Alcoa Corp. has divested its interest in the Ma’aden Rolling Co., a can and auto sheet mill, by amending its joint venture with the Saudi Arabian Mining Co. in which Alcoa holds a 25.1 percent stake.
The move enables the Pittsburgh-based company to pursue future returns in its bauxite mining, alumina refining, and aluminum smelting businesses and gives Ma’aden more strategic flexibility to further develop the rolling business.
The joint venture, created in 2009 in the Kingdom of Saudi Arabia, comprised of the Ma’aden Bauxite and Alumina Co., a bauxite mine and alumina refinery; the Ma’aden Aluminium Co., aluminum smelter and cast house; and the Ma’aden Rolling Co., a can and auto sheet mill.
As a result of the amended joint venture agreements, signed June 26, 2019, and expected to close by month end, Alcoa will:
- Transfer its 25.1 percent interest in MRC to Ma’aden.
- Make a $100 million contribution to MRC in two installments, with $34 million paid on June 17, 2019, to fund its 25.1 percent share of MRC’s current cash requirements, and $66 million paid at closing.
- Be released from all future MRC obligations, including Alcoa’s sponsor support of approximately $295 million of MRC debt and its share of any future MRC cash requirements.
- Avoid future capital contributions in any MRC debt restructuring and recapitalization.
In addition, Alcoa and Ma’aden further defined MBAC and MAC shareholder rights, including the dividend policy.
The parties will maintain their commercial relationship, which includes Alcoa providing sales, logistics and customer technical services support for MRC products for the North American can sheet market.
Alocoa will retain its 25.1 percent minority interest in MBAC and MAC, and Ma’aden will continue to own a 74.9 percent interest.
Alcoa will record an estimated charge associated with the disposition of its interest of approximately $320 million (pre- and after-tax), or $1.72 per share, in the second quarter of 2019. The charge includes the write-off of Alcoa’s investment in MRC, the cash contributions noted above, and the write-off of Alcoa’s share of MRC’s delinquent payables due to MAC of $59 million that were forgiven as part of this transaction. Investment losses attributable to MRC included in net income totaled $34 million (pre- and post-tax) in 2018.
