Alcoa 2010 Annual Report Download - page 115

With the full repayment of the Second Loans, the commitments were effectively terminated.
In March 2008, Alumínio entered into two separate loan agreements (the “First Loans”) with BNDES related to the
Juruti bauxite mine development and the São Luís refinery expansion.
The first loan agreement provides for a commitment of $248 (R$500), which is divided into five subloans, and was
used to pay for certain expenditures of the Juruti bauxite mine development. Interest on four of the subloans totaling
$233 (R$470) is a Brazil real rate of interest equal to BNDES’ long-term interest rate, 6.00% as of December 31, 2010
and 2009, plus a weighted-average margin of 2.13%. Interest on the fifth subloan of $15 (R$30) is a U.S. dollar rate of
interest equal to the average cost incurred by BNDES in raising capital outside of Brazil, 4.16% and 4.25% as of
December 31, 2010 and 2009, respectively, plus a margin of 2.40%.
Principal and interest were payable monthly beginning in September 2009 and ending in November 2014 for the four
subloans totaling $233 (R$470) and beginning in November 2009 and ending in January 2015 for the subloan of $15
(R$30). Prior to these dates, interest was payable quarterly on borrowed amounts.
As of December 31, 2010, Alumínio’s outstanding borrowings were $186 (R$312) and $10 (R$17) and the weighted-
average interest rate was 8.13% and 6.56% for the subloans totaling $233 (R$470) and the subloan of $15 (R$30),
respectively. During 2010, Alumínio repaid $75 (R$130) and $4 (R$8) of outstanding borrowings related to the
subloans totaling $233 (R$470) and the subloan of $15 (R$30), respectively. As of December 31, 2009, Alumínio’s
outstanding borrowings were $253 (R$442) and $15 (R$25) and the weighted-average interest rate was 8.13% and
6.65% for the subloans totaling $233 (R$470) and the subloan of $15 (R$30), respectively. During 2009, Alumínio
repaid $17 (R$30) of outstanding borrowings related to the subloans totaling $233 (R$470).
The second loan agreement provides for a commitment of $374 (R$650), which is divided into three subloans, and was
used to pay for certain expenditures of the São Luís refinery expansion. Interest on two of the subloans totaling $339
(R$589) is a Brazil real rate of interest equal to BNDES’ long-term interest rate plus a weighted-average margin of
1.99%. Interest on the third subloan of $35 (R$61) is a U.S. dollar rate of interest equal to the average cost incurred by
BNDES in raising capital outside of Brazil plus a margin of 2.02%.
Principal and interest were payable monthly beginning in December 2009 and ending in February 2015 for the two
subloans totaling $339 (R$589) and beginning in February 2010 and ending in April 2015 for the subloan of $35
(R$61). Prior to these dates, interest was payable quarterly on borrowed amounts.
As of December 31, 2010, Alumínio’s outstanding borrowings were $280 (R$469) and $29 (R$48) and the weighted-
average interest rate was 7.99% and 6.18% for the subloans totaling $339 (R$589) and the subloan of $35 (R$61),
respectively. During 2010, Alumínio repaid $64 (R$112) and $6 (R$11) of outstanding borrowings related to the
subloans totaling $339 (R$589) and the subloan of $35 (R$61), respectively. As of December 31, 2009, Alumínio’s
outstanding borrowings were $334 (R$581) and $35 (R$61) and the weighted-average interest rate was 7.99% and
6.27% for the subloans totaling $339 (R$589) and the subloan of $35 (R$61), respectively. During 2009, Alumínio
repaid $5 (R$9) of outstanding borrowings related to the subloans totaling $339 (R$589).
The First Loans may be repaid early without penalty with the approval of BNDES. Also, the First Loans include a
financial covenant that states that Alcoa must maintain a debt-to-equity ratio of 1.5 or lower.
In June 2008, Alumínio finalized certain documents related to another loan agreement with BNDES. This loan
agreement provides for a commitment of $397 (R$687), which is divided into three subloans, and is being used to pay
for certain expenditures of the Estreito hydroelectric power project. Interest on the three subloans is a Brazil real rate of
interest equal to BNDES’ long-term interest rate plus a weighted-average margin of 1.48%. Principal and interest are
payable monthly beginning in October 2011 and ending in September 2029 for two of the subloans totaling R$667 and
beginning in January 2011 and ending in December 2016 for the subloan of R$20. This loan may be repaid early
without penalty with the approval of BNDES. As of December 31, 2010 and 2009, Alumínio’s outstanding borrowings
were $394 (R$662) and $300 (R$523), respectively, and the weighted-average interest rate was 7.52%.
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