Alcoa prices $2.6b senior notes for South32 bauxite, alumina and aluminium deal

Alcoa Corporation has set the price for a USD 2.6 billion senior notes offering to help finance the cash consideration for its proposed acquisition of South32’s bauxite, alumina, and aluminium assets. Along with the cash on hand, this debt is expected to provide permanent funding for the approximately USD 3.1 billion cash part of the transaction.

The offering consists of USD 1.5 billion of 6.63 per cent Senior Notes due in 2034, to be issued by Alumina Pty Ltd, and USD 1.1 billion of 6.88 per cent Senior Notes due in 2036, issued by Alcoa Nederland Holding BV.

Both of these companies are fully owned by Alcoa. The notes will be backed by Alcoa and some of its subsidiaries on a senior unsecured basis. The deal is expected to finalise on September 23, 2026, depending on usual closing conditions.

Alcoa said the net proceeds from the notes, along with existing cash, will be used to fund part of the USD 3.1 billion cash purchase of South32’s bauxite, alumina, and aluminium smelter operations. It will also cover the related costs and fees.

Alcoa intends for this combined funding to be the permanent financing for the acquisition. Once the notes offering has been completed, the company plans to end any remaining commitments under the senior unsecured 364-day bridge term loan credit facility connected to the transaction.

Completion of the South32 acquisition remains subject to several conditions, such as approval from South32’s shareholders, necessary regulatory approvals, and other usual closing requirements. Thus, the transaction process is still underway to receive approval and is undergoing closing procedures.

The notes and related guarantees will be sold through a private placement to people who are believed to be qualified institutional buyers, as allowed by Rule 144A of the US Securities Act of 1933.

The offering will also include certain non-US personnel in offshore transactions under Regulation S.

The notes and related guarantees have not been and will not be registered under the Securities Act or any other country’s securities laws. Consequently, these notes may not be offered or sold in the US or to US citizens unless they are officially registered or have a special exemption.