A$ Medium Term Note Programme dated 29 October 2014
Dated 13 November 2014
Nature of the Bonds
Direct, unsecured and unsubordinated obligations of the Issuer and will at all times rank pari passu and ratably in right of payment and without preference or priority among themselves and at least equally with all present and future unsubordinated and unsecured obligations of the Issuer (subject to laws and principles of equity generally affecting creditors’ rights or as provided by operation of law).
Interest Rate and Step-up
5.50% per annum, payable semi-annually (in two coupons of 2.75%) in arrears on 19 May and 19 November in each year, including the Maturity Date. If the Issuer’s credit rating falls below a certain level, the Interest Rate will increase by 1.25% to 1.75%.
Repayment at Par on the Maturity Date
On the Maturity Date, bondholders are scheduled to receive the Face Value and the final Coupon Payment for the last Interest Period.
The value of an investment in the Alumina Bonds may fluctuate due to various factors, including investor perceptions, worldwide economic conditions, interest rates, debt market conditions and factors that may affect the Issuer’s financial performance. The following risks may also affect an investment in the Bonds:
- Lack of liquidity - in the secondary market for the Bonds;
- Interest rate risks – bondholders may suffer unforeseen losses due to fluctuations in interest rates;
- Litigation risks - Risks relating to litigation and regulatory actions;
- Operational risks - Equipment breakdowns and natural disasters may cause losses to or harm the Issuer’s business and reputation
Default risk - if an event of default occurs under the Bonds, or the Issuer fails to perform any obligation in relation to the Bonds, such event or failure may impact on the value of an investment in the Bonds, the transferability of the Bonds and the ability of a holder to recover amounts due under the Bonds. In assessing potential default risk, a bondholder should consider the periodic and continuous disclosures made by the Issuer.
Key benefits include:
- approximately 3.5 years remaining until Maturity Date;
- interest paid semi-annually in arrears;
- interest paid as 100% cash;
- interest is not deferrable nor are interest payments discretionary;
- rank equally with all other senior and unsecured creditors of the Issuer.
The Issuer will not create any Encumbrance over its Property, unless the Bonds are equally secured, excepting permitted Encumbrances which include:
- those over Joint Venture interests
- those already existing over Property when acquired
- relating to certain acquisition, exploration, drilling, development, construction, extension, expansion or improvement of any Property in which a Group member has an interest; and
- any Encumbrance which in aggregate is less than 15% of Net Tangible Assets
Total Debt of the Issuer will not exceed US$500,000,000.
Early Redemption by Issuer
Yes, for tax reasons, and also within 180 days of the Maturity Date.
Early Redemption by Bondholders
Yes, Bondholders can request early redemption if there is a change of control in the ownership of the Issuer and the credit rating of the Bonds falls below a certain level or is withdrawn.
Events of Default
Events of Default include:
- Failure to Pay: Applicable with a 3 day cure period;
- Breach of other obligations: Applicable, with a 30 day cure period;
- Insolvency: Applicable;
- Cross default: Applicable with Threshold Amount of US$ 25,000,000;
- AWAC Agreements: Certain events impacting on the Alcoa World Alumina and Chemicals joint venture (“AWAC”) agreements