Alcoa obtains $2.6bn financing for South32 acquisition

Alcoa has priced $2.6 billion in senior notes as it moves to secure permanent financing for its proposed acquisition of South32’s aluminium assets. The debt package comprises $1.5 billion of 6.625% senior notes due 2034 and $1.1 billion of 6.875% senior notes due 2036.

The notes are being issued by wholly owned Alcoa subsidiaries Alumina Pty Ltd and Alcoa Nederland Holding B.V., respectively, and will be guaranteed on a senior unsecured basis by Alcoa and certain of its subsidiaries. The offering is expected to close on 23 September 2026, subject to customary closing conditions.

Alcoa said the proceeds, together with cash on hand, will be used to fund the approximately $3.1 billion cash portion of the consideration for its proposed acquisition of South32’s interests, alongside associated fees and expenses.

The financing represents a significant step towards completing the transaction, which would strengthen Alcoa’s position across the upstream aluminium value chain, with additional interests spanning bauxite mining, alumina refining and aluminium smelting.

Alcoa expects the proceeds from the notes, combined with existing cash resources, to provide permanent financing for the acquisition.

Following completion of the offering, the company also expects to terminate any remaining commitments under a 364-day senior unsecured bridge term loan facility established to support the transaction.

The proposed acquisition has yet to receive all necessary approvals.

Completion remains subject to conditions including approval from South32 shareholders, required regulatory clearances and other customary closing requirements.

The transaction comes as aluminium producers continue to focus on securing competitive and integrated positions across the raw material and primary metal supply chain.

For Alcoa, the addition of further bauxite, alumina and smelting interests would reinforce its vertically integrated operating model and potentially broaden its exposure to key stages of aluminium production.

The senior notes are being placed privately with qualified institutional buyers and certain non-US investors.

The securities have not been registered under the US Securities Act or applicable securities legislation in other jurisdictions.