Alcoa Will Pay Alba $85M as Result of Litigation Settlement
Alcoa (NYSE: AA) (“Alcoa”) confirmed today that it has entered into a settlement agreement with Aluminium Bahrain B.S.C. ("Alba") resolving a civil lawsuit that had been pending in the U.S. District Court for the Western District of Pennsylvania since 2008.
Without admitting any liability, Alcoa agreed to make a cash payment to Alba of $85 million payable in two installments. One half was made at settlement and the other half will be made one year later. The settlement amount is within the range Alcoa previously estimated as its reasonably possible losses, which it disclosed in its second quarter 2012 earnings announcement.
Alcoa said the settlement with Alba represents the best possible outcome and avoids the time and expense of complex litigation.
Based on the settlement agreement with Alba, Alcoa recorded a $40 million charge ($15 million after-tax and noncontrolling interest) in the third quarter in addition to the $45 million charge ($18 million after-tax and noncontrolling interest) it recorded in the second quarter. Alcoa estimates an additional possible after-tax charge of approximately $25-30 million to reflect an agreement between the shareholders of Alcoa World Alumina LLC regarding the cash costs of the settlement of the Alba civil lawsuit; such charge would be recognized in the event that a settlement is reached with the Department of Justice and the Securities and Exchange Commission regarding their investigations.
Alcoa and Alba have also resumed a commercial relationship and have entered into an Alumina Price Index-based, long-term alumina supply agreement, demonstrating a mutual desire to work together going forward and the significant value that Alcoa brings to customers in the region through superior quality and optimal logistics of its alumina.
© 2014 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.