News Column

Fitch: Alcoa's Ratings Unaffected by Acquisition Announcement

June 26, 2014



NEW YORK--(BUSINESS WIRE)-- Fitch Ratings has stated that Alcoa's ratings and Outlook are unaffected by the company's announcement today that it is acquiring Firth Rixson for $2.85 billion.

Alcoa's purchase of Firth Rixson will bolster the company's aerospace business in the jet engine component segment. On a pro forma basis, the acquisition will increase Alcoa's annual aerospace segment revenues to approximately $4.8 billion from $4 billion for 2013. The two combined businesses are complementary and possess little product overlap.

The acquisition is subject to regulatory approvals and conditions and is expected to close by the end of 2014. Consideration for the acquisition is $500 million of Alcoa common equity to Oak Hill Capital Partners (owner of Firth Rixson) and $2.35 billion in cash as well as a potential $150 million earn-out. The cash portion is supported by a committed bridge facility provided by Morgan Stanley. Fitch anticipates that Alcoa will subsequently take out the bridge facility with a combination of debt and equity that will leave Alcoa's post-acquisition credit profile commensurate with its existing ratings.

Fitch currently rates Alcoa as follows:

--Issuer Default Rating (IDR) 'BB+';

--Senior unsecured debt 'BB+';

--$3.75 billion revolving credit facility 'BB+';

--Preferred stock 'BB-'.

--Short-term IDR 'B';

--Commercial paper 'B'.

The Rating Outlook is Stable.

Additional information is available at 'www.fitchratings.com'.

ALL FITCH CREDIT RATINGS ARE SUBJECT TO CERTAIN LIMITATIONS AND DISCLAIMERS. PLEASE READ THESE LIMITATIONS AND DISCLAIMERS BY FOLLOWING THIS LINK: HTTP://FITCHRATINGS.COM/UNDERSTANDINGCREDITRATINGS. IN ADDITION, RATING DEFINITIONS AND THE TERMS OF USE OF SUCH RATINGS ARE AVAILABLE ON THE AGENCY'S PUBLIC WEBSITE 'WWW.FITCHRATINGS.COM'. PUBLISHED RATINGS, CRITERIA AND METHODOLOGIES ARE AVAILABLE FROM THIS SITE AT ALL TIMES. FITCH'S CODE OF CONDUCT, CONFIDENTIALITY, CONFLICTS OF INTEREST, AFFILIATE FIREWALL, COMPLIANCE AND OTHER RELEVANT POLICIES AND PROCEDURES ARE ALSO AVAILABLE FROM THE 'CODE OF CONDUCT' SECTION OF THIS SITE. FITCH MAY HAVE PROVIDED ANOTHER PERMISSIBLE SERVICE TO THE RATED ENTITY OR ITS RELATED THIRD PARTIES. DETAILS OF THIS SERVICE FOR RATINGS FOR WHICH THE LEAD ANALYST IS BASED IN AN EU-REGISTERED ENTITY CAN BE FOUND ON THE ENTITY SUMMARY PAGE FOR THIS ISSUER ON THE FITCH WEBSITE.



Fitch Ratings

Primary Analyst

Sean T. Sexton, CFA, +1 312-368-3130

Managing Director

Fitch Ratings, Inc.

70 West Madison

Chicago, IL 60602

or

Secondary Analyst

Monica M. Bonar, +1 212-908-0579

Senior Director

or

Media Relations:

Brian Bertsch, +1 212-908-0549

brian.bertsch@fitchratings.com

Source: Fitch Ratings


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Source: Business Wire


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