Alcoa to get $1.02B from sale of Rio Tinto stake
Aluminum producer Alcoa Inc. said today that it expects to receive $1.02 billion from the sale of its stake in a so-called special purpose vehicle with Aluminum Corp. of China.
In February 2008, Alcoa and Aluminum Corp. of China, also known as Chinalco, agreed to jointly acquire a 12 percent stake in miner Rio Tinto PLC. The two companies' special purpose vehicle was named Shining Prospect.
The money from Alcoa's sale of its stake in Shining Prospect will be received in three installments over a six-month period beginning July 31.
In the first quarter, the company will record a noncash after-tax loss of some $120 million on its investment in Shining Prospect.
Alcoa, which also will receive its share of dividends paid by Rio Tinto since the investment was made, said the divestiture will improve its cash position and improve its debt-to-capital ratio.
Alcoa's announcement that it is exiting Shining Prospect comes two days after Standard & Poor's Ratings Services slashed the aluminum producer's corporate credit rating, saying it expected Alcoa's credit metrics to deteriorate significantly this year.
Alcoa and Chinalco, which on its own is investing $19.5 billion in Rio Tinto, also said they will jointly "explore opportunities to expand their commercial relationship by identifying strategic ventures that will benefit from the companies' complementary strengths in bauxite, alumina, aluminum and fabricated products."
Shares of Alcoa fell 3 cents to $7.66 shortly after the market opened.