Alcoa 2012 Annual Report Download - page 123

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 July 2012 and ending in June 2018 for the subloan of R$20. This loan may be repaid early without penalty
with the approval of BNDES.
As of December 31, 2012 and 2011, Alumínio’s outstanding borrowings were $311 (R$637) and $355 (R$661),
respectively, and the weighted-average interest rate was 6.49% and 7.50%, respectively. During 2012 and 2011,
Alumínio repaid $20 (R$38) and $5 (R$9), respectively, of outstanding borrowings. Additionally, Alumínio borrowed
$7 (R$13) and $5 (R$8), under the loan in 2012 and 2011, respectively.
In December 2012, Alumínio finalized certain documents related to another loan agreement with BNDES. This loan
agreement provides for a commitment of $85 (R$177) and is being used to pay for certain expenditures of the Estreito
hydroelectric power project. Due to the timing of the finalization of the loan documents and the expenditures of the
project, Alumínio advanced the cash necessary to the consortium to pay for the expenditures supported by this loan.
Interest on the loan is a Brazil real rate of interest equal to BNDES’ long-term interest rate plus a margin of 1.55%.
Principal and interest are payable monthly beginning in January 2013 and ending in September 2029. This loan may be
repaid early without penalty with the approval of BNDES. As of December 31, 2012, Alumínio’s outstanding
borrowings were $86 (R$177) and the interest rate was 6.55%.
Commercial Paper. Alcoa had no outstanding commercial paper at December 31, 2012. Outstanding commercial
paper was $224 at December 31, 2011. In 2012 and 2011, the average outstanding commercial paper was $354 and
$197. Commercial paper matures at various times within one year and had an annual weighted average interest rate of
0.8%, 0.6%, and 0.7% during 2012, 2011, and 2010, respectively.
On July 25, 2011, Alcoa entered into a Five-Year Revolving Credit Agreement (the “Credit Agreement”) with a
syndicate of lenders and issuers named therein. The Credit Agreement provides a $3,750 senior unsecured revolving
credit facility (the “Credit Facility”), the proceeds of which are to be used to provide working capital or for other
general corporate purposes of Alcoa, including support of Alcoa’s commercial paper program. Subject to the terms and
conditions of the Credit Agreement, Alcoa may from time to time request increases in lender commitments under the
Credit Facility, not to exceed $500 in aggregate principal amount, and may also request the issuance of letters of credit,
subject to a letter of credit sublimit of $1,000 under the Credit Facility.
The Credit Facility was scheduled to mature on July 25, 2016; however, on December 7, 2012, Alcoa received
approval for a one-year extension of the maturity date by the lenders and issuers that support $3,700 of the Credit
Facility (approval for the remaining $50 was received on January 8, 2013). As such, the Credit Facility now matures on
July 25, 2017, unless extended or earlier terminated in accordance with the provisions of the Credit Agreement. Alcoa
may make one additional one-year extension request during the remaining term of the Credit Facility, subject to the
lender consent requirements set forth in the Credit Agreement. Under the provisions of the Credit Agreement, Alcoa
will pay a fee of 0.25% (based on Alcoa’s long-term debt ratings as of December 31, 2012) of the total commitment
per annum to maintain the Credit Facility.
The Credit Facility is unsecured and amounts payable under it will rank pari passu with all other unsecured,
unsubordinated indebtedness of Alcoa. Borrowings under the Credit Facility may be denominated in U.S. dollars or
euros. Loans will bear interest at a base rate or a rate equal to LIBOR, plus, in each case, an applicable margin based on
the credit ratings of Alcoa’s outstanding senior unsecured long-term debt. The applicable margin on base rate loans and
LIBOR loans will be 0.50% and 1.50% per annum, respectively, based on Alcoa’s long-term debt ratings as of
December 31, 2012. Loans may be prepaid without premium or penalty, subject to customary breakage costs.
The Credit Facility replaces Alcoa’s Five-Year Revolving Credit Agreement, dated as of October 2, 2007 (the “Former
Credit Agreement”), which was scheduled to mature on October 2, 2012. The Former Credit Agreement, which had a
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