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May 17, 2007
Alcoa Sends Letter to Alcan Board Outlining Commitments to Quebec; Will Meet Requirements of Agreement between Alcan and Quebec Government
Announces Satisfaction of Related Offer Condition
MONTREAL & NEW YORK--(BUSINESS WIRE)--Alcoa Inc. (NYSE:AA) announced today that it has reviewed Alcan’s
continuity agreement with the Government of Québec
which identifies the requirements that Alcoa must meet regarding Alcan’s
future operations in the Province in order to maintain certain of Alcan’s
hydroelectric and water rights. In a letter to Alcan’s
Board of Directors, Alcoa outlined the many ways in which its offer to
acquire Alcan not only meets, but exceeds the continuity agreement’s
requirements. As a result of this combination, Québec
will enjoy a substantially enhanced position in the world aluminum
industry and a reinforced position as an important industrial center.
Alain J.P. Belda, Chairman and Chief Executive Officer, stated: "We are
pleased that the Government of Québec made
the continuity agreement public quickly after we announced our offer. We
have reviewed the agreement and are very comfortable assuming all of
Alcan's existing obligations and other commitments to the Province of Québec.
When combining Alcan's obligations, which Alcoa will be assuming, with
Alcoa's commitments to Québec and Canada, we
are confident that no other company can match the increased benefits our
offer presents to Canada, Québec, British
Columbia, Montreal and all other stakeholders. In light of this, we have
asked the Board of Directors of Alcan to today begin the review period
contemplated by the agreement.
"We remain hopeful that Alcan's Board of Directors will recognize that
Alcoa and Alcan are uniquely suited to each other and, together, we will
be better positioned to compete in the industry. We would welcome the
opportunity to pursue our business combination together,”
concluded Mr. Belda.
Alcoa is confident that the terms of the continuity agreement will not
hinder Alcoa's offer for Alcan. Alcoa has determined that the condition
to its offer relating to certain contractual provisions affecting Alcan’s
power or water rights in Canada has been satisfied. This condition is
set forth in paragraph (m) of the “Conditions
of the Offer” in Alcoa’s
Offer to Purchase, dated May 7, 2007.
Today’s letter to Alcan’s
Board of Directors provides further details on Alcoa’s
proposals for Québec. Key points include:
Alcoa will maintain dual corporate headquarters in Montréal
and New York, with substantial strategic management functions in each
In addition to the corporate headquarters, the combined company’s
Global Primary Products Business also will be located in Montréal.
The role of Alcan’s Montréal
headquarters will be substantially increased, as its assets under
management will be doubled.
Alcoa is committed to maintaining effective and responsible
stewardship of hydro resources and other natural resources, including
those which Alcan controls.
Alcoa’s contributions to the communities in
which it operates are deep and longstanding. The Alcoa Foundation has
a current endowment of $534 million and over $437 million in grants
have been made to date in community programs around the world. This
transaction will maintain and expand Alcan’s
leadership role in Québec in this area.
Alcoa intends to implement the two companies’
planned investments in Québec of
approximately US$5 billion, including modernizations and expansions,
making it the single largest private sector investment program in Québec’s
history. These expansion plans in Québec
would result in the creation of 1,100 new jobs, 5,500 construction
jobs, and 1,100 to 2,100 indirect jobs.
Alcoa will establish Québec as the R&D
center for primary aluminum process innovations, which have the
potential to dramatically change the cost and environmental footprint
of the aluminum industry.
Alcoa’s pledge to environmental initiatives
and sustainable development is internationally recognized and the
movement of groundbreaking pilot programs to Québec
smelters will benefit Canada and Québec.
The World Economic Forum at Davos recently named Alcoa as one of the
top sustainable corporations in the world.
Alcoa has an industry leading track record with regard to safety in
the work place. Alcoa’s lost work day
indicator is an industry leading 0.088 and Alcoa’s
workplace standards have historically improved safety with its
Our high ethical standards have been publicly recognized, most
recently by Ethisphere Magazine, which names Alcoa as one of the world’s
most ethical companies.
Following is a copy of the letter Alcoa sent to Alcan’s
Board of Directors today:
May 17, 2007
The Board of Directors of Alcan Inc.
1188 Sherbrooke Street West
H3A 3G2 Canada
Attention: Mr. L. Yves Fortier, C.C., O.Q., Q.C., Chairman
Ladies and Gentlemen,
On May 7th, we announced that we were taking our offer directly to your
shareholders. We did not take this decision lightly. Our Board concluded
that this combination continued to be an extraordinary fit. However, as
I told Yves Fortier the day of our announcement, reaching a negotiated
deal would have been our preferred result.
We have now reviewed your continuity agreement with the Government of Québec
under which it has rights in the event of a change of control of Alcan
having certain effects on the health and prospects of the economy or
society of Québec.
I clearly understand that the terms of the continuity agreement you have
negotiated with the Government of Québec
reflect that many factors in addition to price are relevant in a change
of control of Alcan. The interests of all of your stakeholders –
employees, communities and Québec, as well
as shareholders – are acknowledged. We firmly
believe that our proposals fulfill the letter and spirit of the
continuity agreement, and that no one else can match the benefits we
offer to Alcan’s stakeholders in this and
many other respects.
As we said publicly, Montréal will become
the combined company’s global headquarters
for primary products as well as for related research and development. As
a stand-alone company, the primary products business will be the largest
aluminum company in the world. Larger than Alcan is today, it will rank
among the largest businesses in Canada. It is the view of our Board that
this combination will be good for both companies and for all our
stakeholders, including Canada, Québec,
British Columbia and Montréal. We trust you
will come to the same conclusion.
We understand that the continuity agreement permits you to defer
consideration of our proposals for Québec
until a later date. We believe however it is in all parties’
interests, including those of Québec, for
you to commence such consideration at this time. We welcome the
opportunity to discuss with you how our plans, the details of which are
attached, are responsive to the continuity agreement.
I remain hopeful that once you have had the opportunity to reflect fully
on the choices for Alcan, you will conclude, as we have, that combining
our two companies is the best alternative, reflecting our shared
history, our shared values and what we believe will be an even brighter
and better future together.
I look forward to discussing our plans and working together to find a
common path forward. I remain convinced we can work constructively and
fruitfully in the interests of our companies and all stakeholders.
Best personal regards,
Alain J. P. Belda
ALCOA’S PROPOSALS AND THE REQUIREMENTS OF
THE CONTINUITY AGREEMENT
As contemplated under section 3 of the continuity agreement between
Alcan Inc. and the Government of Québec,
Alcoa believes that its proposals demonstrate that, following its
acquisition of Alcan, there is no reasonable basis to believe either:
(i) the positive commitment of Alcan to the health and prospects of the
economy and society of Québec will be
diminished or put at risk in any material respect, or (ii) there will be
a direct or indirect net negative impact to the health and prospects of
the economy or society of Québec.
Alcoa’s proposals, as generally described in
its offer, are set forth below by reference to the important factors
referred to in section 4 of the continuity agreement.
With our acquisition of Alcan, we will assume as a matter of law all of
Alcan’s existing obligations and other
commitments, including to Québec. Moreover,
once the combination is completed we have no intention of modifying
those obligations or commitments in any manner otherwise than in
accordance with and subject to the terms of the continuity agreement
where it is applicable.
Accordingly, we hereby formally commit to the proposals set forth below.
MAINTENANCE IN QUÉBEC OF SUBSTANTIVE
OPERATIONAL, FINANCIAL AND STRATEGIC ACTIVITIES AND HEADQUARTERS IN
RESPECT OF ALCAN AND ITS ASSETS AT LEVELS THAT ARE SUBSTANTIALLY SIMILAR
TO THOSE OF ALCAN AT THIS TIME (CONTINUITY AGREEMENT, SECTION 4(A))
We had discussions last year on a friendly basis and had agreed on some
matters that we think continue to be good for our combined companies.
- Dual headquarters in Montréal and New
York – Selected strategic management
functions located in each city.
- Corporate executive positions –The
corporate Chairman, CEO, and CFO will maintain offices in both Montréal
and New York.
- Montréal headquarters–
Corporate staff functions will include significant global leadership
responsibilities in the areas of Corporate Development, Strategic
Planning, Global Purchasing and Human Resources.
- Board of Directors– It is our
intention that we will have significant Canadian representation on our
combined companies’ global corporate Board
of Directors. Presently our Board consists of 9 independent members
plus the Chairman/CEO. It is our intention that one-third of the
combined company's Board seats be occupied by Canadians.
- Name– The name of the new company
will reflect the importance and heritage of the Alcan name.
- Best available talent – Our company
is a meritocracy, as global competitiveness requires us to use the
best available talent. We will draw from the best talent of both
organizations as we have successfully done before:
-- Our corporate CFO, President of Global Primary Products,
Alcoa Canada President and President of Primary Metals
Material Management all came into Alcoa through acquisitions
or joint ventures.
-- More than half of the members of the Alcoa Executive
Council(1) have joined the company from outside Alcoa in the
last 10 years, including the CFO and the heads of Global
Primary Products, Rolled Products Group, HR, Legal,
Environmental, Health and Safety ("EHS") and Public Strategy.
Global Primary Products Business –
Alcoa will locate the headquartersof the new combined company’s
Global Primary Products Business in Montréal.
The CEO of the Global Primary Products Business will manage this global
business from Montréal. He or she will be a
member of the Executive Council of the combined company and will be
supported by a newly created Advisory Board comprised only of Canadian
On a stand-alone basis, the combined primary products business will be
the largest aluminum company in the world, the largest industrial
business in Canada, larger than Alcan is today, and have a significant
operating footprint in Canada.
Globally, the combined primary products business will have US$32.3
billion in revenues, 38,000 employees and over 100 locations in 29
In Canada, the combined operations will have US$6.8 billion in revenues
and 15,000 employees, and over 35% of the company’s
smelting capacity will be in Canada.
It is our understanding that currently the Alcan Bauxite & Alumina and
Primary Metals groups are headquartered in Montréal,
while Engineered Products and Packaging are based in Paris. Our plan
specifically means that we will add to the Montréal
based Primary Metals group headquarters the necessary people and
functions to manage:
an additional number of 11 hydroelectric facilities and 6 thermal
plants with the combined generation of over 2,210 MW in Canada, the US
and Australia, as well as our 930 MW share of three additional
hydroelectric generating plants under construction in Brazil; and
the following additional production:
These additions will more than double the responsibility of and primary
products assets under management by the headquarters in Montréal.
The following functions (which today reside in various Alcoa locations
including New York, Pittsburgh and Knoxville) will be resident in Montréal
within the final organization to be established:
- Global Primary Products – management
team (including CEO, CFO, CIO, HR, Legal)
- Primary Metals – Global Smelting
President, North American Smelting Operations Head, EHS, Alcoa
Business System (“ABS”)
- Alumina Refining – Global Refining
President, North American Operations Head, Alumina Technology & ABS,
Alumina Sales & Marketing, Bauxite, Development
- Metal Sales, Purchasing and Marketing for Primary Products –Physical Trading, Scrap Acquisition and Purchasing
- Energy –New Projects, Developments,
Generation Operations and Maintenance
- Materials Management – Logistics &
Transportation, International Transportation, Risk Management
- Primary Products Growth – Major
Projects (Refining & Smelting), Project and Opportunity Development,
Construction Planning and Control, Construction Purchasing, Financial
Control and Management
Global Primary Products –
Global Growth Projects
The combined company will locate its Primary Products Growth Group in
Montréal, which will become the center for
management of the global portfolio of primary growth projects in bauxite
mining, alumina refining, aluminum smelting and energy generation. This
includes the project development, site investigation, design,
engineering and construction management of a 10-year US$32 billion
global growth project portfolio.
Today we are both involved in growth projects such as the following:
Our projects include:
- Brazil – Construction and start up
of 2.1 million MT expansion at the Alumar Sao Luis alumina refinery
- Brazil – Start up of Alcoa’s
new Juruti 2.6 million MT bauxite mine, and a future 12 million MT of
bauxite mine, refinery and smelter
- Australia –The design and
construction of a 2.1 million MT expansion at Wagerup alumina refinery
- Guinea – The design and construction
of a new 1.7 million MT alumina refinery in which Alcoa and Alcan are
the lead sponsors
- Iceland – The commissioning of Alcoa’s
newly completed 346,000 MT smelter in Fjardaal.
Your projects, as we understand it, include:
- South Africa – Alcan’s
proposed 720,000 MT primary aluminum smelter in Coega
- Oman – 2008 start-up of the 350,000
MT Sohar smelter JV
- Saudi Arabia – Integrated aluminum
complex in Ma’aden, including a 1,400 MW of
power, 1.6 million MT refinery and 720,000 MT smelter.
We stand ready to carry these projects forward. This will be a
significant portfolio of business that will be managed from Montréal.
Firms in Montréal, such as SNC Lavalin and
Bechtel Canada, are already working with us today on Alumar and Fjardaal
MAINTENANCE OF COMMITMENTS TO AND QUÉBEC
BASED CAPABILITIES FOR THE EFFECTIVE AND RESPONSIBLE STEWARDSHIP OF THE
HYDRO RESOURCES AND OTHER NATURAL RESOURCES OVER WHICH ALCAN HAS
OWNERSHIP, CONTROL, DIRECTION OR INFLUENCE IN QUÉBEC
(CONTINUITY AGREEMENT, SECTION 4(B))
Alcoa is committed to maintaining effective and responsible stewardship
of hydro resources and other natural resources, including those which
Alcan controls. Alcoa and Alcan together are uniquely qualified to
assume stewardship of the hydro resources and other natural resources
currently under Alcan’s ownership, control,
direction and influence in Québec. Alcoa is
an owner and operator of its own hydroelectric generating facilities
globally. Some of its North American operations were relicensed in 2005
for a 40-year period by the Federal Energy Regulatory Commission in the
United States. The Québec government is
directly familiar with Alcoa’s existing
operations in the Province. In addition, we are co-owners of 1,830 MW of
newly constructed and of 1,687 MW hydroelectric facilities in
construction in Brazil. Together, we own and operate significant
hydroelectric and thermal plants in the United States, in Canada and in
Australia that are similar in scale.
MAINTENANCE OF EMPLOYMENT LEVELS IN QUÉBEC
IN ACCORDANCE WITH THE THEN CURRENT COMMITMENTS AND PLANS OF ALCAN
(CONTINUITY AGREEMENT, SECTION 4(C))
As noted above, with our acquisition of Alcan, we will assume as a
matter of law all of its existing obligations and other commitments,
including to Québec and any unions.
Moreover, additional employment will be created upon completion of the
combination and implementation of the proposed investments described in
MAINTENANCE OF GENERAL COMMUNITY, EDUCATIONAL, CULTURAL AND
CHARITABLE SUPPORT POLICIES, PRACTICES AND BUDGETS RELATIVE TO QUÉBEC
AT LEVELS AT LEAST AS FAVORABLE AS THOSE WHICH ARE THEN CURRENT WITHIN
ALCAN (CONTINUITY AGREEMENT, SECTION 4(D))
In addition to any legal obligations we will assume, our commitment to
the communities in which we live and operate is deep and longstanding.
Alcoa Foundation, established in 1952, has a current endowment of US$534
million. Over US$437 million in grants have been made to date in
community programs around the world. In 2006, we made more than US$42
million in grants in 32 countries. In addition to financial support,
Alcoa and Alcoa Foundation support close to 500,000 hours per year of
volunteer work by Alcoans around the world sharing their time and
talents with their communities. In Québec
today, we contribute US$2.75 million annually to organizations,
including the Québec Symphony (Orchestre symphonique
de Québec), the Québec
National Museum of Fine Arts (Musée
national des beaux-arts du Québec) and
the Québec Museum of Civilization (Musée
de la civilisation de Québec).
We do not have the financial details on the major role Alcan plays in
Montréal and Québec
but we know of your support and your sponsorship, for example, of the
Montréal Jazz Festival. In accordance with Imagine
Canada’s program, we understand Alcan
contributes at least 1% of its Canadian pre-tax profits in the form of
donations and sponsorships. Alcoa will continue Alcan’s
participation in this program and add the existing Canadian Alcoa
businesses to this program.
We know you have recently reaffirmed your commitment to Montréal
through the announced office consolidation in Montréal
with a US$50 million construction project at the former Salvation Army
property. Alcoa will maintain this commitment and continue with this
construction project. We expect that our combined company will maintain
and expand on Alcan’s vital leadership role
in the community.
MAINTENANCE OF ALCAN’S FINANCIAL,
EMPLOYMENT CREATION AND OTHER COMMITMENTS IN RESPECT OF REGIONAL
ECONOMIC DEVELOPMENT AS THEY THEN APPLY TO QUÉBEC
(CONTINUITY AGREEMENT, SECTION 4(E))
Although not part of the requirements of your continuity agreement,
Alcoa thinks it is important for the Alcan Board to understand our own
plans. Alcoa intends to continue to grow in Canada, while remaining
committed to Alcan’s expansion plans in Québec
and British Columbia. In Québec, we plan to
continue discussions with the Government as part of the overall
Alcoa/Alcan investment strategy for the Province.
The combined company’s investment obligations
and proposals will, together, be the largest single private sector
development commitment in Québec’s
history - US$5 billion investment in Québec,
creating over 1,100 new jobs, 5,500 construction jobs, and 1,100 to
2,100 indirect jobs. Alcoa’s participation in
this development would include:
Baie Comeau smelter modernization
US$1.2 billion Alcoa investment
Replace old Soderberg smelting technology with modern pre-bake
Increase the overall capacity by 110,000 MT to 540,000 MT
Reduce emissions/improve energy efficiency
Preserve jobs at the smelter while creating over 2,000 construction
US$1.4 billion Alcoa investment
Double capacity from 270,000 MT to more than 550,000 MT.
Create 250 jobs at the smelter, 350 jobs indirectly, and 2,000
New anode and cathode facility
Given the scope of the combined company’s
expansion plans in Québec, there is the
opportunity of consolidating anode and cathode manufacturing for the
region. Assuming such opportunity proves advantageous, we believe this
will warrant an additional investment of US$400 million, creating an
additional 100 jobs.
In Québec, Alcoa will honor the commitments
between Alcan and the Government for projects, such as AP-50 full-scale
technology deployment at Complexe Jonquière
smelter. As we understand it, the initial US$550 million investment is
the first step in a planned ten-year US$1.8 billion investment program
Saguenay-Lac Saint-Jean region. In British Columbia, Alcoa will also
maintain the commitment to expanding the Kitimat smelter. Alcoa will
explore doing the expansion through a modernization of current pot lines
and addition of new pot lines.
MAINTENANCE OF POLICIES, PRACTICES AND INVESTMENT PLANS IN RESPECT OF
RESEARCH AND DEVELOPMENT ACTIVITIES THEN BEING CARRIED OUT OR PLANNED TO
AN EXTENT SIMILAR TO THOSE THEN IN PLACE WITHIN QUÉBEC
(CONTINUITY AGREEMENT, SECTION 4(F))
Global Primary Products Center for Technology & Innovation
Alcoa will establish Québec as the R&D
center for primary aluminum process innovations which have the potential
to dramatically change the cost and environmental footprint of the
aluminum industry. Québec will be the global
center for aluminum innovation through a combination of in-house
corporate research and affiliation with external Québec
Alcoa’s annual R&D investment in this area is
over US$48 million and today includes “game-changing”
technologies such as:
- Inert Anode– This involves the
replacement of the traditional consumable carbon anode with an “inert”
anode that is not consumed. The inert anode would provide breakthrough
reductions in costs and CO2 (100% reduction
or 3 tonnes per tonne of aluminum). Alcoa has invested more than
US$200 million in this program. Presently we are running commercial
cell trials in a smelter in Massena, New York. The current annual
budget for this project is US$28.2 million, with a 110-person
- Carbothermic Smelting - This is a new way of making aluminum
with 30% better energy efficiency, significantly less capital and the
potential for reductions in emissions. Research is currently underway
in Norway and will be piloted in Québec as
the cells reach that stage. We are presently moving from a pilot scale
of 1.5MW to an 8.0MW scale up. Working with Elkem AS, we have invested
more than US$37 million on this project. The annual budget for this
research is US$14.8 million, with a 35-person development team.
We are not as familiar with the details of Alcan’s
R&D program but we will maintain and grow your R&D programs including:
Continuous improvement investments
AP-50 smelter technology
MAINTENANCE OF POLICIES, PRACTICES AND STANDARDS IN RESPECT OF
ENVIRONMENTAL PROTECTION AND EMPLOYEE HEALTH AND SAFETY AT LEVELS AT
LEAST AS DEMANDING AS THOSE THEN CURRENT WITHIN ALCAN (CONTINUITY
AGREEMENT, SECTION 4(G))
Environment and Sustainable Development
The Government of Québec is familiar with
our commitment to reducing our impact on the environment. Going beyond
our operations in Québec, we have anunmatched
commitment in the aluminum industry to protection of the environment and
sustainable development. We have been recognized as one of the most
sustainable corporations in the world for the third year in a row at the
World Economic Forum in Davos. We are a charter member in USCAP. In 1996
we were awarded the World Environment Center’s
(WEC) Gold Medal for International Corporate Achievement in Sustainable
The combination of our talents and commitment in this area will continue
to serve our industry well. If the Board wishes to have more detail on
our environmental performance globally and improvement targets as well
as our 2020 plan, we will be delighted to supply additional information.
We enclose herewith a copy of our 2006 Annual Report, our 2006
Sustainability Highlights and the 2005 edition of Life Magazine (Alcoa
Canada Primary Metals’ annual report on
Health and Safety
Alcoa has an uncompromising commitment to health and safety and is
recognized as a leader not only in the aluminum industry but in the
larger industrial sector as well. Our lost work day (LWD) is an industry
leading 0.088. Alcoa practices have improved safety in every
acquisition. For example, we reduced LWD from 3.0 to Zero at acquired Québec
smelters (Baie Comeau, Deschambault and Bécancour).
Consistent with our shared values, best practices from both
organizations will be combined to continue the improvements in health
We are confident that the Government of Québec
is familiar with and has formed a favorable opinion of our standards and
performance in the environmental, health and safety areas.
We will be happy to share our performance and commitment in these areas
with the Alcan Board if you need additional information.
GOOD CHARACTER, REPUTATION AND HIGH ETHICAL STANDARDS OF ALCOA AND
ITS DIRECTORS, OFFICERS, EMPLOYEES AND ASSOCIATES (CONTINUITY AGREEMENT,
Our high ethical standards have been publicly recognized, most recently
by Ethisphere Magazine, which names Alcoa as one of the world’s
most ethical companies. Throughout the world, Alcoa operates by a
bedrock set of values. Our two companies were founded by the same people
with the same vision and commitment to the aluminum industry. We know
that Alcan is also a values driven company with values compatible with
ours. These values will guide how the new enterprise will continue to do
business everywhere, every day.
To familiarize the Alcan Board with our standards, they are captured by
- Integrity: The integrity of our people is our foundation.
- Environment, Safety and Health: We will work safely in a manner
that promotes the health and well-being of the individual and the
- Quality and Excellence: We will relentlessly pursue continuous
improvement and innovation in everything we do to create significant
competitive advantage compared to world standards.
- People: People are the key to our success. Every Alcoan will
have equal opportunity in an environment that fosters communication
- Profitability: We are dedicated to earning a return that will
enable growth and enhanced shareholder value.
- Accountability: We are accountable, individually and in teams,
for our actions and results.
- Customer: We are committed to being the preferred supplier and
brand in each of the markets we serve and in every region of the world.
As our partner for many years in projects such as Alumar and Halco, and
new projects such as the refinery project in Guinea, you have had the
opportunity to see our values in action first hand. We think that is the
best evidence of our ongoing commitment to the consistent application of
our values around the world. We are confident the Government of Québec
has formed its own favorable opinion of us through their observation of
our performance in the Province at our Bécancour,
Baie Comeau and Deschambault operations.
ABOUT ALCOA’S OFFER
Alcoa’s offer was announced on May 7, 2007.
The complete terms, conditions and other details of the offer are set
forth in the offering documents filed with the U.S. Securities and
Exchange Commission and with Canadian securities regulatory authorities
on May 7, 2007.
The offer and withdrawal rights are scheduled to expire at 5:00 p.m.,
Eastern Daylight Saving Time on July 10, 2007, subject to extension. The
offer is subject to a number of customary conditions, including there
having been tendered in the offer at least 66 2/3% of Alcan’s
common shares on a fully diluted basis, receipt of all applicable
regulatory approvals, and the absence of material adverse effects.
As previously announced, Alcoa has received a commitment letter from
Citi, Goldman Sachs Credit Partners L.P. and Goldman Sachs Canada Credit
Partners Co. to fully finance the proposed transaction. Skadden, Arps,
Slate, Meagher & Flom LLP, Stikeman Elliott LLP, and Cleary Gottlieb
Steen and Hamilton LLP are acting as legal counsel to Alcoa. Citi,
Goldman, Sachs & Co., BMO Capital Markets, and Lehman Brothers are
acting as financial advisors.
Alcoa is the world's leading producer and manager of primary aluminum,
fabricated aluminum and alumina facilities, and is active 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, Alcoa also markets consumer brands including
Reynolds Wrap® foils and plastic wraps, Alcoa®
wheels, and Baco® household wraps. Among its
other businesses are closures, fastening systems, precision castings,
and electrical distribution systems for cars and trucks. The company has
122,000 employees in 44 countries and has been named one of the top most
sustainable corporations in the world at the World Economic Forum in
Davos, Switzerland. More information can be found at www.alcoa.com
A French translation of this press release is also available.
WHERE TO FIND ADDITIONAL INFORMATION
In connection with the offer by Alcoa to purchase all of the issued and
outstanding common shares of Alcan (the “Offer”),
Alcoa has filed with the Securities and Exchange Commission (the “SEC”)
a registration statement on Form S-4 (the “Registration
Statement”), which contains a prospectus
relating to the Offer (the “Prospectus”),
and a tender offer statement on Schedule TO (the “Schedule
TO”). This communication is not a substitute
for the Prospectus, the Registration Statement and the Schedule TO.
ALCAN SHAREHOLDERS AND OTHER INTERESTED PARTIES ARE URGED TO READ THESE
DOCUMENTS, ALL OTHER APPLICABLE DOCUMENTS AND ANY AMENDMENTS OR
SUPPLEMENTS TO ANY SUCH DOCUMENTS WHEN THEY BECOME AVAILABLE, BECAUSE
EACH CONTAINS OR WILL CONTAIN IMPORTANT INFORMATION ABOUT ALCOA, ALCAN
AND THE OFFER. Materials filed with SEC are available electronically
without charge at the SEC’s website, www.sec.gov.
Materials filed with the Canadian securities regulatory authorities
("CSRA") are available electronically without charge at www.sedar.com.
Materials filed with the SEC or the CSRA may also be obtained without
charge at Alcoa’s website, www.alcoa.com,
or by directing a request to Alcoa’s
investor relations department at (212) 836-2674. In addition, Alcan
shareholders may obtain free copies of such materials filed with the SEC
or the CSRA by directing a written or oral request to the Information
Agent for the Offer, MacKenzie Partners, Inc., toll-free at (800)
322-2885 (English) or (888) 405-1217 (French).
While the Offer is being made to all holders of Alcan Common Shares,
this communication does not constitute an offer or a solicitation in any
jurisdiction in which such offer or solicitation is unlawful. The Offer
is not being made in, nor will deposits be accepted in, any jurisdiction
in which the making or acceptance thereof would not be in compliance
with the laws of such jurisdiction. However, Alcoa may, in its sole
discretion, take such action as they may deem necessary to extend the
Offer in any such jurisdiction.
Certain statements and assumptions in this communication contain or are
based on "forward-looking" information and involve risks and
uncertainties. Forward-looking statements may be identified by their use
of words like "anticipates," "believes," "estimates," "expects,"
"hopes," "targets," "should," "will," "will likely result," "forecast,"
"outlook," "projects" or other words of similar meaning. Such
forward-looking information includes, without limitation, the statements
as to the impact of the proposed acquisition on revenues, costs and
earnings. Such forward looking statements are subject to numerous
assumptions, uncertainties and risks, many of which are outside of
Alcoa's control. Accordingly, actual results and developments are likely
to differ, and may differ materially, from those expressed or implied by
the forward-looking statements contained in this communication. These
risks and uncertainties include Alcoa's ability to successfully
integrate the operations of Alcan; the outcome of contingencies
including litigation, environmental remediation, divestitures of
businesses, and anticipated costs of capital investments; general
business and economic conditions; interest rates; the supply and demand
for, deliveries of, and the prices and price volatility of primary
aluminum, fabricated aluminum, and alumina produced by Alcoa and Alcan;
the timing of the receipt of regulatory and governmental approvals
necessary to complete the acquisition of Alcan and any undertakings
agreed to in connection with the receipt of such regulatory and
governmental approvals; the timing of receipt of regulatory and
governmental approvals for Alcoa's and Alcan's development projects and
other operations; the availability of financing to refinance
indebtedness incurred in connection with the acquisition of Alcan on
reasonable terms; the availability of financing for Alcoa's and Alcan's
development projects on reasonable terms; Alcoa's and Alcan's respective
costs of production and their respective production and productivity
levels, as well as those of their competitors; energy costs; Alcoa's and
Alcan's ability to secure adequate transportation for their respective
products, to procure mining equipment and operating supplies in
sufficient quantities and on a timely basis, and to attract and retain
skilled staff; the impact of changes in foreign currency exchange rates
on Alcoa's and Alcan's costs and results, particularly the Canadian
dollar, Euro, and Australian dollar, may affect profitability as some
important raw materials are purchased in other currencies, while
products generally are sold in U.S. dollars; engineering and
construction timetables and capital costs for Alcoa's and Alcan's
development and expansion projects; market competition; tax benefits and
tax rates; the outcome of negotiations with key customers; the
resolution of environmental and other proceedings or disputes; and
Alcoa's and Alcan's ongoing relations with their respective employees
and with their respective business partners and joint venturers.
Additional risks, uncertainties and other factors affecting forward
looking statements include, but are not limited to, the following:
Alcoa is, and the combined company will be, subject to cyclical
fluctuations in London Metal Exchange primary aluminum prices,
economic and business conditions generally, and aluminum end-use
Alcoa's operations consume, and the combined company's operations will
consume, substantial amounts of energy, and profitability may decline
if energy costs rise or if energy supplies are interrupted;
The profitability of Alcoa and/or the combined company could be
adversely affected by increases in the cost of raw materials;
Union disputes and other employee relations issues could adversely
affect Alcoa's and/or the combined company's financial results;
Alcoa and/or the combined company may not be able to successfully
implement its growth strategy;
Alcoa's operations are, and the combined company's operations will be,
exposed to business and operational risks, changes in conditions and
events beyond its control in the countries in which it operates;
Alcoa is, and the combined company will be, exposed to fluctuations in
foreign currency exchange rates and interest rates, as well as
inflation and other economic factors in the countries in which it
Alcoa faces, and the combined company will face, significant price
competition from other aluminum producers and end-use markets for
Alcoa products that are highly competitive;
Alcoa and/or the combined company could be adversely affected by
changes in the business or financial condition of a significant
customer or customers;
Alcoa and/or the combined company may not be able to successfully
implement its productivity and cost-reduction initiatives;
Alcoa and/or the combined company may not be able to successfully
develop and implement new technology initiatives;
Alcoa is, and the combined company will be, subject to a broad range
of environmental laws and regulations in the jurisdictions in which it
operates and may be exposed to substantial costs and liabilities
associated with such laws;
Alcoa’s smelting operations are expected
to be affected by various regulations concerning greenhouse gas
Alcoa and the combined company may be exposed to significant legal
proceedings, investigations or changes in law; and
Unexpected events may increase Alcoa's and/or the combined company's
cost of doing business or disrupt Alcoa's and/or the combined
See also the risk factors disclosed in Alcoa's Annual Report on Form
10-K for the fiscal year ended December 31, 2006. Readers are cautioned
not to put undue reliance on forward-looking statements. Alcoa disclaims
any intent or obligation to update these forward-looking statements,
whether as a result of new information, future events or otherwise,
except as may be required by applicable law.
1 The Alcoa Executive Council presently
consists of its senior executives that run global businesses (4
individuals) and global staff services areas (5 individuals). Some of
these are located in New York City and some are located in other global
business headquarters. This group, which reports directly to the
Chairman/CEO of Alcoa, attends, participates and presents projects and
specific reports to Alcoa’s Board.