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Arconic Closes Exchange of Alcoa Stock, Cuts $800M of Debt

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Arconic Inc. said that it has wrapped up the earlier announced exchange of its remaining 12,958,767 shares of common stock of Alcoa Corp. (AA - Free Report) for roughly $428.6 million total principal amount of Arconic debt held by Citigroup Global Markets Inc. and Credit Suisse Securities (USA) LLC.

The completion of the exchange marks Arconic’s complete exit of its ownership interest in Alcoa Corp. The exchange has been intended to qualify as generally tax-free to Arconic for U.S. federal income tax purposes.

In addition, Arconic has purchased the balance of the debt (around $2 million in total principal amount of its 6.500% senior notes due 2018 and roughly $79.5 million in total principal amount of 6.750% senior notes due 2018) held by Citigroup and Credit Suisse with cash.

The actions taken by Arconic so far in 2017 have resulted in a reduction of its total debt by around $800 million. The company, at its Investor Day in Dec 2016, said that it plans to cut its debt by $1 billion in first-half 2017.

Arconic has outperformed the Zacks categorized Mining-Non Ferrous industry year to date, aided by strong demand for its products across aerospace and automotive markets and its efforts to improve cost structure through company-wide productivity actions. The company’s shares have gained around 47.2% over this period, compared with roughly 5.3% gain recorded by the industry.


Arconic’s adjusted earnings and revenues for first-quarter 2017 beat the respective Zacks Consensus Estimate. The company gained from its cost-saving actions in the quarter that more than offset unfavorable price and mix.

Arconic ended the quarter with cash and cash equivalents of roughly $2.6 billion. Long-term debt was around $8 billion at the end of the quarter.

Arconic said that it will remain focused on capital efficiency, growth actions, cost cutting and improving margin in 2017. The company said that it is well placed in the aerospace market that is continuing its transition to new platforms.

Arconic also backed its guidance for full-year 2017 provided at its Investor Day last year. The company sees revenues in the range of $11.8 billion to $12.4 billion and adjusted earnings of $1.10 to $1.20 per share for 2017.

Arconic is a Zacks Rank #3 (Hold).

Arconic Inc. Price and Consensus

 

Arconic Inc. Price and Consensus | Arconic Inc. Quote

Stocks to Consider

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Chemours has expected long-term growth of 15.5%.

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