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Arconic Investor Relations – Website FAQ

  1. How did the separation impact Alcoa Inc. common stock?

    • As of the separation on November 1, 2016, Alcoa Inc. was renamed Arconic Inc., and any shares of Alcoa Inc. were automatically renamed as Arconic shares.

    • Following the separation, a shareholder who held Alcoa Inc. shares as of the close of business on October 20, 2016, which was the record date for the separation distribution, (i) retained his/her shares (now called Arconic shares), and (ii) in addition, automatically received shares of the new upstream company, Alcoa Corporation. Alcoa Inc. shareholders received one share of Alcoa Corporation common stock for every three shares of Alcoa Inc. common stock held as of the record date for the separation distribution. Shareholders received cash in lieu of any fractional shares.

    • For additional information about the separation distribution, please see our separation-related filings, which can be found on the SEC’s website at www.sec.gov and Arconic’s website.

  2. What is the conversion rate of the 5.375% Mandatory Convertible Preferred Stock?

    • As a result of the separation and the cash dividend to be paid on November 25, 2016 to holders of the Company’s common stock as of November 11, 2016 (the “Dividend Record Date”), in accordance with the terms of the Mandatory Convertible Preferred Stock, certain adjustments have been made, in each case effective immediately after 5:00 p.m., New York City time, on the separation record date (October 20, 2016) and the Dividend Record Date, respectively, as a result of which:

      • The Maximum Conversion Rate is equal to 15.6981 Common Shares per share of Mandatory Convertible Preferred Stock (equivalent to 1.56981 Common Shares per depository share representing a 1/10th interest in a share of Mandatory Convertible Preferred Stock).
      • The Minimum Conversion Rate is equal to 13.0817 Common Shares per share of Mandatory Convertible Preferred Stock (equivalent to 1.30817 Common Shares per depository share representing a 1/10th interest in a share of Mandatory Convertible Preferred Stock).
      • For the purposes of determining which of clauses (i), (ii) and (iii) of Section 7(b) shall apply on the Mandatory Conversion Date, the Threshold Appreciation Price is $38.22 and the Initial Price is $31.85.
      • The Fundamental Change Conversion Rate, for a Fundamental Change Conversion, is the conversion rate set forth in the table below for the Fundamental Change Effective Date and the Fundamental Change Share Price applicable to such Fundamental Change:

        View Table

      • The Initial Dividend Threshold is $0.0592 per Common Share.

    • If all of the outstanding aggregate amount of Mandatory Convertible Preferred Stock convert at the prevailing Maximum Conversion Rate of 15.6981 Common Shares per share of Mandatory Convertible Preferred Stock, the Common Shares to be issued upon conversion would be approximately 39.2 million shares.

    • The adjustments described have been made on the basis of the Current Market Price of the Common Shares of Arconic and the Current Market Price of the Alcoa Corporation Common Shares, in each case calculated as the Average VWAP per Common Share or Alcoa Corporation Common Shares, as applicable, over the first ten consecutive Trading Days commencing on and including November 8, 2016. Such Current Market Price of the Common Shares of Arconic and such Current Market Price of the Alcoa Corporation Common Shares were calculated to be $18.8968 and $29.4506, respectively. The adjustments for the Dividend have been made on the basis of the Current Market Price of the Common Shares of Arconic, calculated as the Average VWAP per Common Share over the five consecutive Trading Day period ending on November 7, 2016. Such Current Market Price of the Common Shares was calculated to be $18.1918.

    • In accordance with the terms of the Mandatory Convertible Preferred Stock, adjustments to the conversion rates may be made in the future upon certain events, including any cash dividends to common stockholders in excess of the Initial Dividend Threshold.

    The foregoing description is subject to and is qualified by reference to the Statement with respect to Shares Amending the Articles of Incorporation of Arconic Inc. (f/k/a Alcoa Inc.) designating and establishing the Mandatory Convertible Preferred Stock; capitalized terms used herein and not otherwise defined herein have the meaning given in such Statement.

  3. How did the separation impact Alcoa Inc. cumulative preferred stock?

    • The $3.75 Cumulative Preferred Stock of Alcoa Inc. has been retained as preferred stock of Arconic.

  4. What is the impact of the separation on dividends, which Alcoa Inc. previously paid?

    • The Arconic Inc. Board of Directors will determine the optimal dividend policy to create value for shareholders.

  5. What are the tax implications of the separation for non-US shareholders? Will it be a tax-free transaction for them?

    • Non-US shareholders will need to seek appropriate tax advice to determine the tax implications of the transaction.

  6. What is the conversion rate of the RTI International Metals Inc. (a subsidiary of Arconic Inc.) Convertible Senior Notes due 2019 (the “RTI 2019 Notes”)? How many shares could these notes convert into?

    • As of November 17, 2016, after giving effect to Arconic’s separation on November 1, 2016 and the cash dividend to be paid on November 25, 2016 (which cash dividend’s record date was November 11, 2016), the adjusted conversion rate RTI 2019 Notes is 35.1714 shares per $1,000 principal amount.

    • If all of the outstanding aggregate principal amount of $402,500,000 RTI 2019 Notes convert at the prevailing conversion rate of 35.1714, the shares to be issued upon conversion would be approximately 14.2 million shares.

    • Pursuant to the indenture for the RTI 2019 Notes, the conversion rate will be adjusted upon certain events, including any dividend that Arconic may pay in the future.

      The foregoing description is subject to and is qualified by reference to all the provisions of the RTI 2019 Notes and the related indenture, including the definitions of certain terms used in the indenture.
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