Alcoa Corp

Current report

The issuance of shares of Alcoa common stock dilutes the ownership position of the Company’s existing stockholders and the price of Alcoa common stock may be affected.

Current report

The Alumina Limited shareholders now beneficially own approximately 31.5% of the fully diluted shares of Alcoa common stock (including the shares of Alcoa common stock issuable upon conversion of the shares of non-voting convertible preferred stock). Consequently, the Company’s existing stockholders own a smaller proportion of Alcoa common stock and of the Company’s voting power than the proportion of Alcoa common stock and of the Company’s voting power owned before the completion of the Alumina Limited acquisition and, as a result, have less influence on the Company’s management and policies.

Current report

The issuance of the new shares of Alcoa common stock could have the effect of depressing the market price for Alcoa common stock. In addition, Alumina Limited shareholders may decide not to hold and instead to sell the new shares of Alcoa common stock or CDIs received, which could have the effect of depressing the market price for Alcoa common stock. The price of Alcoa common stock and CDIs may fluctuate significantly in the days following the completion of the acquisition, including as a result of factors over which the Company has no control.

Current report

The secondary listing of the Alcoa common stock on the ASX via CDIs could lead to price variations and other impacts on the price of Alcoa common stock.

Current report

Alcoa common stock is listed as CDIs on the ASX in addition to Alcoa Corporation’s existing primary listing on the New York Stock Exchange (NYSE).

Current report

Dual listing may result in price variations between Alcoa Corporation’s securities listed on the different exchanges due to a number of factors, including that Alcoa common stock listed on the NYSE is traded in U.S. dollars and CDIs listed on the ASX are traded in Australian dollars, inherently introducing exchange rate volatility, and differences between the trading schedules and time zones of the two exchanges, among other factors. A decrease in the price of Alcoa Corporation’s securities in one market may result in a decrease in the price of Alcoa Corporation’s securities in the other market. Dual listing also presents the Company with the opportunity to raise additional funds through the issuance of CDIs, which could cause dilution to stockholders.

Current report

Alcoa Corporation’s exposure to fluctuations in foreign currency exchange rates has increased.

Current report

Alcoa Corporation has been subject to foreign currency exchange risk because it conducts business operations in several foreign countries, including Australia, through its foreign subsidiaries or affiliates, which conduct business in their respective local currencies. As the Alumina Limited acquisition is completed, Alcoa Corporation’s international operations account for a more significant portion of Alcoa Corporation’s overall operations than previously and Alcoa Corporation’s exposure to fluctuations in foreign currency exchange rates has increased.

Current report

The integration of Alumina Limited will subject Alcoa Corporation to liabilities that exist or may exist at Alumina Limited.

Current report

The integration of Alumina Limited with Alcoa Corporation may pose special risks, including write-offs and unanticipated costs or charges, and will subject Alcoa Corporation to liabilities that exist or may exist at Alumina Limited, including liabilities relating to Alumina Limited’s revolving credit facility and potential tax liabilities. Although Alcoa Corporation and its advisers conducted due diligence on the operations of Alumina Limited, there can be no guarantee that Alcoa Corporation is aware of all liabilities of Alumina Limited. These liabilities, and any additional risks and uncertainties related to the transaction not currently known to Alcoa Corporation or that Alcoa Corporation may currently deem immaterial or unlikely to occur, could negatively impact Alcoa Corporation’s business, financial condition, and results of operations.

Previous report

Alcoa will incur significant transaction costs in connection with the Transaction.

Previous report

Alcoa expects to incur significant costs associated with the Transaction. Alcoa’s fees and expenses related to the Transaction include financial advisor fees, filing fees, legal and accounting fees, and regulatory fees, some of which will be paid regardless of whether the Transaction is completed.

Previous report

The Transaction is subject to conditions to closing that could result in the Transaction being delayed or not completed and the Agreement can be terminated in certain circumstances, each of which could negatively impact the price of Alcoa common stock and Alcoa’s business and operations.

Previous report

Completion of the Transaction is subject to conditions, including, among others:

Previous report

the approval of the Transaction by the Alumina Limited shareholders;

Previous report

the approval of the scheme by the Federal Court of Australia (sitting in Melbourne) (the Court);

Previous report

the issuance of a report by an independent expert (who is appointed by Alumina Limited pursuant to the Agreement) for the scheme concluding that the scheme is in the best interests of Alumina Limited shareholders and who does not change its conclusion prior to the second Court date;

Previous report

the absence of any law, order or injunction by an Australian or United States court or regulatory authority that would prohibit or make illegal the Transaction;

Previous report

the receipt of certain regulatory approvals;

Previous report

the approval for listing on the NYSE of the shares of Alcoa common stock to be issued or issuable in the Transaction and the establishment of a secondary listing on the ASX to allow shareholders of Alumina Limited to trade Alcoa CDIs on the ASX; and,

Previous report

no specified events having occurred in respect of Alumina Limited or Alcoa.

Previous report

The regulatory approval processes may take a lengthy period of time to complete. There can be no assurances that any or all of such approvals will be obtained or will be obtained in a timely manner. Even if such approvals or conditional approvals are obtained, no assurances can be given as to the terms, conditions and timing of the approvals or whether they will be acceptable to Alcoa (in terms of any impact on the Transaction or the combined company’s operations). In addition, Alcoa and Alumina Limited may waive certain of these conditions.

Previous report

In addition, Alcoa and Alumina Limited each has the right, in certain circumstances, to terminate the Agreement. If the Agreement is terminated or any of the conditions to closing are not satisfied or, where waivable, not waived, the Transaction will not be completed.

Previous report

Failure to complete the Transaction, any delay in the completion of the Transaction or any uncertainty about the completion of the Transaction may adversely affect the price of Alcoa common stock or have an adverse impact on Alcoa’s business and operations.

Previous report

If the Transaction is not completed for any reason, Alcoa’s ongoing business may be adversely affected and, without realizing any of the benefits of having completed the Transaction, Alcoa may be subject to a number of risks, including the following:

Previous report

negative reactions from the financial markets;

Previous report

incurring and paying significant expenses in connection with the Transaction, such as financial advisor fees, filing fees, legal and accounting fees, soliciting fees, regulatory fees and other related expenses, many of which will become due and payable regardless of whether the Transaction is completed;

Previous report

nonpayment or delay in payment of any amounts due under any shareholder loan to AWAC made pursuant to the Agreement in accordance with the terms of such loan; and,

Previous report

paying a termination fee of $20 if Alumina Limited validly terminates the Agreement on the basis that Alcoa has failed to obtain the approval of its stockholders for issuance of the Alcoa shares in connection with the Transaction, or $50 if the Agreement is terminated in certain other circumstances.

Previous report

In addition, Alcoa could be subject to litigation related to any failure to complete the Transaction or litigation seeking to require Alcoa to perform its obligations under the Agreement.

Previous report

Obtaining required governmental and court approvals necessary to satisfy closing conditions may delay or prevent completion of the Transaction.

Previous report

Completion of the Transaction is conditioned upon the receipt of certain governmental authorizations, consents, orders or other approvals, including approvals, clearances or filings required in relation to the Transaction under the antitrust and foreign investment laws of Australia and the antitrust laws of Brazil. The Transaction must also be approved by the Court. No assurance can be given that the approvals will be obtained. Even if such approvals or conditional approvals are obtained, no assurance can be given as to the terms, conditions and timing of the approvals or that they will satisfy the terms of the Agreement.