Alcoa And Alumina Agree To Terminate Litigation On Alcoa's Separation

(RTTNews) - Alcoa Inc. (AA) and Alumina Limited (AWC.AX) said that they have agreed to make certain changes to the Alcoa World Alumina and Chemicals or "AWAC" joint venture that will enhance value for Alcoa, Alumina, and their respective shareholders.

In conjunction with these amendments, the companies have agreed to terminate their litigation in the Delaware Court of Chancery relating to Alcoa's pending separation into two independent, publicly traded companies. Alcoa Inc. remains on track to complete its separation in the second half of 2016.

Effective upon the completion of Alcoa's separation, certain changes will be made to the governance and financial policies of the joint venture, intended to enhance the cooperation between the shareholders. The changes will also simplify AWAC's dividend and cash management policies and require that AWAC raise a limited amount of debt to fund future mutually agreed growth projects.

In the event of a change of control of either partner in the future, opportunities for the AWAC partners to engage in expansion and development projects would increase, with each partner having the right to proceed unilaterally with an expansion or development project inside the joint venture if the other partner chooses not to participate. A partner that avails itself of such an opportunity would pay for the costs related to the project, including for AWAC resources and shared facilities used, and be entitled to that project's resulting off-take.

In addition, upon a change of control, the exclusivity and non-compete restrictions under the current joint venture agreements would terminate, and be replaced by rights of first offer on expansions and other development projects that either party may choose to undertake outside of the joint venture.

If a change of control of Alumina were to occur in the future, off-take rights for alumina and bauxite would be triggered.