After the series of discussion, Alcoa finally registered Upstream Alcoa Corporation with the Securities of Exchange. The American lightweight metals and advanced manufacturer has filed Form 10 registration form with the SEC to separate the upstream sector under the Alcoa Corporation recently.
Alcoa divided its company in two segment, the Upstream Business and the Value added Segment. The company aims to separate the two officially this second half of the year. Based on the statement of Alcoa, The value added segment will be named as Arconic Incorporated while the upstream business will be handled by the Alcoa Corporation.
“Alcoa Corporation has a low-cost base that will enable resilience and value-creation at all stages of the commodity cycle,” said Klaus Kleinfeld Alcoa Chairman and CEO. The company assures the investors that the two segments are well positioned for successful business in their respective fields.
Through our multi-year transformation, we have substantially re-positioned each business and laid the foundation for future long-term success. The separation will allow each new company to pursue its own distinct corporate strategy and unlock the full value of each business,” Mr. Kleifield added.
Based on the full transcript of the Initial Form 10, Alcoa Corporation which is New Co will be listed on the New York Stock Exchange through a tax-free spinoff to our shareholders. Alcoa Inc. will be renamed into Arconic and Arconic will be Remain Co. Arconic would be a technology driven company producing performance materials and highly engineered products for growth markets.
Arconic will retain up to 19.9% of Alcoa Corporation. And the separation is on track to be completed in the second half of this year. As Arconic retain 19.9 percent of Alcoa Corporation they can do a pro rata distribution of at least 80.1% of the outstanding shares.
“It provides Arconic a liquid security that can be monetized to strengthen the balance sheet. The intention here is to monetize in the first 18 months but there is an option to do it no later than five years. This reduces the relying on Alcoa Corporation to raise debt and enables Alcoa Corporation to be separated with lower leverage, and it gives Alcoa Corporation significant flexibility to manage through future market cycles,” Mr. Kleifield explained.
Futher, Since Alcoa Inc. will be renamed into Arconic, it will still continue to trade on the New York Stock Exchange and the ticker symbol will be ARNC. Alcoa Corporation will be New Co. Alcoa Corporation will also trade on the New York Stock Exchange and the ticker symbol will be AA.
Lloyd O’Carroll, an analyst for data provider and researcher CRU and an Alcoa bondholder,believed that the split is an optimization and it will save on freight. “The Alcoa smelters will be able to sell metal closer to where they are, and the downstream can buy from anywhere,” O’Carroll said.
The previous year, Alcoa had a net loss of $121 million after the narrow demand for metals and the over supply in China. Alco has made significant efforts to increase its share price despite the slump of aliminum prices on the London Metal Exchange.
Recently, the shares of Alcoa Incorporated lost 2.47 percent or $0.23 to trade at $9.10 as they filed the registration for separation of Upstream Business. The stock had a market capitalization of 12.27 billion, with a dividend yield of 1.32 percent.