecutive years. More information can be found at www.alcoa.com
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