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Alcoa Corporation Announces Closing of Inaugural Green Bond Offering

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Alcoa (NYSE:AA) closes $750 million green bond offering to finance sustainable projects, supporting its transition to a lower carbon economy.
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  • Alcoa successfully closed a $750 million green bond offering for sustainable projects.
  • The 7.125% senior notes due 2031 are guaranteed by Alcoa and certain subsidiaries.
  • The notes represent Alcoa's inaugural Green Finance Instrument in line with its Green Finance Framework.
  • Proceeds will finance/refinance eligible projects and support Alcoa's cash needs and sustainability efforts.
  • The Framework aligns with international Green Bond Principles and provides a structured approach for green finance initiatives.
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Alcoa's recent closure of a $750 million senior notes offering at 7.125% due 2031 is a significant move that warrants a close examination of its financial implications. The decision to earmark the proceeds for green projects and to bolster the company’s cash position suggests a strategic pivot towards sustainability, which is increasingly being favored by investors and regulators alike. The relatively high interest rate may reflect current market conditions, signaling a cautious approach from investors demanding higher yields for corporate debt amidst economic uncertainties.

Examining the company's balance sheet, the addition of this capital can improve liquidity, potentially enhancing Alcoa's ability to navigate short-term market volatility. However, the long-term debt implications need to be assessed against the backdrop of future cash flows and the potential returns from the green projects financed through this instrument. Investors should monitor the deployment of these funds and the subsequent impact on Alcoa's profitability and return on investment.

Alcoa's alignment with the International Capital Market Association’s Green Bond Principles and the various Green Loan Principles is a testament to the company's commitment to sustainability. This move not only helps in attracting environmentally-conscious investors but also places Alcoa in a position to potentially benefit from favorable financing terms in the future, as the market for green instruments continues to grow. Furthermore, the focus on financing projects that contribute to a lower carbon economy could provide Alcoa with a competitive edge as industries worldwide are pressured to reduce their environmental footprint.

It is essential to scrutinize the actual environmental impact of the projects funded by these notes. The transparency and reporting in line with the Framework will be critical for investors to verify that the proceeds are indeed contributing to tangible sustainability improvements. This could further influence Alcoa's reputation and market position, as successful green initiatives can lead to enhanced brand value and customer loyalty.

The issuance of green bonds is part of a broader trend in the financial markets where companies are increasingly leveraging their sustainability initiatives to access capital. Alcoa’s entry into this market with a sizable offering positions it within a niche that is rapidly growing and gaining traction among institutional investors. This strategic move could potentially open up new avenues for funding and partnerships, especially as the company looks to refinance existing projects under the green criteria.

Market response to such offerings can serve as a barometer for investor sentiment towards the company's long-term sustainability goals. It's important for stakeholders to evaluate how this bond issuance compares to similar initiatives by competitors and the potential implications for Alcoa's market share. The success of this green finance instrument may also set a precedent for future offerings, influencing the company's cost of capital and its strategic financial planning.

PITTSBURGH--(BUSINESS WIRE)-- Alcoa Corporation (NYSE:AA) (“Alcoa”) announced today that Alcoa Nederland Holding B.V., a wholly-owned subsidiary of Alcoa, closed its offering of $750 million aggregate principal amount of 7.125% senior notes due 2031 (the “notes”). The notes are guaranteed on a senior unsecured basis by Alcoa and certain of its subsidiaries.

The notes represent Alcoa’s inaugural Green Finance Instrument in alignment with its Green Finance Framework (the “Framework”). Alcoa intends to use an amount equal to the net proceeds of the issuance of the notes to finance and/or refinance, in whole or in part, new and/or existing projects that meet certain eligibility criteria within the Framework. The net proceeds will also support Alcoa’s cash position and ongoing cash needs, including with respect to its previously announced portfolio actions. Additional details on eligibility criteria and use of proceeds are available in the Framework.

"We are pleased to advance our sustainability efforts by successfully issuing and closing this inaugural green bond offering,” said Executive Vice President and Chief Financial Officer Molly Beerman. “These Green Finance Instruments support our investments and products which enable the transition to a lower carbon economy.”

The Framework was developed in alignment with the International Capital Market Association’s 2021 Green Bond Principles, as well as the Loan Market Association, the Asia Pacific Loan Market Association and the Loan Syndications and Trading Association’s 2023 Green Loan Principles. It provides a structured approach for Alcoa to assess, select, and report on its green finance initiatives, supporting Alcoa in its sustainability efforts by aligning it with its financing strategy.

About Alcoa

Alcoa is a global industry leader in bauxite, alumina and aluminum products with a vision to reinvent the aluminum industry for a sustainable future. Our purpose is to turn raw potential into real progress, underpinned by Alcoa Values that encompass integrity, operating excellence, care for people and courageous leadership. Since developing the process that made aluminum an affordable and vital part of modern life, our talented Alcoans have developed breakthrough innovations and best practices that have led to improved safety, sustainability, efficiency, and stronger communities wherever we operate.

Forward-Looking Statements

This press release contains statements that relate to future events and expectations, including those relating to the intended use of the net proceeds from the issuance of the notes, and as such constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements include those containing such words as “aim,” “ambition,” “anticipates,” “believes,” “could,” “develop,” “endeavors,” “estimates,” “expects,” “forecasts,” “goal,” “intends,” “may,” “outlook,” “plans,” “potential,” “projects,” “reach,” “seeks,” “sees,” “should,” “targets,” “will,” “working,” “would,” or other words of similar meaning. All statements by Alcoa that reflect expectations, assumptions or projections about the future, other than statements of historical fact, are forward-looking statements. Forward-looking statements are not guarantees of future performance and are subject to known and unknown risks, uncertainties, and changes in circumstances that are difficult to predict. Although Alcoa believes that the expectations reflected in any forward-looking statements are based on reasonable assumptions, it can give no assurance that these expectations will be attained, and it is possible that actual results may differ materially from those indicated by these forward-looking statements due to a variety of risks and uncertainties. Additional information concerning factors that could cause actual results to differ materially from those projected in the forward-looking statements is contained in Alcoa’s filings with the Securities and Exchange Commission. Alcoa disclaims any obligation to update publicly any forward-looking statements, whether in response to new information, future events or otherwise, except as required by applicable law.

Investor Contact

James Dwyer

412-992-5450

James.Dwyer@alcoa.com

Media Contact

Jim Beck

412-315-2909

James.Beck@alcoa.com

Source: Alcoa

FAQ

What is the ticker symbol for Alcoa ?

The ticker symbol for Alcoa is 'AA'.

What type of offering did Alcoa close recently?

Alcoa closed a $750 million green bond offering.

What are the notes guaranteed by?

The notes are guaranteed on a senior unsecured basis by Alcoa and certain subsidiaries.

What will the net proceeds from the notes issuance be used for?

The net proceeds will be used to finance and/or refinance eligible projects within the Green Finance Framework.

What does the Green Finance Framework align with?

The Green Finance Framework aligns with international Green Bond Principles.

Who mentioned that the green bond offering supports Alcoa's sustainability efforts?

Executive Vice President and Chief Financial Officer Molly Beerman mentioned that the green bond offering supports Alcoa's sustainability efforts.

Alcoa Corporation

NYSE:AA

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Alumina Refining and Primary Aluminum Production
Manufacturing
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United States of America
PITTSBURGH